Mark Latham Commodity Equity Intelligence Service

Friday 10th February 2017
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files







    Macro

    Trump Says He Will Announce "Something Phenomenal On Taxes In Next 2-3 Weeks"


    After a few hours of relative calm, President Trump has injected some renewed chaos into capital markets this mornings after comments that he will release "something phenomenal on taxes in the next 2-3 weeks" among other things...

    “We are going to be announcing something over the next two or three weeks that will be phenomenal in terms of tax,” President Trump says in meeting with airline CEOs.

    USD spiked, bonds dumped, and gold dropped...

    http://www.zerohedge.com/news/2017-02-09/trump-says-he-will-announce-something-taxes-next-2-3-weeks-market-turmoils
    Back to Top

    Foreign Companies leave China

    Why foreign companies are shutting shop in China


    Sony Electronics, Marks & Spencer, Metro, Home Depot, Best Buy, Revlon, and L’Oreal – some of the big names to have closed Chinese operations



    US-based Seagate, the world’s biggest maker of hard disk drives, closed its factory in Suzhou near Shanghai last month with the loss of 2,000 jobs, in a move that has rekindled fears that China is becoming increasingly hostile towards foreign firms operating in the country.

    A passionate speech presented by Chinese president Xi Jinping at the World Economic Forum meeting in Davos in early January had been hoped to address the issue, and reassure investors that China’s remained open to foreign investment.

    Xi defended globalisation and promised improved market access for foreign companies, a positive sign seen by many that China is still sticking firmly to its opening up policies, first rolled out by late leader Deng Xiaoping in the 1980s.

    Yet, Seagate joined a spate of foreign companies to shutter operations in China in recent years, for various reasons, but most have attributed the country’s high tax regime, rising labour costs and fierce competition from domestic companies.

    Panasonic, for instance, stopped all its manufacturing of televisions in the country in 2015 after 37 years of operating in China.


    Back to Top

    Robust China trade data a boon for Asia as protectionist risks loom


    China posted much stronger-than-expected trade data for January as demand picked up at home and abroad, an encouraging start to 2017 for the world's largest trading nation even as Asia braces for a rise in U.S. protectionism under President Donald Trump.

    Trump criticized China, Japan and Germany last week, saying the three key U.S. trading partners were engaged in devaluing their currencies to the harm of U.S. companies and consumers.

    But he has not followed through yet on threats to label China a currency manipulator and slap heavy tariffs on Chinese goods, and took a major step on Thursday to improve ties by holding a phone call with President Xi Jinping.

    "China's trade data are going to be pretty good in the first part of this year because of the very good run that we had in the last part of 2016," said Louis Kuijs, head Of Asia economics at Oxford Economics in Hong Kong.

    "The worry we have is really about U.S. trade policy, which is undeniably turning more protectionist...It is pretty obvious to me that the climate for exports to the U.S. is going to be much harsher in the coming years."

    China's imports in January rose at the fastest pace in four years, fueled by a continued construction boom which is boosting demand and global prices for resources from copper to steel, preliminary customs data showed on Friday.

    The 16.7 percent bounce easily eclipsed an expected rise of 10.0 percent in a Reuters poll.

    China's imports from the United States rose 23.4 percent in January, the fastest pace in at least a year, while its monthly trade surplus with the U.S. dipped to $21.37 billion.

    Both Chinese and U.S. data show China's surplus with the U.S. narrowed last year, but it remained well above the sustained level of more than $20 billion that is one of three criteria used by the U.S. Treasury to designate another country as a currency manipulator.

    The surplus decreased $20.1 billion to $347.0 billion in 2016, the U.S. Commerce Department said Tuesday, while Chinese data put it somewhat lower.

    Led by electronics, China's January exports climbed the most in almost a year, adding to evidence that Asia's long trade recession may be bottoming out.

    January shipments rose 7.9 percent, more than twice as much as expected, after 2016 exports slumped nearly 8 percent.

    China had been lagging a recent export recovery seen in Japan, South Korea and Taiwan, dragging on the regional supply chain. Its integrated circuit shipments rose 14.5 percent last month, while exports of mobile phones rose 7.9 percent.

    That left the country with a initial trade surplus of $51.35 billion for the month, the highest in a year. Customs is due to release updated data for trade on Feb. 23.

    "The export outlook for China is good, except for the potential risk of a Sino-U.S. trade war. The most important risk for China is what the Trump administration will do," Jianguang Shen, chief economist at Mizuho Securities in Hong Kong.

    China watchers warned the long Lunar New Year holidays may have distorted the data to some degree, with companies pumping up production or rushing to build inventories before the break, which can last for weeks.

    But most economists agreed the trend backed the view that manufacturing demand is improving in China and globally.

    MAN OF STEEL

    The world's second-largest economy continued to hoover up commodities ranging from coal and iron ore to soybeans.

    Iron ore imports were the second highest on record, while crude oil imports were the third highest ever. Coal purchases also soared, for use in both power generation and steelmaking.

    "Steel mills are making really good money. So that means they can afford to pay for more iron ore," said Lachlan Shaw, an analyst at UBS in Melbourne, adding that government efforts to reduce excess capacity were aiding the trend.

    Chinese futures prices for steel reinforcing bars used in construction have surged some 80 percent since last February, adding to views that price pressures are slowly building in the economy.

    But analysts are not sure how much longer the commodities buying frenzy will last, noting that inventories are building up at Chinese ports and pointing to signs that a year-long housing boom is cooling off.

    http://www.reuters.com/article/china-economy-trade-idUSL4N1FV278

    Attached Files
    Back to Top

    Concerns about illicit funding flows dog mining companies in Africa

    Concerns about illicit funding flows dog mining companies in Africa

    A World Bank report has raised concerns about tax compliance by mining companies in Africa, tax loopholes and the illicit flow of funds in a range of African countries.

    The report, ‘Transfer Pricing in Africa, with a focus on Africa’, has shown that several countries on the continent have struggled to achieve a tax to gross domestic product ratio of 15%, against an average of over 33.6% for Organisation for Economic Cooperation and Development countries since 2000.

    “It is critical that African jurisdictions continue to pay a fair amount of taxes on the profits generated in a country,” World Bank lead mining specialist Boubacar Bocoum told delegates at the 2017 Investing in African Mining Indaba, in Cape Town.

    He said the report, compiled by an international team of mining and tax experts, would support a series of workshops with African tax officials starting early this year.
    The report says multinational enterprises (MNEs) often undercharge for mineral products they export and overpay for routine corporate services and specialised goods and services, such as insurance and logistics. By doing this, they reduce the profit of the mining subsidiary and the tax collected in the host country.

    “While some tax practices may be technically legal, it may be argued they are ethically questionable,” says the report.

    MNEs have tended to structure their businesses by consolidating high-value functions and related intangible assets in hubs that provide goods and services to their global operations. They locate them in low-tax jurisdictions or in jurisdictions allowing the establishment of preferentially taxed special purpose entities.

    The way MNEs organise their global corporate structures often leads to the eroding of the tax base of the host country as profit is shifted abroad. The functions of the miningsubsidiaries are often stripped down to mostly routine activities using primarily less skilled employees and tangible assets, the report reveals.

    The report says few mining companies are fully vertically integrated, while, increasingly, mining companies are entering into cross-border transactions which provide for high-value, specialised services and assets and financing.

    The World Bank has called on tax authorities to question whether the profits of mining subsidiaries and of overseas related customers and service providers match the value actually added by each of them.

    The report says African governments need to look at how to strengthen their capacity in the area of tax administration. They have to research the structures, value chain characteristics and processes of the mining industry in their countries.

    “While most jurisdictions already have adequate legislation, the challenge now is to put in place supporting regulations, structures and adequate administrative capacity to effectively enforce it,” suggests the study.

    The report says the “extreme complexity and artificiality” of some multilayered structures shows evidence that some conduit companies are effectively just “mailboxes” with no clear business purpose, adding little or no value. There are indications that they are primarily designed to cut the tax paid by multinational companies at the consolidated level.

    Civil society participants attending the special session on transparency within mining, also raised deep concern, saying mining companies were not open and transparent.

    http://www.miningweekly.com/article/concerns-about-illicit-funding-flows-dog-mining-companies-in-africa-2017-02-09
    Back to Top

    Chinese exchanges block Bitcoin withdrawals


    At least two of China's biggest bitcoin exchanges announced they are blocking customers from withdrawing their bitcoins. It was down as much as 10% before paring its losses. The announcements follow Wednesday's meeting between the People's Bank of China and the bitcoin exchanges.

    Thursday's announcements are notable because nearly 100% of all bitcoin transactions take place on Chinese exchanges. The cryptocurrency has had a wild start to 2017 after gaining 120% in 2016, becoming the top performing currency two years in a row.

    Bitcoin started 2017 with a gain of more than 20% in the opening week of the year before crashing 35% on concerns China was going to start cracking down on trading. Recently, China's largest bitcoin exchanges announced they would charge a flat fee of 0.2% on all transactions.  

    Thursday's steep slide has pushed bitcoin to its lowest level since the final trading day of January.  It is still higher by 3.6% for the year.

    http://uk.businessinsider.com/bitcoin-price-february-9-2017-2017-2?r=US&IR=T
    Back to Top

    Oil and Gas

    OPEC Keeps Its Promise About Crude Oil Cuts, IEA Says


    OPEC achieved the best compliance rate in its history at the outset of an accord to clear the oil glut, a plan that’s being supported by surprising strength in demand, the International Energy Agency said.

    The Organization of Petroleum Exporting Countries implemented 90 percent of promised output cuts in January, the first month of its agreement, as key member Saudi Arabia reduced production by even more than it had committed, the agency said. Resilient oil demand is aiding OPEC’s bid to re-balance world markets, growing more than expected last year and poised to do so again in 2017.

    OPEC “appears to have made a solid start to what is a six-month process,” said the Paris-based IEA, which advises most of the world’s major economies on energy policy. “The first cut is certainly one of the deepest in the history of OPEC output cut initiatives.”

    OPEC and Russia are leading a push by global oil producers to end a three-year oil surplus that has depressed prices and battered the economies of energy-exporting nations. While their pact initially sparked a 20 percent rally in oil prices, gains have since faltered on concern that U.S. shale drillers could revive output and undo OPEC’s efforts.

    The IEA increased its 2016 estimates for world oil demand growth for a third month, and boosted its outlook for 2017, anticipating an increase of 1.4 million barrels a day this year.

    World oil inventories will fall by 600,000 barrels a day during the first half of the year if OPEC sticks to its agreement, the IEA said. While stockpiles in industrialized nations have declined for five months in a row, and fell in the fourth quarter by the most in three years, they remain significantly above average levels.

    “This stock draw is from a great height,” said the IEA. “The continued existence of high stocks,” plus concern that OPEC’s cuts will only stimulate supplies elsewhere, explains why oil prices remain capped in the mid-$50s, according to the agency.

    OPEC is being joined by 11 non-members including Russia and Kazakhstan, who collectively agreed to reduce supply by 558,000 barrels a day. While the agency didn’t give an estimate for compliance among these countries in January, its projections assume they will curtail output.

    Even if those reductions are made, total supply from outside OPEC will increase by 400,000 barrels a day this year after plunging in 2016, due to gains in Brazil, Canada and the U.S. Non-OPEC nations will pump an average of 58 million barrels a day in 2017, about 100,000 a day more than predicted in last month’s report.

    The 11 OPEC nations bound by the accord reduced output by 1.12 million barrels a day to 29.93 million a day last month, with Saudi Arabia delivering 116 percent of the curbs it had promised.

    While the IEA based its estimate of compliance on how much of the total cut OPEC delivered, the group also set a collective target for its members at the level needed to reduce inventories. With output rising from the two members exempt from making cuts -- Libya and Nigeria -- OPEC’s compliance with that total is only about 60 percent, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.

    https://www.bloomberg.com/news/articles/2017-02-10/opec-attains-record-90-of-output-cuts-as-demand-grows-iea-says?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social

    Attached Files
    Back to Top

    Total Lifts Dividend, Plans Growth as Profits Beat Estimates


    Total SA raised its dividend by 1.6 percent and said it may give the go-ahead for almost a dozen new projects in the next 18 months after fourth-quarter profit beat analysts’ estimates.

    “We’re going to propose to increase the dividend as we have confidence in the future,” Chief Executive Officer Patrick Pouyanne told reporters in Paris. “My goal is to launch new projects to prepare the future, while remaining disciplined and cutting costs further because crude prices might drift lower.”

    Total’s confident appraisal of the year ahead belied what was otherwise a difficult fourth quarter for major oil companies. The French producer’s peers BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp. all fell short of analysts’ estimates as rising profits from oil and gas production failed to fully offset weaker earnings from refining and trading.

    Total’s adjusted net income climbed 16 percent from a year earlier to $2.41 billion due to rising oil and gas production and cost cuts, the company based in Courbevoie near Paris said Thursday. Analysts polled by Bloomberg had expected a profit of $2.23 billion.

    “We view this as a solid release, with a small beat to consensus, further cost-reduction targets and a small hike in dividend signaling management confidence,” Goldman Sachs Group Inc. analysts wrote in a note.

    Total shares gained as much as 2 percent and were up 0.6 percent at 47.10 euros as of 11:22 a.m. in Paris. The stock has climbed 28 percent in the past 12 months.

    Funding Dividend

    Adjusted net operating income jumped 51 percent from a year earlier to $1.13 billion in Total’s exploration and production business, and rose 13 percent to $1.14 billion in the refining and chemicals division. After writing down the value of gas assets in Australia, Angola and the U.K. due to falling oil and gas prices, Total reported net income of $548 million compared with a loss of $1.63 billion a year earlier.

    The company said it would raise its quarterly dividend by 1 cent to 62 euro cents, the first increase in three years, while maintaining the option for shareholders to be paid with new Total shares. It said it should be able to fund operations and the cash part of its dividend without needing to borrow with crude at about $50 a barrel this year -- $5 lower than both its September estimate and the current price of Brent crude.

    Exxon and Shell both said in the past week that cash flow covers their spending and dividends at current oil prices, while the U.K.’s BP needs Brent to rise to $60 a barrel this year to achieve that goal.

    Investment Decisions

    The price rebound and lower drilling costs have encouraged Total to sign preliminary deals to produce gas in Iran and invest in oil projects from Brazil to Uganda. The final go-ahead for Iran’s South Pars 11 project may be made “before the summer” if the U.S. doesn’t impose new sanctions on Iran, the CEO said. The Libra 1 project in Brazil may also be approved within a similar time frame, Pouyanne said.

    The company said it plans to make final investment decisions on 10 oil and gas production projects in the next 18 months, in countries including Nigeria, Angola, Azerbaijan and Argentina. It also expects to decide on a petrochemical project at Port Arthur in the U.S. this year. Total reiterated its plan to boost oil and gas production by 5 percent a year from 2014 to 2020.

    The company also said that:
    * Output increased by 4.7 percent in the fourth quarter from a year earlier to 2.462 million barrels of oil equivalent a day; volumes will rise by more than 4 percent this year
    * Operating costs were cut by $2.8 billion last year compared with 2014
    * Targeted savings to climb to $3.5 billion in 2017 and $4 billion in 2018
    * Organic investments including resource renewal will be between $16 billion and $17 billion in 2017, down from $18.3 billion in 2016
    * Net debt rose to $27.1 billion at the end of 2016 from $26.6 billion a year earlier
    * It may divest as much as $2 billion of pipelines and small fields this year after completing the $3.2 billion sale of its Atotech unit last month

    https://www.bloomberg.com/news/articles/2017-02-09/total-raises-dividend-plans-growth-as-earnings-beat-estimates.

    French oil company Total is on the hunt to buy assets from struggling rivals, it said on Thursday, after reporting better than expected fourth quarter net profit thanks to cost cuts, and raising its dividend.

    "We are in a field of opportunities," Pouyanne told reporters. "After two years of very low prices, there are companies around the world that have good assets but are struggling."

    http://www.reuters.com/article/total-results-idUSL5N1FU1JC
    Back to Top

    Iran takes market share from OPEC rivals


    Rise in flows bucks OPEC trend, bodes well for heavy crudes Iran's crude oil and condensate exports rose 3% month on month in January as it continued to regain market share, widening its appeal among refiners around the globe in the process.

    * Iran's oil exports rise 3% in January
    * India emerges as largest crude buyer

    Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in January climbed to 2.162 million b/d from 2.102 million b/d in December, data from cFlow, S&P Global Platts trade flow software, showed.

    Iran was the only Middle Eastern producer to see exports rise in January, as others, like Iraq, Kuwait, Saudi Arabia, and the UAE, saw a fall in loadings, in line with agreed OPEC-led output cuts by crude producers. Unlike its peers under the landmark OPEC-led agreement, Iran has wiggle room to boost production to 3.80 million b/d.

    Iranian crude is similar in quality to barrels from other OPEC countries in its region, meaning this is an ideal time for it to broaden its customer base, sources said. Output in January rose to 3.72 million b/d, up 30,000 b/d from December, a monthly survey of OPEC output by Platts found, meaning Iran seems intent on reclaiming ground lost under years of sanctions that crippled its oil sector.

    One of the main reasons for the rise in output has been a gradual increase in production from the South Azadegan field, in the strategic West Karun region, according to sources and oil ministry officials. In recent months, Iran has signed a number of upstream development deals as part of its plans to boost oil and gas exports to pre-sanctions level of four million b/d.

    CRUDE EXPORTS TO ASIA RISE

    Exports to Asia accounted for 61%, or 1.323 million b/d, of outflows, marking an increase of almost 200,000 b/d from December. India emerged as the largest buyer of Iranian crude, with exports in January totaling 571,387 b/d, more than double the 281,065 b/d in December.

    Rising demand for Iranian crude from India bodes well for Iran, as the South Asian country is one of the main drivers of oil demand growth this year. The bulk of these exports traveled to Essar Oil's 400,000 b/d Vadinar refinery on the west coast of India, the second-largest privately held refinery in India, after Reliance Industries' Jamnagar plant.

    Essar Oil is one of the biggest buyers of Iranian crude and its purchases have increased significantly post-sanctions, boosted by the ease of using of shipping insurance, as its refinery relies heavily on sour crudes from the Persian Gulf and Latin America.

    The rest of the loadings to India went to the country's newest refinery at Paradip operated by IOC along with refineries in Chennai and New Mangalore.

    Exports to China in January fell to 369,484 b/d from 413,710 b/d the previous month. China was the largest buyer of Iranian crude in 2016, averaging more than 600,000 b/d, according to estimates by Platts.

    China's interest in crude priced off Dated Brent, like grades from the North Sea and West Africa, has increased as the OPEC-led cuts have decreased exports from countries like Iraq, Kuwait, Saudi Arabia and the UAE, narrowing the spread between the Platts Dated Brent and Platts Dubai benchmarks.

    Japan, a major buyer of Iranian condensate, saw its interest fall month on month to 212,161 b/d in January, down 35,678 b/d. But flows to South Korea rose to 170,839 b/d from 119,774 b/d in December. South Korean imports of Iranian oil jumped sharply last year, up 164% to 112 million barrels, according to Korea National Oil Corp. data.

    This rise is attributable to more condensate imports, as oil refiner Hyundai Oilbank started commercial operations at its 130,000 b/d condensate splitter in November. The splitter is running mainly on South Pars condensate as a feedstock, traders said, along with some Qatari condensates.

    Trading sources also said South Korean refiners found Iranian oil more price-competitive than other oil suppliers in the Middle East. In Europe, Turkey and France were the major destinations, with 209,774 b/d and 170,419 b/d, respectively, exported from Iran in January.

    Demand from Greece, Italy and Spain fell month on month but traders have said European refiners remained interested in Iranian crude due to its competitive pricing. The cracking margins in Europe for Iran Heavy compared with Saudi Arabia's Arab Medium are also providing better yields, sources said.

    OLD CRUDE BUYERS RETURN

    Last month, the International Group of P&I Clubs said it will soon provide nearly full coverage of reinsurance of around $7.8 billion per tanker for shipping Iranian oil, in addition to resuming reinsurance coverage for the National Iranian Tanker Co.'s oil tankers. That can boost Iran's already increasing oil exports as ongoing US sanctions had created hurdles on the availability of ships to carry Iranian barrels, sources said.

    With it now easier for a wider pool of charterers and shipowners to transport and trade Iranian oil, the past month saw some old buyers returning. In the next few days, two Iranian VLCCs -- the Huge and the Snow -- will discharge a mix of Iranian heavy and light crude grades in the Rotterdam refining hub for the first time in five years.

    The National Iranian Oil Company sold a cargo of Iranian Light crude to Indonesia's state-owned Pertamina for February loading as a test sale, the first direct crude sale between NIOC and Pertamina for around 15 years, according to sources close to the matter.

    The Philippines' PNOC has also recently signaled it was seeking to resume crude oil imports from Iran. PNOC president and CEO Pedro Aquino said recently his company and NIOC were in negotiations for the long-term sale of four million barrels of Iranian crude oil per month to the Philippines.
    Back to Top

    Indonesia needs $70-80 bil in gas investments to avoid shortage: Pertamina


    Indonesia needs to invest $70 billion to $80 billion in gas infrastructure through 2030 to avoid a potential gas shortage, as domestic consumption growth outpaces supply, state-owned energy business Pertamina said Tuesday.

    An expanding economy and growing middle class are the key drivers of energy consumption, which continues to grow by around 4-5% a year.

    Natural gas accounts for approximately 15% of the country's energy needs, and its growth is primarily supported by expanding demand from the power, refinery, fertilizer and transport sectors.

    "Indonesia needs new investment to explore and develop new gas resources and to build gas infrastructure," said Yenni Andayani, chairman of Indonesia Gas Society and acting president director of Pertamina.

    "Gas infrastructure investment requires coordination with all stakeholders, incentives, competitive prices and a good domestic investment climate," he said, at the opening of the International Indonesia Gas Conference and Exhibition 2017.

    Indonesia is a major LNG supplier, with Bontang, Tangguh and Donggi Senoro LNG facilities having produced a total of 18.83 million mt of LNG in 2016, up by 4.3% from the 8.05 million mt produced in 2015, according to Platts Analytics.

    Of the total, 3.016 million mt was delivered to one of Indonesia's three import terminals supplying the highly populated centers of Java and Sumatra, up by more than 30% from 2.281 million mt received in 2015.

    At current gas demand growth rates, there could be a supply gap of 27.9 Bcm by 2025, the equivalent of more than 20 million mt of LNG, Platts has previously reported.

    The country, which has not yet imported LNG from the international markets, is to import 1.52 million mt/year from 2019, as part of a 20-year contract between Pertamina and Houston-based Cheniere Energy.

    Indonesia's proven reserves stand at 3.7 billion barrels of oil and 101.54 Tcf of gas.

    Crude oil production peaked at 1.6 million b/d in 1995 and has since been declining, owing to ageing fields and limited investor interest due to the country's complex bureaucracy and contract system. Indonesia produced 831,000 b/d in 2016.

    Gas production is expected to rise to 9.35 Bcf/d over the next few years from 8 Bcf/d currently, but growth in demand is expected to outpace supply.

    http://www.platts.com/latest-news/natural-gas/singapore/indonesia-needs-70-80-bil-in-gas-investments-27765422
    Back to Top

    Eni CEO charged with international corruption


    Italian prosecutors have reportedly charged Eni and its CEO Claudio Descalzi with international corruption over the controversial acquisition of an offshore block in Nigeria in 2011.

    Apart from Descalzi, the charge reportedly extends to the former CEO Paolo Scaroni and nine other people involved in the $1.3 bilion deal. Scaroni served as the Chief Executive Officer of Eni  from June 2005 to May 2014, when he was succeeded by Descalzi.

    According to the Financial Times, apart from Eni and its former and current members, Shell has also been charged.

    This is continuation of the case stemming from Eni’s and Shell’s joint acquisition of the block named OPL 245 in Nigeria. In 2014, the Milan Prosecutor’s office launched an investigation to see where the payment went and whether Eni and Shell knew, as it has been alleged that the money didn’t end up in the state coffers but was passed on further to the former oil minister Dan Etete.

    Both Eni and Shell have been denying any wrongdoing ever since the start of the investigation.

    In a statement on Thursday, responding to latest info on the Italian prosecutors seeking trial for Descalzi, Eni’s Board again denied any wrongdoing and backed up its CEO.

    The company said: “With regard to the news reported by the media on the request for trial by Milan prosecutors relating to the 2011 acquisition of a stake in OPL 245 in Nigeria, Eni’s Board of Directors, following an in-depth legal analysis, confirms its total confidence that Eni is entirely free of any involvement in the alleged corrupt conduct subject to investigation.

    The Board of Directors also confirms its total confidence that the company’s CEO, Claudio Descalzi, was not involved in any way in the conduct under investigation, and maintains their upmost support for him as CEO. The Board of Directors also confirms its total confidence in the judiciary.”

    http://www.offshoreenergytoday.com/report-eni-ceo-charged-with-international-corruption/
    Back to Top

    UAE's Dana Gas freezes Egypt investments over debts


    Dana Gas will not make new investments in Egypt because of delays in obtaining payments owed to it there, the chief executive of the United Arab Emirates company said.

    Political and economic turbulence in Egypt and Iraqi Kurdistan mean Dana has struggled to secure revenues in either country, once again hitting its profit on Thursday.

    Dana posted a $7 million net profit in the three months to Dec. 31, versus $134 million in the same period of 2015 when it benefited from a one-off legal settlement. Shares in Dana fell 3.7 percent following the results.

    The amount owed by Egypt was $265 million as of Dec. 31, up from $221 million at the end of 2015, Dana said. Unpaid receivables from the Kurdistan Regional Government were $713 million, down slightly from $727 million in 2015.

    "As uncertainty remains we must therefore be rigorous in balancing any additional capital investment in Egypt with actual collections," CEO Patrick Allman-Ward told reporters.

    Dana will complete current Egyptian investments in critical health, safety, security and environmental areas and all of its up-and-running projects, but all non-critical projects have been paused since the start of the year, he said.

    The Egyptian government has been seeking to draw foreign investors back to its energy sector to boost shaky public finances, but it has failed to meet self-imposed deadlines for paying back international oil companies.

    Dana had thought that part of a $12 billion loan from the International Monetary Fund loan agreed with Egypt in November would be used for payments to the petroleum sector, but the money had been "used for other purposes", Allman-Ward said.

    He now hoped part of a combined $5.5 billion that Egypt has secured through an international bond issue and loans from the World Bank and African Development Bank would be used to meet outstanding petroleum debts.

    Dana's investment freeze would be reviewed once it had been paid by the Egyptian government, Allman-Ward said, adding that the company wanted to continue developing its assets there.

    Production from Egypt in the fourth quarter rose to 40,500 barrels of oil equivalent per day (boepd), up 31 percent on the year-ago period, Dana said, although it took a $20 million charge last year because of currency depreciation.

    http://www.reuters.com/article/dana-results-idUSL5N1FU0GW
    Back to Top

    Iraq's Basra oil export terminal resumes loadings after 24 hour halt


    Iraq's main oil export terminal, off the southern city of Basra, resumed loading after a 24-hour halt because of work to install a new pipeline feeding the facility, an executive at state-run South Oil Co said on Thursday.

    Loadings stopped at midnight Tuesday and resumed midnight Wednesday, he said.

    The terminal's loading capacity is estimated at around 1.8 million barrels per day (bpd).

    Loading offshore at three single-point moorings (SPMs) connected with the Basra terminal was not affected.

    OPEC's second-largest producer after Saudi Arabia, Iraq exported a record 3.51 million bpd in December from the southern ports.

    http://www.reuters.com/article/iraq-energy-oil-shipping-idUSL5N1FU14O
    Back to Top

    South Korea's KOGAS says interested in U.S. shale gas projects


    Korea Gas Corp (KOGAS), the world's No.2 buyer of liquefied natural gas (LNG), would be "interested" in participating in U.S. shale gas projects, with such investment curbing any potential trade pressure on South Korea from the U.S. government.

    U.S. President Donald Trump, who has dropped out of the 12-nation Trans-Pacific Partnership pushed by his predecessor Barack Obama, has repeatedly criticized the trade policies of South Korea's neighbors, Japan and China.

    "U.S. trade pressure is likely to increase, but U.S. gas investments can work as a tool against trade pressure," Lee Seung-hoon, CEO of state-run KOGAS, said at a forum in Seoul.

    Expected to become an importer of LNG just a decade ago, the shale gas revolution in the United States unlocked cheap, abundant gas supplies, allowing the country to become an exporter instead.

    Benefiting from the Panama Canal expansion last year that allows bigger ships to cross from the Gulf of Mexico into the Pacific, it has been pushing to ship more cargoes to meet surging demand in parts of Asia.

    "Securing U.S. shale gas is crucial because it's an important resource," said Lee, adding that such imports would help keep its supplies stable.

    KOGAS in 2012 signed a deal with Texas-based Cheniere to bring in 2.8 million tonnes of LNG annually for 20 years starting from this year. Lee said the first cargoes from the deal were expected to arrive in South Korea this summer.

    Lee also said that the company could eventually import LNG from both the United States and Iran without so-called 'destination restrictions', or clauses in contracts that limit possible buyers for any resales of the cargoes.

    "When new suppliers enter, they cannot request destination restrictions ... we can secure supplies that don't carry destination restrictions," he said.

    Iran, despite having some of the world's biggest natural gas reserves, does not have LNG export facilities, so shipping its gas to South Korea would require vast investment and would take many years to develop.

    But Lee said that South Korean demand for LNG would keep falling in the short-term due to increased electricity output from nuclear and coal-fired power plants. The country is the world's second-biggest LNG importer after Japan. 

    "This year South Korea's LNG demand is expected to remain flat at around 30 million tonnes," Lee told Reuters on the sidelines of the event.

    http://www.reuters.com/article/us-southkorea-lng-kogas-idUSKBN15P02U
    Back to Top

    Occidental Petroleum loss bigger than expected due to higher costs


    Oil and gas producer Occidental Petroleum Corp reported a larger-than-expected quarterly loss as a rise in oil prices failed to offset higher costs, and the company said it expected to spend less this year than it had originally estimated.

    The company said it expects to spend $3.0 billion to $3.6 billion this year, lower than a preliminary estimate of $3.3 billion to $3.8 billion it gave in November.

    Occidental spent under $3 billion last year.

    Global oil prices have rallied, thanks in part to OPEC's decision to cut supply, prompting oil and gas producers to ramp up spending.

    Occidental's total cash operating costs rose nearly 19 percent per barrel of oil equivalent (boe) in the fourth quarter ended Dec. 31.

    However, operating costs per boe in Texas' Permian Basin - the focus of Occidental's oil and gas operations - fell 25 percent.

    General, administrative and other expenses shot up 38 percent per boe, while exploration expenses rose 31 percent.

    Total production fell to 607,000 boe per day, on average, from 680,000, a year earlier.

    Net loss attributable to shareholders narrowed to $272 million or 36 cents per share, from $5.18 billion or $6.78 per share a year earlier. (bit.ly/2lrI7sS)

    The year-ago quarter included impairment and related charges of $4.9 billion.

    Core loss was 13 cents per share, much steeper than the analysts' average estimate of 2 cents, according to Thomson Reuters I/B/E/S.

    http://www.reuters.com/article/occidental-results-idUSL4N1FU3ZG
    Back to Top

    CONSOL Energy Announces 11% Increase in Proved Reserves to 6.3 Tcfe

    CONSOL Energy Announces 11% Increase in Proved Reserves to 6.3 Tcfe

    CONSOL Energy Inc. today announced total proved reserves of 6.3 Tcfe, as of December 31, 2016, which is an 11% increase compared to the previous year. Oil, condensate, and liquids account for 423 Bcfe, or 6.8%, of the 6.3 Tcfe total proved reserves, of which the Marcellus and Utica Shale represent 99% of these heavier hydrocarbons.

    During 2016, CONSOL Energy added 720 Bcfe of proved reserves through extensions and discoveries, which resulted in CONSOL Energy replacing 183% of its 2016 net production of 394 Bcfe.

    In 2016, total capital costs incurred were $165 million. Total capital costs incurred divided by the summation of 720 Bcfe for extensions and discoveries, 1,444 Bcfe for the purchase of reserves in-place, negative 871 Bcfe for the sale of reserves in-place, and negative 290 Bcfe for revisions, yields an all-in finding and development (F&D) cost for proved reserve additions of $0.16 per Mcfe.

    In 2016, drilling and completion costs incurred directly attributable to extensions and discoveries were $144 million. When divided by the extensions and discoveries of 720 Bcfe, this yields a drill bit F&D cost of $0.20 per Mcfe, compared to $0.66 per Mcfe at year-end 2015.

    Future development costs for proved undeveloped (PUD) reserves are estimated to be approximately $1.191 billion, or $0.46 per Mcfe, compared to $0.48 per Mcfe at year-end 2015.

    http://boereport.com/2017/02/08/consol-energy-announces-11-increase-in-proved-reserves-to-6-3-tcfe/
    Back to Top

    BHP approves Mad Dog 2


    Diversified giant BHP Billiton has approved a $2.2-billion investment for its share of the Mad Dog Phase 2 development, in the Gulf of Mexico.

    The Mad Dog Phase 2 project, in which BHP holds a 23.9% interest, is a southern and south-western extension of the existing Mad Dog field, and includes a new floating production facility with the capacity to produce up to 140 000 gross barrels of crude oil a day from 14 production wells.

    Production is expected to start in 2022.

    “Mad Dog Phase 2 is one of the largest, discovered and undeveloped resources in the Gulf of Mexico, one of BHP Billiton’s preferred conventional deep water basins,” said BHP’s president for petroleum, Steve Pastor.

    “It offers an attractive investment opportunity for BHP and aligns with our strategic objective to build our conventional portfolio through the development of large, long-life, high quality resources.”

    The Mad Dog field is operated by oil major BP, which olds a 60.5% interest in the project, with the balance of the asset belonging to Union Oil Company.

    The project was placed on ice in 2013 after the initial designproved too complex and costly, however, in December of last year BP sanctioned the $9-billion Mad Dog Phase 2 projectafter the project partners worked to simplify and standardize the platform design, reducing the overall project cost by some 60%.

    The Mad Dog 2 platform will be moored about six miles to the south-west of the existing Mad Dog platform, which has a capacity to produce 80 000 bbl/d of oil and 60-million cubic feet a day of natural gas.

    http://www.miningweekly.com/article/bhp-approves-mad-dog-2-2017-02-09

    Attached Files
    Back to Top

    Alternative Energy

    Solar better for jobs than Coal

    There are now twice as many solar jobs as coal jobs in the US

    Updated by Brad Plumer@bradplumerbrad@vox.com 
    Green workers install a residential grid-tied solar array on a hillside in Malibu, California, USA.
     (Citizen of the Planet/Education Images/UIG via Getty Images)

    Putting solar panels on rooftops and arrays is a labor-intensive process. You need people to design and manufacture the panels. Then people to market the panels to homes, businesses, and utilities. Then people to come and install them.

    It all adds up to a lot of jobs. Even though solar power still provides just a fraction of America’s electricity — about 1.3 percent — the industry now employs more than 260,000 people, according to a new survey from the nonprofit Solar Foundation. And it’s growing fast: Last year, the solar industry accounted for one of every 50 new jobs nationwide.

    The chart below breaks it down by job type. The majority of solar jobs are in installation, with a median wage of $25.96 per hour. The residential market, which is the most labor-intensive, accounts for 41 percent of employment, the commercial market 28 percent, and the utility-scale market the rest:

     (The Solar Foundation)

    To put this all in perspective: “Solar employs slightly more workers than natural gas, over twice as many as coal, over three times that of wind energy, and almost five times the number employed in nuclear energy,” the report notes. “Only oil/petroleum has more employment (by 38%) than solar.”

    Now, mind you, comparing solar and coal is a bit unfair. Solar is growing fast from a tiny base, which means there's a lot of installation work to be done right now, whereas no one is building new coal plants in the US anymore. (Quite the contrary: Many older coal plants have been closing in recent years, thanks to stricter air-pollution rules and cheap natural gas.) So solar is in a particularly labor-intensive phase at the moment. Still, it’s worth thinking through what these numbers mean.


    Back to Top

    Agriculture

    China forecasts corn imports at decade low, spooking exporters

    China forecasts corn imports at decade low, spooking exporters

    China's forecast on Thursday of a drop in corn imports to their lowest in at least a decade may end a years-long bonanza for global merchants and producers as maize prices in the world's biggest grains market have dropped below global prices.

    In its monthly crop report, the Ministry of Agriculture forecast imports for the 2016/2017 crop year that ends in September as low as 800,000 tonnes, down 200,000 from last month's estimate.

    That would be down from 3.2 million tonnes for the calendar year 2016 and a third of the average for the past decade.

    Other estimates, however, point to higher imports for the year. The U.S. Department of Agriculture expects imports at 3 million tonnes and state think-tank National Grain and Oils Information Center estimates 2 million tonnes.

    Still, the drop reflects the waning appetite for foreign grain after the government abandoned its longstanding price support program last year.

    It will likely spook global merchants and producers that enjoyed a prolonged boon in business as the world's second-largest economy scooped up foreign crops to feed its growing urban population and livestock.

    Removing the price supports has shifted the long-held premium of domestic corn over international prices to a discount.

    Last month, Chinese corn traded at a rare discount of 120 yuan ($17.48) to duty-paid imports in southern ports last month, the report said. That is down from a premium of 1,000 yuan per tonne in recent years.

    China will eventually need imports once it has reduced its stocks and the price gap may diminish if physical prices catch up with the rally in Chinese corn futures.

    The import decline could combine with bumper crops in the United States and other major producers to lower global prices further. U.S. corn futures are languishing close to multi-year lows.

    Ukraine accounted for the majority of last year's imports, followed by the United States. [GRA/CN]

    Traders said they do not expect a pick-up any time soon. Meng Jinhui, analyst with COFCO Futures, said the arbitrage should remain in favor of domestic farmers until at least July.

    The forecast provides further evidence that 2017 could be a pivotal year for China as Beijing doubles down on efforts to boost domestic demand and curb output to get rid of its ageing reserve and reduce imports.

    Chinese corn futures rose to an 18-month high this week on expectations for an inventory decline. Prices have gained 20 percent since Sept. 30.

    http://www.reuters.com/article/us-china-crops-corn-imports-idUSKBN15O0ZO

    Attached Files
    Back to Top

    Agrium Q4 profit falls two-thirds as fertiliser market slump weighs


    Calgary, Alberta-based fertiliser producerAgrium Inc, which controls the largest retail distribution network in North America, has reported a 67% slide in net fourth-quarter earnings attributable to equity holders of $67-million, or $0.49 a share.

    The company, which is in the process of merging with Canadian counterpart PotashCorp of Saskatchewan to create a new $36-billion entity, attributed the reduction in net earnings to lower year-over-year nutrient pricing.

    Sales for the year fell 5% to $2.3-billion.

    Despite president and CEO Chuck Magro stating that Agrium has been encouraged by the recent firming in global nutrient markets and the company anticipating solid demand for crop inputs in the coming spring application season, Agrium announced its 2017 guidance range of $4.50 to $6.00 diluted earnings a share, which falls short of average Wall Street analyst forecasts calling for full-year earnings of $5.45 a share.

    http://www.miningweekly.com/article/agrium-q4-profit-falls-two-thirds-as-fertiliser-market-slump-weighs-2017-02-10
    Back to Top

    Precious Metals

    Goldcorp buys back gold stream on giant Chile project


    World number four gold producer Goldcorp announced on Wednesday it's acquiring New Gold’s 4% gold stream on its El Morro project in Chile for $65 million in cash.

    El Morro is part of a joint venture between Goldcorp and Teck Resources. The Vancouver-based companies merged the El Morro and Relincho deposits in  2015 to create NuevaUnion in the Atacama region of Chile. Goldcorp bought New Gold's 30% share in El Morro for $90 million cash plus the stream at the same time the merger was announced.

    The partners hope to complete a pre-feasiblity study on the giant project in the second half of this year. NuevaUnion is expected to cost around $3.5 billion to bring into production. Ore would be transported from the El Morro to a mill and concentrator facility at Relincho with an initial capacity of 90kt – 110kt a day.

    NuevaUnion will have a 32-year lifespan and produce an average of 190kt copper and 315koz gold a year, over the first decade. NuevaUnion is located 4,000m above sea level and the underground operation, like many in Chile, will rely on desalinated water.

    http://www.mining.com/goldcorp-buys-back-gold-stream-giant-chile-project/
    Back to Top

    RBPlat to post FY earnings in turnaround from 2015 losses


    JSE-listed Royal Bafokeng Platinum(RBPlat) expects to report earnings per share (EPS) of between 81c and 92c and headline earnings per share (HEPS) of between 80c and 91c for the year ended December 31.

    This compares with a loss per share of 1 589.2c and headline loss per share of 83.2c in 2015.

    The increase in earnings is largely attributed to the net effect of a 9.8% increase in revenue, mainly as a result of a higher realised revenue basket price, combined with a nominal 0.6% increase in cost of sales.

    “The improved earnings, combined with a strong cash flowcontribution from on-reef development revenue at the Styldrift I project, in the North West, resulted in the group having a substantial cash balance at the end of the year,” the company said in a statement on Thursday.

    Cash preservation continues to be a priority and RBPlat remains unleveraged with a robust balance sheet that positions it well for the next phase of Styldrift I’s ramp-up to a 150 000 t/m operation.

    RBPlat expects to release its results on February 28.

    http://www.miningweekly.com/article/rbplat-to-post-fy-earnings-in-turnaround-from-2015-losses-2017-02-09
    Back to Top

    Base Metals

    Rio Tinto looking at exit from giant Indonesia mine


    Rio Tinto is considering walking away from its interest in the huge Grasberg copper mine operated by Freeport McMoRan Inc in Indonesia, amid uncertainties over the future operation of the mine.

    The world's No.2 copper mine is facing a stoppage in its copper concentrate exports and permit issues with the Indonesian government, which Freeport has warned could force it to slash production and its local workforce.

    A strike at the country's biggest copper smelter, which is Freeport's sole domestic buyer of copper concentrate, has added to pressure on the partnership.

    "There is no doubt that Grasberg is a world-class resource. But the key question, especially in the light of what happened three weeks ago, is: is Grasberg a world-class business for us?" Rio CEO Jean-Sebastian Jacques said, according to a transcript of an analyst briefing.

    "Everyone was taken by surprise," he said, referring to Indonesia's stoppage of copper exports from Grasberg on Jan. 12. Freeport CEO Richard Adkerson was "on his way back to Jakarta" for talks with the government, Jacques added.

    Rio, which reported earnings on Wednesday, will decide in "coming weeks and months" whether to sell or walk away from its option to take an effective 40 percent stake in Grasberg in 2021, he said.

    "If we want to have a meaningful offtake and stream beyond 2021, we would need to invest in a big way in the coming years," Jacques said.

    "We're going to watch very carefully what's happening before we commit additional material money into this project."

    A spokesman for Rio Tinto in Australia could not be reached for comment on Thursday.

    POLITICS RULE

    Under a joint venture deal it inked with Freeport in 1995, Rio gets a 40 per cent share of Grasberg's production above specific levels until 2021, then 40 per cent of all production after 2021.

    Rio said last month it was expecting to benefit from a share of production in 2017, but the miner has not had any production from Grasberg since 2014, when its share was just 7,700 tonnes of copper. Freeport's share of copper production from the joint venture was nearly 300,000 tonnes that year. Freeport Indonesia spokesman Riza Pratama told reporters that amid the export stoppage, Grasberg's copper concentrate stockpile warehouse was now "almost full", indicating that a production cut would be imminent without a breakthrough.

    He declined to comment on Freeport's partnership with Rio.

    Analysts have noted that muddled policies are complicating matters for miners in Indonesia.

    "What this signals is that politics rule in Indonesia. At the moment it is very difficult for any investor to navigate through the mining sector in Indonesia," Achmad Sukarsono, Asia political analyst at Eurasia Group, said.

    However, he saw a resolution.

    "I think it will end with an agreement. The ball is now in Freeport's court - to what extent they want to concede."

    http://www.reuters.com/article/rio-tinto-freeport-mcmoran-indonesia-upd-idUSL4N1FU2J0

    Attached Files
    Back to Top

    Co-owner of Russia's Rusal considers share sale -sources


    Onexim Group, which manages the assets of Russian tycoon Mikhail Prokhorov, is considering selling some of its 17 percent stake in Russian aluminium giant Rusal, two banking sources and two industry sources told Reuters on Thursday.

    Reports of a possible share sale came on the same day two sources close to Rusal and a banking source told Reuters the Hong Kong-listed company was also looking at listing in London.

    Rusal denied on Friday it was considering such a move.

    "The company has not considered or discussed any such secondary public offering of shares in London," it said in a statement to the Hong Kong bourse.

    Russian companies have seen a long-expected revival in investment demand this year amid signs of stabilisation in the country's economy situation after several years of crisis.

    Three Russian firms have already raised a total of almost $800 million in share sales in 2017, in addition to a number of debt issues, including Rusal's own $600 million Eurobond.

    "It is a good time for the share sale taking into account the high interest in Russian shares. However, maximum mutual benefit will only be reached if Onexim sells this stake via Rusal," said Kirill Chuyko at BCS Investment Bank.

    All four sources said Onexim could start accelerated book building for the stake sale in the near future. According to one of the banking sources, Onexim is considering selling about 5 percent of Rusal.

    Onexim declined to comment.

    Earlier on Thursday, sources said Rusal was considering a London listing, with one saying the aluminium giant could offer up to 20 percent of its shares on the London Stock Exchange.

    "Rusal has a programme aimed at increasing liquidity (of its shares) and a listing in London is being considered as a part of it," another source close to Rusal said.

    Russian tycoon Oleg Deripaska's En+ Group owns 48.1 percent of Rusal, with 15.8 percent owned by Viktor Vekselberg and Leonard Blavatnik's Sual Partners. Glencore holds 8.75 percent and the remaining 10 percent is listed in Hong Kong.

    http://www.reuters.com/article/russia-rusal-spo-idUSL5N1FU3BA
    Back to Top

    Steel, Iron Ore and Coal

    Choking China Backs Race to Mine Greener Iron Ore for Top Mills


    Chinese engineers who carved a railway through the Tibetan plateau and built the world’s longest sea-bridge across Hangzhou Bay have a new challenge: developing a $3.4-billion project on Australia’s remote Eyre Peninsula to meet increased demand for cleaner iron ore.

    China Railway Group Ltd., the world’s second-largest infrastructure builder, is backing the mine, port and rail-road project that aims to supply high-quality, lower-emission ore to Chinese steel mills facing stricter environmental rules.

    The project would be a major step toward South Australia’s goal of securing A$10-billion ($7.6-billion) of investments to fund a stable of new iron ore mines by 2021. China Railway’s partner  Iron Road Ltd. aims to bring the 24-million ton-a year mine into production in late 2020 after tests showed its product can help customers meet the tougher standards.

    “China’s demand for higher quality iron ore will increase, driven by stricter environmental protection regulations and improved profitability of steel mills,” said Yi Zhu, an analyst at Bloomberg Intelligence in Hong Kong. A restructuring of China’s steel sector will also boost demand for premium quality imports, according to researcher CRU Group.

    China, the world’s biggest carbon emitter, plans to invest 2.5-trillion yuan ($360 billion) in renewable energy through 2020 to reduce greenhouse gases and is seeking to curb emissions by iron and steel producers. Mills are being compelled to upgrade their plants or cease operations if they fall short of standards, according to Bloomberg Intelligence.

    Iron Road’s iron ore will never solve all of the problems facing Chinese steel mills but “it will certainly help them,” Managing Director Andrew Stocks said by phone from Adelaide.  “We see an increase in productivity, a decrease in fuel use and a decrease in atmospheric emissions --  it’s not quite the Holy Grail, but there are three very positive attributes to improve the steel mills.”

    Stocks is planning to meet with banks in Beijing and Shanghai this month and expects a final investment decision to be made this year. Under an interim 12-month accord signed last year, state-controlled China Railway anticipates taking as much as a 15 percent stake in the project, if approved, and will be the prime construction contractor, Iron Road said in a filing.

    China Railway views the Eyre Peninsula as the preferred development location for a large scale, long life, high-grade iron concentrate development as opposed to competing locations in Western Australia, Eastern Canada and West Africa, according to an Iron Road filing. Calls to ChinaRailway’s Beijing office weren’t answered and e-mails to an address on the company’s website received no reply.

    In 2016, China shed more than 65-million tons of excess steel capacity and 290 million tons of inefficient coal miningcapacity, Premier Li Keqiang said last month.

    New Demand

    South Australia’s government believes it has the right ore to meet the new demand -- about 14 billion tons of untapped magnetite, a higher-quality ore that contains more of the metal and fewer impurities than dominant market rival hematite. While it costs more to process magnetite, the product commands a premium from mills producing high-quality steel.

    The state’s ambition to export 50 million tons of magnetite by 2030 is dwarfed by the predominantly hematite ore production in neighboring Western Australia, which accounts for more than half of global exports and is forecast to ship more than 860 million tons this year. Magnetite currently accounts for only between 15 to 20 percent of the seaborne export market, according to researcher AME Group.

    Iron ore with 62% content in Qingdao rose 0.3% to $83.53 a dry ton on Wednesday, according to Metal Bulletin Ltd. The commodity touched a two-year high last month.

    Hurdles from securing finance to displacing China’s homegrown magnetite supplies also present challenges to South Australia’s dream of reviving its iron ore sector. The state saw the nation’s first mining of the material in the late 19th Century and sent cargoes to markets including the US, the Netherlands and Japan.

    The existing market for magnetite exports is well supplied and hasn’t shown major growth, though more higher quality material is likely to be required in the future, according to Fortescue Metals Group Ltd., the fourth-largest exporter. The West Australian company is yet to proceed with its Iron Bridge magnetite joint venture with Baosteel Group Corp. and Formosa Plastics Corp.

    “South Australia has some difficulties,” Fortescue Chief Executive Officer Nev Power said in a phone interview. While the region holds good deposits, cargoes would probably take three days longer to reach China than from Western Australian ports, adding “a significant cost penalty for them,” he said.

    ‘Genuine Pressure’

    As well as in China, demand is building for the higher-quality exports in the Middle East, where steel plants in Algeria to Oman also require the material, supporting the case for new mines, according to Gordon Toll, chairman of Magnetite Mines Ltd.

    Magnetite Mines plans to begin output from South Australia’s Braemar district with a A$400-million, 2.5-million ton-a year mine within two years, said Toll, previously a chairman of Fortescue. The developer signed a sales agreement with Ningbo Iron & Steel Co. last month and is in talks with potential partners and investors in China, Japan, South Korea and the Middle East.

    “There’s genuine pressure in China” for more environmentally friendly mills, Toll said by phone, forecasting the wider Braemar district could deliver exports of 100-million tons a year within a decade.

    http://www.miningweekly.com/article/choking-china-backs-race-to-mine-greener-iron-ore-for-top-mills-2017-02-09

    Attached Files
    Back to Top

    Indonesian Bumi targets coal output of 93-94 mln T in 2017


    Indonesia's biggest coal producer, Bumi Resources, is targeting production of 93 million to 94 million tonnes of coal in 2017, Reuters reported on February 9, citing Director Dileep Srivastava.

    That would be up to 9% higher than the 86.5 million tonnes produced in 2016.

    Sixty percent of Bumi's projected 2017 sales is already committed and this is expected to rise to 75% at end of the first quarter, with the finalization of annual contracts with Japan, the company said in a statement.

    Outlook for coal price in 2017 is optimistic and benchmark Coal Price presently is around $80/t, said the company.

    http://www.sxcoal.com/news/4552106/info/en
    Back to Top

    Shanxi major miners lock rail capacity for 7.3 mln T coal


    Shanxi Coking Coal Group, Datong Coal Mine Group and Yangquan Coal Industry Group -- three major miners in northern China's Shanxi province, have locked Taiyuan Railway Bureau's transport capacity for 7.3 million tonnes of contract coal to be supplied to ten end users, Shanxi Daily reported on February 8.

    These products will be directly railed to Shandong Iron & Steel Group, Datang International Power Generation Co., Ltd., Sinopec Qilu Petrochemical Company and other seven buyers.

    This was part of the initiative launched by the Chinese government last month – transport contracts being signed by miners, railway bureaus and buyers -- in a bid to facilitate long-term contracts implementation and strengthen cooperation among the production, transport and sales sectors of the coal industry.

    Coal shipment through railways under Taiyuan Railway Bureau accounted for 1/3 of the nation's total.

    http://www.sxcoal.com/news/4552093/info/en
    Back to Top

    Colombia Dec coal exports surge 81pct on mth


    Colombia exported 9.99 million tonnes of coal in December 2016, surging 81.15% from November and 41.01% year on year, showed data from the National Administrative Department of Statistics of Colombia.

    That valued $599 million, soaring 67.16% year on year and 75.75% month on month. That translated to an average price at $59.98/t, down 2.98% on the month but rising 18.55% on the year.

    During 2016, the country's coal exports stood at 85.13 million tonnes, a year-on-year rise of 13.94%.

    The value of coal exports totalled $4.64 billion last year, gaining 1.73% from the year prior.

    http://www.sxcoal.com/news/4552105/info/en
    Back to Top

    Cliffs Natural profit beats as iron ore pellet sales soar

    Cliffs Natural profit beats as iron ore pellet sales soar

    Iron ore producer Cliffs Natural Resources (CLF.N) reported a quarterly profit that handily beat analysts' estimates, driven by a surge in iron ore pellet sales.

    The company's shares were up 6.4 percent at $10.12 in premarket trading on Thursday.

    Demand for iron ore pellets, a raw material used in making steel, is rising due to lower Chinese exports, anti-dumping measures and higher demand.

    U.S. President Donald Trump's $550 billion stimulus plan for infrastructure spending is expected to further boost demand for steel.

    "A much more favorable business environment in the U.S. and a newly adopted rational behavior in the international iron ore market support the work we have done internally," Chief Executive Lourenco Goncalves said in a statement.

    The company said sales volume in its U.S. iron ore pellet business rose about 53 percent to nearly 6.9 million tonnes in the fourth quarter ended Dec. 31.

    Cliffs Natural also said it expected sales volume in its U.S. iron ore pellet business to rise 4.3 percent to 19 million tonnes in 2017.

    The company said net income attributable to shareholders was $79.1 million, or 34 cents per share, in the fourth quarter ended Dec. 31, compared with a loss of $60.3 million, or 39 cents per share, a year earlier.

    Analysts' on average had expected earnings of 23 cents per share, according to Thomson Reuters I/B/E/S.

    Revenue rose 58.4 percent to $754 million, also above estimate of $675.2 million.

    Cliff Natural's shares had jumped more than five-fold in 2016.

    http://www.reuters.com/article/us-cliffs-natural-results-idUSKBN15O1LA
    Back to Top

    China's key steel mills daily output down 2.5pct in mid-Jan


    Daily crude steel output of China's key steel mills slid 2.51% from ten days ago to 1.62 million tonnes over January 11-20, hitting a new low since early August last year, according to data released by the China Iron and Steel Association (CISA).

    The country's total crude steel output was estimated at 2.19 million tonnes each day on average during the same period, climbing 0.37% from ten days ago, the CISA said.

    Some steel mills in Shanxi suspended production for environmental concerns in mid-January. Steel mills in other areas gradually resumed production after regular maintenances to benefit from good profit.

    Yet it took time for some furnaces to start operation, which, however, impacted daily output of steel products to some degree.

    By January 20, stocks of steel products at key steel mills stood at 12.31 million tonnes, down 2.28% from ten days ago, the CISA data showed.

    By February 3, stocks of major steel products totaled 13.49 million tonnes, increasing 22.2% from January 20, as market participants were active in replenishing stockpiles amid bullishness toward the post-holiday market.

    In mid-January, rebar price increased 2.7% from ten days ago to 3,299.2 yuan/t; wire price climbed 2.9% from ten days ago to 3,397.7 yuan/t, showed data from the National Bureau of Statistics.

    http://www.sxcoal.com/news/4552141/info/en

    Attached Files
    Back to Top

    JSW Steel crude steel output jumps 49pct in Jan


    India's JSW Steel has posted a 49% year-on-year growth in crude steel production at 1.39 million tonnes in January 2017, Press Trust of India reported.

    The crude steel production was 0.93 million tonnes in the year-ago period, data showed.

    Among the rolled products, the flat products registered a jump of 38% at 1.03 million tonnes and long products up 18% at 279,000 tonnes.

    JSW Steel is a part of diversified JSW Group, which has presence in steel, energy, infrastructure and cement. JSW Steel has an installed steel-making capacity of 18 Mtpa.

    http://www.sxcoal.com/news/4552113/info/en
    Back to Top

    Japanese scrap prices drop in monthly auction


    The highest bid in Thursday's monthly auction for Japanese H2 grade ferrous scrap, for export from Tokyo Bay by March 31, was Yen 26,051/mt ($232/mt) free alongside ship, a decrease of Yen 1,179/mt on last month's highest winning bid, the organizer said.

    The monthly auction held by the Kanto Tetsugen group of scrap dealers around Tokyo received 18 bids for a total of 158,000 mt of scrap, with the average being Yen 24,623/mt FAS.

    The first and the second bids were both at the same price, 10,000/mt, and placed by JFE Shoji Trade, a JFE Steel group trader, according to sources who attended the auction.

    JFE Shoji Trade officials in charge of the auction were not available for comment about the award Thursday. But a Tokyo-based scrap trader said the winning bid was higher than the current prices traders are paying to collect H2 material for export.

    "I believe the winner is planning to use the parcels to fill back orders which it contracted at higher prices," he said.

    Japanese traders are currently paying Yen 24,500-25,000/mt FAS to collect H2 material to be exported from eastern Japan.

    Another scrap trader in Tokyo said that the average price of Yen 24,623/mt FAS among all the bids lodged was about same, as traders are currently paying to companies collecting the scrap.

    "It probably means traders are unclear about where scrap prices are heading," he said. "Japanese scrap prices are these days being more influenced by international scrap price trends."

    Japan's leading mini-mill, Tokyo Steel Manufacturing, cut its scrap buying prices by Yen 500/mt from February 8, the company's first price-cut for scrap since July 9, 2016, as previously reported. However, the reduction only applied to deliveries to its Utsunomiya works, north of Tokyo.

    S&P Global Platts assessed the H2 scrap export price at Yen 24,500-25,000/mt ($218-$222/mt) FOB Tokyo Bay on February 8.

    http://www.platts.com/latest-news/metals/tokyo/japanese-scrap-prices-drop-in-monthly-auction-27766003
    Back to Top

    Tata Steel agrees to sell speciality steel biz to Liberty House


    India's Tata Steel Ltd said on Thursday its British arm has signed a definitive agreement to sell its speciality steel business to Liberty House Group for 100 million pounds ($125.55 million).

    The deal covers several South Yorkshire-based assets including the electric arc steelworks and bar mill at Rotherham, Tata Steel said in a filing to Indian stock exchanges.

    Speciality Steels directly employs about 1,700 people making steel for aerospace, automotive, and oil and gas businesses, it said.

    Tata and Liberty House had entered into exclusive talks in November as the Indian group seeks to offload its money-losing assets and restructure European operations.

    http://www.reuters.com/article/tata-steel-sale-britain-idUSL4N1FU42J
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

    The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.