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Thu, Jan. 14, 8:36 AM
- Rio Tinto (NYSE:RIO) says it will freeze salaries for 2016 from the CEO downward, and warns that it sees no signs of any letup from the commodity price rout.
- "The pressure this is placing on our industry is significant... It is important we recognize that the pressure isn’t going to let up. This situation is not temporary," CEO Sam Walsh said in an email to staff.
- Walsh also cited China’s "more modest" economic growth, which "has shifted emphasis from metals-intensive sectors - like infrastructure and construction - to consumer spending."
- Nevertheless, RIO +2.3% premarket.
Wed, Jan. 13, 12:34 PM
- With iron ore prices collapsing to ~$40/ton, Rio Tinto (RIO +1%) needs to change its investing strategy for the Australia-focused Pilbara Blend to unlock hidden value for shareholders, says Bernstein senior metals analyst Paul Gait.
- The analyst thinks a relaxation of the commitment to the Pilbara Blend - via reducing capex by removing the need for new Pilbara Blend assets and increasing opportunities to sell product to trading houses rather than mostly to steel manufacturers - could be worth up to $7B in enterprise value.
- Still, Gait calls Rio "one of the very few investable stocks in the space... clearly the safest choice since Rio has the capacity to cope with even lower iron ore prices and has a combination of low financial and operating leverage in its favor."
Tue, Jan. 12, 12:46 PM
- BHP Billiton (BHP -4.3%) could cut is payout in half when it releases results, and Rio Tinto (RIO -4.5%) also could cut its dividend later this year, HSBC analysts say, citing the need for the miners to cut expenses to help indebted balance sheets and offset weak commodities prices.
- HSBC also says Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) and First Quantum Minerals (OTCPK:FQVLF) are most at risk if commodities remain weak, although continued South African rand weakness would help Anglo, while strength in copper and other stock-specific reasons could favor returns for Freeport McMoRan (FCX -13.4%) and Glencore (OTCPK:GLCNF, OTCPK:GLNCY).
- The firm downgrades BHP and First Quantum to Reduce, maintains a Reduce rating on Anglo, and has a Buy rating on FCX and Glencore.
Mon, Jan. 11, 8:59 AM
- BHP Billiton (NYSE:BHP) shares sink to decade lows on the Australian Stock Exchange as copper prices plummet to their lowest in six years, after muted Chinese inflation and more equity losses in Shanghai increase concern that demand from the country will slow.
- "China gobbles up about one-half of global demand for anything from aluminum to copper, zinc, tin or coal," says an analyst at the Economist Intelligence Unit. "More downward pressure on the price of commodities and on commodity firms’ valuations can be expected.”
- Metals have lost most of the modest gains they made toward the end of last year, with the LME Index falling last week by the the most since May.
- Related tickers: RIO, VALE, FCX, JJC, CPER, CUPM
Fri, Jan. 8, 11:45 AM
- Iron ore shipments to China through Australia's Port Hedland rose 1% in December to 32.17M metric tons, despite the spot price falling to its lowest on record and a gloomy outlook heading into the new year.
- For all of 2015, shipments to China rose to 377.88M metric tons from 343.41M metric tons in 2014, up 10% Y/Y.
- Port Hedland, the world's largest port for exporting iron ore, is used by major suppliers to the sea-traded market such as BHP Billiton (BHP -1.1%), which plans to raise production by a respective 6% to 247M metric tons by next July, and Fortescue Metals (OTCQX:FSUMF), whose output is running at an annual rate of 165M metric tons, making them the third and fourth largest producers worldwide after Vale (VALE -0.5%) and Rio Tinto (RIO -1.9%).
- "The prospects for iron ore are looking darker than ever, but still more keeps coming out of the ground. It's self-defeating," says a Sydney-based mining analyst.
Wed, Jan. 6, 9:18 AM
Dec. 23, 2015, 9:19 AM
- Mining stocks look to be headed for a strong day, following a rebound in metal prices after China earlier this week raised hopes that demand may strengthen next year when it unveiled plans for more flexible fiscal and monetary policies.
- Prices for industrial commodities including copper, zinc, lead and aluminum are up at least 1%.
- Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) +8.1%, Glencore (OTCPK:GLCNF, OTCPK:GLNCY) +6.7% in London.
- MT +10.2%, RIO +5.4%, VALE +4.8%, BHP +4.5% in U.S. premarket.
Dec. 23, 2015, 9:12 AM
Dec. 22, 2015, 11:58 AM
- Australia’s Department of Industry & Science cuts its 2016 iron ore price forecast by 19%, now expecting prices to average $41.30/metric ton next year compared to $51.20 just three months ago, according to its latest quarterly report.
- Iron ore lost 43% this year as low-cost miners including Rio Tinto (RIO +1.4%), BHP Billiton (BHP +0.3%) and Vale (VALE +1.1%) continued to expand to defend market share, and the government forecasts exports of Australian iron ore will expand another 13% next year after rising ~7% this year.
- Goldman Sachs predicted last week that iron ore would remain under $40 for the next three years as China’s slowdown forces the global industry into a long period of hibernation.
- Spot ore with 62% content delivered to Qingdao, China, rose 0.8% to $40.80/ton today, after bottoming at $38.30 on Dec. 11.
Dec. 18, 2015, 5:41 PM
Dec. 15, 2015, 8:28 AM
- Rio Tinto (NYSE:RIO) says it is revising the cost estimate to expand Mongolia’s Oyu Tolgoi copper and gold mine after its majority-owned Turquoise Hill Resources (NYSE:TRQ) confirmed agreement on a $4.4B financing package.
- The estimate for the underground expansion remains at $5B-$6B but is being re-costed “because the market conditions have changed dramatically in the last six months,” says Jean-Sebastien Jacques, Rio’s top exec for copper and coal.
- While costs of items including steel, concrete and electrical wiring have fallen, labor rates in Mongolia and China have been rising, making it dificult to judge the likely outcome of Rio's review, Deutsche Bank analyst Paul Young says.
- When Oyu Tolgoi is up and running, probably in another 5-7 years, "we expect the market to be in a structural deficit at that point,” Jacques says.
- Also, CEO Sam Walsh says Rio is “well positioned” for what will be another tough year in 2016 because the company has the lowest debt in the industry.
- RIO +1% premarket.
Dec. 14, 2015, 12:58 PM
- Rio Tinto (RIO -1.1%) is set to seal a project finance deal of at least $4B to expand the Oyu Tolgoi mine in Mongolia despite the commodities downturn, Financial Times reports.
- The project finance deal is expected to be announced this week following years of delays amid disputes between Rio and Mongolia’s government over how to share costs and profits from the project, according to the report.
- A deal would be one of the last steps remaining before Rio’s board is expected to to press ahead with expansion of the mine, which would cost a further $5B and would move the mine into a bigger underground phase; approval is now expected in 2016.
Dec. 8, 2015, 5:39 PM
- Rio Tinto (NYSE:RIO) suddenly has a pair of lawsuits in Canada that reach back to projects built in the 1950s - a quarter-century before it first set foot in the country - that miners worry will scare off investors, Bloomberg reports.
- In October, the Supreme Court of Canada cleared the way for separate aboriginal groups to challenge the future operations of a Rio hydroelectric dam in B.C., and an iron ore mine, with accompanying railway and port, in Quebec and Labrador.
- The cases received little notice at the time, but now they are sparking a debate about whether they will discourage investment in Canada's resource sector.
- "If private parties are now going to be in litigation with First Nations for up to two decades on issues that were previously only brought against governments, it adds a lot of risk to potential projects, and ongoing projects, in Canada,” says the Fraser Institute's Center for Aboriginal Policy Studies.
Dec. 8, 2015, 9:15 AM
Dec. 8, 2015, 9:15 AM
- BHP Billiton (NYSE:BHP) -5.8% premarket, Rio Tinto (NYSE:RIO) -6.6% and Vale (NYSE:VALE) -7.7% as iron ore prices continue to drop - now at 10-year lows - and China’s exports fell for a fifth consecutive month while imports slumped for a record 13th straight month.
- Iron ore with 62% content delivered to Qingdao, China lost 1.1% to end Monday's trade at $38.65/ton; according to estimates from Capital Economics, iron ore prices in the $30-$39 range would threaten the profitability for the major iron ore suppliers.
- China's exports fell 6.8% Y/Y in dollar terms in November vs. a 6.9% decline in October and expectations of a 5.3% drop; November imports fell 8.7% Y/Y vs. an 18.8% decrease in October and expectations of an 11.8% drop.
- Also premarket: X -4%, MT -7.4%, CLF -4.4% premarket.
Dec. 8, 2015, 7:45 AM
- Rio Tinto (NYSE:RIO) -6.2% premarket after announcing its second cut to planned capital spending in four months, slashing another $1.5B over two years, as iron ore prices have plunged below $40/metric ton.
- Rio's latest capex cut follows a $2.5B reduction over two years in August, and brings its planned annual spending to ~$5B in 2015 and 2016.
- The cuts will help shore up its balance sheet and cover its $4.1B annual dividend payout.
- Rio also says it expects to reduce cash costs at its aluminum unit by ~$300M by the end of this year, and by a similar level again in 2016; improvements to mine productivity also should help lift output of bauxite, alumina and aluminum.
Rio Tinto PLC is an international mining group engaged in finding, mining and processing the Earth's mineral resources. Its main products are Bauxite, Alumina, Copper, Gold, Molybdenum, Silver, Nickel, Diamonds and Rutile.
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