Jul. 30, 2014, 7:45 AM
- Rio Tinto (NYSE:RIO) agrees to sell its Mozambique coal assets to an Indian investment group for $50M, marking the end of one of its costliest deals during the commodities boom.
- Rio acquired the coal business in 2011 through its $3.7B takeover of Riversdale Mining as coal prices were surging on rising demand from Asia and supply disruptions in major coal-producing countries, but it has since written down the assets by ~$3.5B, as it became clear that extracting and transporting the coal from the Moatize Basin was more challenging than previously thought.
- If $50M seems like a fire sale price, Citigroup analysts had placed a negative value of $373M on the assets, and sees the sale as “a small but accretive deal that cleans up the legacy portfolio.”
Jul. 23, 2014, 10:46 AM
- Rio Tinto (RIO +0.8%) CEO Sam Walsh says Chinese demand for iron ore remains strong despite a short term oversupply and indications that India will resume iron ore exports.
- Walsh says Rio is having to play a balancing act as it and other Pilbara iron ore producers brought on more supply, but "we're easily selling everything that we're producing."
- China's economy was achieving its expected growth rates, and China's pollution problems also have boosted demand for higher grade iron ore, Walsh says.
- India may restart iron ore exports, but freeing up its economy also would free up the steel industry and provide growth for Indian iron ore producers, the CEO says.
Jul. 23, 2014, 8:15 AM
- BHP Billiton (NYSE:BHP) says it exported more iron ore than expected from mines in Australia's northwest last fiscal year, and plans to continue ramping up production in the current year despite tumbling prices and a global supply glut.
- BHP reports record iron ore production of 225M metric tons from its Western Australian mines during H1 2014, up 20% from the prior-year period and above the level investors had been expecting.
- BHP forecasts total iron ore production from the Pilbara to reach 245M tons this fiscal year, up 8.9% Y/Y.
- The record production result comes a week after rival Rio Tinto (NYSE:RIO) said it hit an all-time high in production in its own fiscal H1 and is aiming to boost its Australian iron ore output by a further 20% to 350M by 2017.
Jul. 17, 2014, 11:39 AM
- Aluminum prices reach their highest levels in 16 months as falling inventories, smelter closures and a strong demand outlook continue to attract buyers.
- Companies such as Alcoa (NYSE:AA), Rusal and Rio Tinto (NYSE:RIO) have been shutting smelters over the past two years in an effort to tackle aluminum oversupply, while demand has remained strong; Citi sees demand growth of 6%/year through the end of the decade, driven by the increased use of aluminum in car production.
- Sentiment also has been helped by declining inventories, as LME stocks have dropped below 5M metric tons for the first time since Sept. 2012, but analysts say it will take years to whittle away at the further 5M tons of inventories thought to be held in non-LME warehouses.
- ETFs: JJU, FOIL
Jul. 17, 2014, 10:44 AM
- Australia repeals pro-environment carbon laws that put a price on greenhouse gas emissions, the first time a developed nation has made such a U-turn.
- Australia is one of the world's largest per capita greenhouse gas emitters due to its reliance on coal-burning power stations to power homes and industry, but the country's voters blame the climate laws for rising energy bills and living costs.
- The tax was voted out even as it appeared to be working in reducing carbon emissions, according to The Guardian.
- BHP CEO says repealing the "mis-designed" carbon tax would be important in increasing Australia's competitiveness; J.P. Morgan analysts have estimated that the removal of the carbon tax, together with repeal of the government's mining levy, would boost its valuation on companies such as BHP and Rio Tinto (NYSE:RIO) by as much as 6%.
- Australia's repeal may reverberate internationally ahead of global climate talks next year, when major economies like China, India and the U.S. will consider global greenhouse targets beyond 2030.
Jul. 16, 2014, 7:43 AM
- Rio Tinto (NYSE:RIO) +1.7% premarket after saying it produced a record 139.5M metric tons of iron ore in H1 of this year, up 10% Y/Y, and shipments rose 20% to 142.4M tons.
- Rio says it produced 73.1M tons of iron ore in the June quarter, up 10% from the previous quarter when bad weather swept across the Pilbara region of Western Australia and disrupted mining there.
- In June, Rio hit a target of being able to produce 290M tons in the Pilbara on an annual basis, and plans to spend a further $2B to increase output by more than 20% within three years.
- Also reported a 23% increase in H1 copper production due to a stronger performance from the Kennecott mine in Utah, in which it holds a 30% stake, and the newly begun Oyu Tolgoi operation in Mongolia.
Jul. 7, 2014, 5:44 PM
- Vale (VALE) is an attractive mining investment as the cheapest of the three largest global iron ore producers, which include Rio Tinto (RIO) and BHP Billiton (BHP), Bernstein said in a report out today.
- Three reasons to like Vale, according to the Bernstein analysts: Shares are cheap at 4x 2014 EBITDA vs. 5.7 for RIO and 6.7 for BHP; pellets likely will gain more traction in the pollution conscious world, and 15% of Vale’s iron ore output is sold as pellets; and Vale's Zambia mine is expected to reach full capacity by 2015, giving the company a foothold in one of the world’s best new frontiers for copper production.
- The Bernstein bunch says they prefer Rio as the way to play iron ore, but Vale has leverage to nickel price appreciation.
Jul. 1, 2014, 7:58 AM
- Vale (VALE) threatens to quit a leading industry forum due to rival Rio Tinto's (RIO) lawsuit against it over the Simandou iron ore concession in Guinea, one of the world's largest undeveloped mining assets.
- The suit alleges that Vale and Israeli billionaire Beny Steinmetz colluded to rob Rio of half of the Simandou iron ore concession; both Vale and Steinmetz's mining arm BSG Resources have rejected the lawsuit's claims.
- The International Council on Mining and Metals is made up of 22 of the world's leading mining companies, including Vale, Rio, BHP Billiton and Glencore.
Jun. 27, 2014, 2:39 PM
- Glencore (GLCNF, GLNCY) has told the government of Guinea that it is interested in rights to develop the northern concession of the Simandou project, one of the world's most sought-after iron ore deposits, WSJ reports.
- BHP Billiton (BHP) and Arcelor Mittal (MT) also reportedly have notified Guinea that they could be interested in taking part in a tender.
- Glencore has little exposure to iron ore, but has said it isn't seeking out the kind of long-term investment required by Simandou, which would require billions of dollars in investment before making a profit.
- Earlier this year, the government revoked the license previously held by Vale (VALE) and BSG Resources, alleging BSG obtained the rights through corruption; Simandou's southern concession is being developed by a consortium led by Rio Tinto (RIO).
Jun. 27, 2014, 12:52 PM
- Rio Tinto (RIO) and Russian fertilizer producer Acron are moving ahead with development of the Albany potash prospect in Saskatchewan, Acron says.
- In its first disclosure of the size of the discovery, Acron says the project area contains 1.4B metric tons of inferred resources within the mining caverns at an average grade of 31% potassium chloride, with 329M metric tons recoverable.
- Rio’s rival BHP has invested in the larger Jansen potash project in Canada, but has pushed back production until at least 2020, looking for the right time to enter the currently oversupplied market.
Jun. 26, 2014, 8:45 AM
- Turquoise Hill (TRQ) says it has filed a notice of dispute with Mongolia's government following a recent audit report which claimed unpaid taxes, penalties and disallowed entitlements connected with the initial development of the Oyu Tolgoi copper mine.
- TRQ says it has paid all taxes and charges required, and that it "strongly disagrees" with the audit report.
- Next comes a 60-day period during which a settlement could be negotiated; if that fails, the dispute could be referred to international arbitration , a process that could add to the often delayed Oyu Tolgoi project.
- Rio Tinto (RIO) owns 50.8% of TRQ.
Jun. 23, 2014, 2:16 PM
- Vale (VALE +2.2%) is higher after China reported better than expected June flash manufacturing PMI data, but while iron ore prices may incrementally firm up from Chinese demand, Credit Suisse cuts its iron ore price outlook as it does not foresee any real strength ahead without the kind of broad based stimulus package the current Chinese administration has disavowed.
- The firm now forecasts iron ore to average only $90/ton in H2 of this year, and expects prices to average $89/ton next year and $87/ton in 2016.
- Plus, the big three Australian miners - Rio Tinto (RIO), BHP and Fortescue Metals (FSUMF) - are racing to expand production this year before Vale begins to contribute more meaningfully in 2015, meaning plenty of overseas supply should be expected.
Jun. 23, 2014, 12:27 PM
- Rio Tinto's (RIO +1.8%) $6.2B Oyu Tolgoi copper and gold project in Mongolia hits another snag, as Turquoise Hill Resources (TRQ -4.1%), the Rio-owned mining company that owns the rights to the mine, is handed a new audit claiming unpaid taxes and penalties.
- TRQ says it disputes the government's claims and that a failure to resolve the issue before the end of the month could jeopardize the mine's next phase of development.
- RIO and TRQ say they may consider taking Mongolia to international arbitration if they decide the new tax claim amounts to a breach of their investment agreement.
Jun. 12, 2014, 8:28 AM
- Morgan Stanley cuts its iron ore price estimate for this year and foresees a further drop in 2015, as a seaborne surplus grows faster than expected and the level of cost support at Chinese producers declines.
- Prices are expected to average $105/ton this year vs. $118 forecast in May and $135 in 2013, and average ~$90/ton in 2015, 21% below an earlier estimate.
- Iron ore has dropped below $92 for the first time since 2012 as mining companies boost output, betting that rising exports to China would more than offset lower prices.
- The firm downgrades Vale to Equal Weight from Overweight with a $15.20 price target.
- RIO -2.9%, CLF -2.8%, VALE -1.3%, BHP -1.2%, MT -1.2% premarket.
Jun. 10, 2014, 12:49 PM
- Iron ore prices have plunged by a third this year, hovering at ~$94/ton this week, thanks to the rapid growth in supply from Australia and other exporting nations, but Citi believes the supply surge is peaking in Q2 and that H2 of this year should see a leveling off in supply.
- While UBS is cautious, Citi says iron ore can find price support at $90/ton and that it sees prices back to $100/ton in Q4; if iron ore were trading at $90, China - a high-cost market - would have to cut 25% of its production, and other producers would have to curtail as well, Citi says.
- Iron ore miners are lower today: VALE -0.6%, RIO -1.1%, BHP -0.5%, CLF -0.7%.
Jun. 9, 2014, 11:28 AM
- Even as Rio Tinto (RIO -0.2%) has risen 23% in the past year while Vale (VALE +0.8%) has slipped 9%, and Rio trades at 10x forward earnings vs. Vale's 6.5x, analysts at Credit Suisse does not see a bargain opportunity for investors eyeing Vale.
- The firm sees Rio as the safer bet between the two, figuring investors prefer to see the money up front that at a time when iron ore pricing is soft.
- Also, Rio already has gone through large capital investments and is expected to step up sales volumes this year, but Vale is where Rio was a year ago and is not expected to ramp up production until 2016.
RIO vs. ETF Alternatives
Rio Tinto PLC is an international mining group that engaged on 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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