Mark Latham Commodity Equity Intelligence Service

Thursday 16th July 2015
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    SKF sees slower demand as Europe weighs, hitting shares

    Sweden's SKF, the world's largest bearings maker, said it saw demand softening in the third quarter because of sluggish industrial production and weakness in Europe, sending a chill through the manufacturing sector.

    After reporting quarterly core earnings that fell short of market expectations, SKF shares tumbled 7 percent by 0830 GMT. Its subdued outlook also weighed on manufacturing stocks such as Sandvik and Trelleborg.

    SKF, one of the first European companies to report its quarterly results, is viewed as a manufacturing bellwether. Its bearings are found in products ranging from skateboards to wind turbines.

    The company said it would start an improvement programme for its automotive unit, which has lagged in profitability for years, but said it would remain part of the group, dousing speculation it could be sold.

    "Demand is not there and the outlook is a disappointment," Handelsbanken Capital Markets analyst Peder Frolen said.

    "Regarding automotive this is an internal thing where they will cut costs and review the product portfolio, but I don't think the market will be convinced that they will manage to turn it around."

    CEO Alrik Danielson said weakness in demand in Europe partly reflected many companies' slower exports of products using SKF components to emerging markets.

    "As we enter the third quarter we experience a relatively weak industrial production in many parts of the world, especially in heavy industry, in agriculture, oil and gas, and in some areas industry in general," he said on a conference call.

    Buoyed by a weaker Swedish crown currency and despite tepid sales, SKF's adjusted operating profit rose to 2.58 billion crowns ($303.1 million) from 2.22 billion a year ago, lagging a mean forecast of 2.74 billion in a Reuters poll of analysts.

    The company, a rival of Germany's Schaeffler AG and U.S. Timken, said the review of the automotive business would look at its product portfolio and manufacturing operations.
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    China Jun thermal power output down 5.8pct YoY

    Electricity output from China’s thermal power plants – mainly coal-fired – dropped 5.8% year on year and down 2.4% from May to 336.3 TWh in June, showed data from the National Bureau of Statistics (NBS) on July 15.

    Thermal power generation was negatively impacted by persisting weak industrial demand and abundant hydropower output amid rainy season, which rose 16.4% year on year and surged 34.0% on month to 102.8 TWh in June.

    Total electricity output in China stood at 474.5 TWh in June, edging up 0.5% from a year ago and up 4.0% month on month – the second consecutive month-on-month increase, the NBS data showed. That equates to daily power output of 15.82 TWh on average, up 0.5% on year and gaining 7.5% from May.

    During the first half of the year, China produced a total 2,709.1 TWh of electricity, up 0.6% year on year, with thermal power dropping 3.2% on year to 2,087.9 TWh while hydropower output increasing 13.3% to 423.4 TWh.

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    Anglo American plans up to $4 bln first-half writeoff. Dividend?

    Global mining company Anglo American expects to take a writeoff of between $3 billion and $4 billion in its first-half results because of the slide in prices for iron ore and coal, it said on Thursday.

    This comes on top of a $3.9 billion writedown Anglo took in February, also due to the rout on commodity markets, when it also posted a 25 percent drop in underlying operating profit for 2014.

    The London-listed company has been fighting the impact of a slide in metals prices by trying to improve its mining operations and selling less profitable assets.

    "Anglo American expects to record non-cash impairments within special items ... relating to Minas Rio and certain Australian coal assets of approximately $3 billion to $4 billion on a post-tax basis," it said in its second-quarter production report.

    Minas Rio is Anglo's newly launched iron ore operation in Brazil, which has been ramping up.

    The price of iron ore .IO62-CNI=SI, Anglo's most profitable product last year, has nearly halved over the past 12 months, weighed down by a glut of supply.

    Anglo said it decided to take the writedown after further weakness in bulk commodity prices, especially iron ore and coal used to make steel, prompted a reassessment.

    "Anglo American has therefore reviewed its near- and longer-term commodity price assumptions at the mid-year, while also noting the gradual and ongoing reduction of consensus prices within what remains a wide range of forecasts."

    Anglo, the fifth-biggest diversified mining group by market capitalisation, also said iron ore output at Kumba in South Africa fell by 9 percent in the second quarter year-on-year to 10.4 million tonnes due to mining feedstock issues.

    Minas Rio produced 1.8 million tonnes from April to June.

    Copper production in the second quarter fell by 5 percent, mainly due to production issues in Chile - temporary shutdowns of the processing plants at Los Bronces to manage water reserve levels and plant stability issues at Collahuasi.

    Diamond output fell 6 percent at Anglo's subsidiary De Beers, which last year became the second-largest earner for the company.

    Iron ore, diamond and copper last year accounted for 40 percent, 28 percent and 24 percent of its operating profit respectively.

    Global miner Anglo American may have to cut its dividend soon as current commodity prices seem to be leaving management little choice but to focus on balance-sheet preservation in order to navigate a sustained downturn.

    The decision, likely to be announced while publishing its first-half results at the end of the month, would be the first time since 2009 that the miner has to cut dividends, Bloombergreports.

    "The picture as currently presented is not sustainable. Something has got to give: either commodities prices come up or they'll have to cut investment, jobs or their dividend," a banking source told Reuters earlier this month.
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    Oil and Gas

    Iran Oil Boost on Hold to 2016 as Nuclear Inspectors Go to Work

    Global oil markets won’t feel the real impact of Iran’s historic deal with world powers until 2016 as sanctions remain in place while nuclear inspectors go to work, said banks.

    OPEC’s fourth-largest member won’t achieve a crude-export boost of more than 500,000 barrels a day, or about 50 percent, until next year as Iran’s compliance with curbs on its nuclear program is verified, the banks say. The nation will probably choose to gradually increase exports once sanctions are lifted, rather than risk lower prices by rapidly pushing crude into an oversupplied market, according to the International Energy Agency.

    It will be a long and winding road before Iranian oil returns to the market

    The agreement between Iran and six world powers will eventually lift restrictions that have halved its crude exports, provided the Persian Gulf nation removes nuclear centrifuges and cuts uranium stockpiles. Sanctions will remain in place at least until international monitors report on the country’s compliance in December.

    “The current time line for the lifting of sanctions precludes any substantial increase from Iran” this year, Harry Tchilinguirian, head of commodity markets strategy at BNP in London, said by e-mail Tuesday. “It will be a long and winding road before Iranian oil returns to the market.”

    Obstacles to the restoration of Iran’s exports mean the early drop was “overdone,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.
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    GAIL sells 2 mn tonnes US LNG abroad

    State-owned gas utility GAIL India Ltd has sold overseas two million tonnes of liquefied natural gas (LNG) it had contracted from the US, its Chairman B C Tripathi said today.

    Out of the two million tonnes of LNG, one million tonne has been sold to Royal Dutch Shell.

    Tripathi refused to give details of other buyers.

    GAIL has signed a contract to buy 3.5 million tonnes of LNG per year for 20 years from the US-based Cheniere Energy and has also booked capacity for another 2.3 million tonnes per annum at Dominion Energy's Cove Point liquefaction plant.

    The landed price of US LNG in India is not likely to be less than USD 10 per million British thermal unit, a rate that domestic industry may consider high after adding taxes, transportation charges and margins.
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    First phase of historic Mexico oil auction misses expectations

    Mexico auctioned only two of 14 blocks in a pivotal oil and gas tender on Wednesday, falling far short of the government's modest expectations as it begins to open up the long-nationalized industry to private investment.

    Both the shallow water exploration and production contracts were awarded to the same consortium made up of Mexico's Sierra Oil & Gas, U.S. firm Talos Energy and Britain's Premier Oil.

    The other 12 blocks received no bids, or none that cleared the bar set by Mexico's finance ministry, marking an inauspicious debut for the rollout of President Enrique Pena Nieto's signature economic reform.

    "Without doubt, the start of round one didn't have the momentum we were hoping for," said Juan Carlos Zepeda, president of Mexico's oil regulator, known as the CNH.

    Still, Zepeda called it "a solid start," pointing to a transparent process and the fact that seven private firms bid.

    In the second block up for grabs, the government said the consortium would ultimately pay a total government take of between 74 and 86 percent of profits. In the seventh block, it saw the figure at between 83 and 88 percent of profits.

    The government take is the sum total of the contract's fiscal terms, including a variable royalty, income tax, surface rental fee and the percentage of pre-tax profits.

    The energy ministry said previously that at least 30 percent, or five contract awards, of the 14 would be a success. Blocks not awarded can be tendered again at a later date.

    A total of 34 companies, either in consortia or alone, pre-qualified for the first set of 14 shallow water production-sharing contracts, including U.S.-based majors ExxonMobil and Chevron.

    But only nine bidders registered for the first phase.
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    Woodside Q2 revenue down over a third on weak gas price

    Woodside Q2 revenue down over a third on weak gas price

    Woodside Petroleum, Australia's biggest independent oil and gas company, on Thursday posted a 36 percent fall in second-quarter revenue from the first quarter due to weak gas prices and lower production volumes from its Pluto LNG venture.

    The sharp decline, which was in line with analysts' estimates, was blamed by Woodside on a 35 percent slide in liquefied natural gas prices after a drop in indexed prices to $64 per barrel.

    The price was calculated based on a four-month lag between LNG prices and the Japanese crude import price on which long-term contracts are based.

    The situation was compounded by an 18 percent decline in sales volume due to lower production at its Pluto LNG operation in Western Australia and the timing of shipments.

    Woodside reported $898 million in sales revenue during in the quarter, down from $1.4 billion in the first quarter.

    LNG revenues from the Pluto venture more than halved to $346 million in the second quarter.

    Despite the setback, Woodside maintained its production target range of 86 to 94 million barrels of oil equivalent in 2015.
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    US oil production

                                      Last Week     Week Ago    Last Year

    Domestic Production    9,562            9,604          8,592
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    Summary of Weekly Petroleum Data for the Week Ending July 10, 2015

    U.S. crude oil refinery inputs averaged over 16.8 million barrels per day during the week ending July 10, 2015, 229,000 barrels per day more than the previous week’s average. Refineries operated at 95.3% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.7 million barrels per day. Distillate fuel production increased slightly last week, averaging 5.1 million barrels per day.

    U.S. crude oil imports averaged about 7.4 million barrels per day last week, up by 38,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 1.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 682,000 barrels per day. Distillate fuel imports averaged 146,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.3 million barrels from the previous week. At 461.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.1 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.8 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.8 million barrels last week.

    Total products supplied over the last four-week period averaged 19.9 million barrels per day, up by 3.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.6 million barrels per day, up by 6.5% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 2.3% from the same period last year. Jet fuel product supplied is down 4.7% compared to the same four-week period last year.

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    Manhattan Institute Says Now is Time to Ramp Up Shale Production

    The New York-based Manhattan Institute, a non-profit think tank with a mission “to develop and disseminate new ideas that foster greater economic choice and individual responsibility” has just released a new report titled, “Step on the Gas! How to Extend America’s Energy Advantage”.

    The 20-page report says now is the time for the U.S. to press its advantage in shale energy. The report’s writer, senior fellow at the Manhattan Institute, Oren Cass, points out the cyclical nature of commodity prices for oil and gas and says even though prices are down now–they won’t stay that way. In order to take full advantage of the shale boom, Cass suggests 11 reforms to help craft a smarter U.S. energy policy–one that will amplify the current boom and extend it far into the future.

    At the top of the hit parade: allow domestic producers to export oil and gas, and streamline the process to let it happen more quickly.
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    WVU Research Shock Finding: Utica is as Big as Marcellus!

    Data from a two-year geological study conducted by the Appalachian Oil and Natural Gas Research Consortium, a group of state and federal officials along with university researchers representing West Virginia, Ohio, Pennsylvania, Kentucky and New York, was presented yesterday in Canonsburg, PA.

    The study, titled “A Geologic Play Book for Utica Shale Appalachian Basin Exploration”, finds the Utica Shale play has 20 times more recoverable natural gas than thought just three years ago–an astonishing 782 trillion cubic feet of natural gas in the Utica.

    Here’s the shocker news coming from the release of this new study: The size and potential recoverable resources in the Utica are “comparable” to the Marcellus play, the largest shale oil and gas play in the U.S. and the second largest in the world. You read that right. The Utica is potentially as big as the Marcellus!

    The Utica is located pretty much underneath the Marcellus. The depths vary, but the Marcellus is around a mile down and the Utica around two miles down. Researchers at the top-notch West Virginia University took the lead in publishing the report.
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    Kinder Morgan to buy out Shell's JV stake; raises div

    Kinder Morgan Inc said it would buy the 49 percent stake that it does not already own in natural gas joint venture Elba Liquefaction Co from Royal Dutch Shell Plc, and it raised its dividend.

    Kinder Morgan said it expects to invest $630 million in Elba terminals, bringing its total investment in the project near Savannah, Georgia to $2.1 billion.

    The deal shows the energy sector's appetite for fast-growing natural gas logistics and exports. Marathon Petroleum Corp bought natgas processor MarkWest Energy Partners LP in a $15.6 billion deal earlier this week.

    Kinder Morgan, which last year put all of its publicly traded partnerships into one corporate parent company, raised its quarterly divided by 14 percent to 49 cents per share.

    The company said it continued to remain on track for 2015 dividend target of $2 per share.

    Kinder Morgan's net income attributable to shareholders fell 29 percent to $333 million in the second quarter ended June 30, from the first quarter ended March 31.

    Excluding items, earnings from natgas pipelines, the company's biggest business, fell 14.6 percent to $928 million.

    Earlier this year, Kinder Morgan entered North Dakota's Bakken shale with a $3 billion acquisition of Hiland Partners, a pipeline and logistics company.

    The company said growth in its natgas pipeline unit was "partially affected" in the second quarter due to weak commodity prices.

    Earnings in its carbon-dioxide unit fell to $240 million from $281 million.
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    Sanchez Energy announces second quarter 2015 operating results

    Record production of 4,907 thousand barrels of oil equivalent during the second quarter 2015 for average production of 53,920 barrels of oil equivalent per day ('BOE/D') driven by shorter drilling times and strong production from recent wells put on production at Catarina. Average daily production exceeded the high end of the Company's second quarter guidance range of 42,000 to 46,000 BOE/D. Current production is approximately 53,000 BOE/D.
    The two most recent two-well pads at South-Central Catarina have averaged 24-hour initial production rates between 1,400 and 1,800 BOE/D and are trending in line with the strongest wells in Western Catarina.
    Based on recent operating results in the first half of 2015, the Company is increasing its full year 2015 production guidance range to 44,000 to 48,000 BOE/D.
    The Company has met all Catarina drilling commitments for the annual term, which ended June 30, 2015, by drilling 68 wells towards the 50-well annual commitment. The Company enters the next well-commitment year with a bank of 18 wells that reduces the number of remaining wells in the next 50-well annual commitment to 32 wells required to be drilled before June 30, 2016.
    Well costs in Catarina have decreased from approximately $6.5 million per well that was budgeted at the start of 2015, to below $4.5 million currently.

    Management comments

    Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy, commented: 'During the second quarter 2015, we had success on a number of fronts. Estimated production for the second quarter 2015 averaged approximately 53,920 BOE/D. As a result of operational efficiencies, we are now able to drill and complete wells at a faster pace and at lower costs. This improvement in productivity has allowed us to put online additional wells in the first half of 2015 without spending additional capital beyond the budget or increasing the number of drilling rigs working on our assets. The additional wells brought online, combined with better-than-anticipated production results at Catarina, has allowed our company to significantly exceed the high end of our second quarter production guidance of 42,000 to 46,000 BOE/D.'
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    Energy Transfer Partners sells convenience stores to Sunoco

    Pipeline company Energy Transfer Partners said it would sell convenience store operator Susser Holdings for about $1.94 billion to its unit Sunoco LP .

    Sunoco will pay about $970 million in cash and issue about 22 million of its units valued at about $970 million as of Tuesday's close.

    Susser operates convenience stores in Texas, New Mexico and Oklahoma under the Stripes brand.
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    Sabine Oil & Gas files for bankruptcy

    Oil and gas company Sabine Oil & Gas Corp filed for Chapter 11 bankruptcy on Wednesday, becoming the latest victim to the decline in global oil prices.

    The company said it was in discussions with its lenders and debt holders on a financial restructuring plan.

    Sabine Oil expects to support itself with its cash on hand and funds generated from ongoing operations.

    The company listed assets and liabilities of more than $1 billion.

    The case is in U.S. Bankruptcy Court, Southern District of New York, Case No: 15-11835.
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    Paladin achieves record Q4

    Paladin achieves record Q4 

    Uranium miner Paladin Energy has reported its best quarter yet for the 2015 financial year, with the miner on Thursday announcing a 340% quarter-on-quarter increase to $73.3-million in sales revenue for the three months to June 30. 

    The Langer Heinrich mine, in Namibia, produced 1.33-million pounds of uranium oxide (U3O8) in the quarter under review, an 8% increase on that produced in the March quarter. The March quarter results had been affected by a failure of the pre-leach thickener feed well at the plant, in February. 

    Production for the full year, at 5.04-million pounds U3O8, was within guidance. Paladin noted that run-of-mine stockpiles at Langer Heinrich had decreased by the end of the June quarter, with the low stockpile levels expected to remain until mid-July, when high-grade ore would be exposed in Pit H4. 

    The miner further pointed out that the bicarbonate recovery project (BRP) at Langer Heinrich operated well throughout the quarter, achieving 115% to 120% of design capacity in terms of both volumes processed and sodium bicarbonate recovered. Significant process optimisation took place during the quarter, which allowed the BRP to achieve 147% of its design capacity, which Paladin said could be maintained or exceeded throughout the September quarter. 

    This would equate to a potential direct saving of around $16-million in reagent costs. Further optimization was ultimately expected to lift the BRP performance to higher than 200% of its design capacity by December of this year, without the need for the installation of any additional equipment. 

    Paladin noted that the high degree of success from the BRP augured well for the ongoing success of the company’s innovation program, with the new technology acting as a key driver for further reductions in C1 costs at Langer Heinrich. C1 unit cash costs for the quarter reached $26.03/lb, which were in line with expectations. During the month of June, these costs were further improved to $24.72/lb. 

    Paladin expected to produce between 5-million and 5.4-million pounds U3O8 in the 2016 financial year. Meanwhile, the miner said the restart feasibility study of its Kayelekera mine, in Malawi, was nearing completion.
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    Base Metals

    Zambia's mining industry says new tax rules will scare away investors

    Zambia's mining industry said on Wednesday that an increase in corporate tax to 35 percent and other new tax rules will scare away investors and discourage processing to add value, and called for them to be scrapped.

    Last month Zambia, Africa's No.2 copper producer, approved a plan to increase the corporate income tax rate on mineral processing to 35 percent from 30 percent, and it became effective this month, bringing it in line with the rate charged to non-mining companies.

    Foreign mining companies in Zambia include Glencore , Barrick Gold Corp, Vedanta Resources and First Quantum Minerals.

    The government also cut mineral royalty rates to 6 percent for underground mining, from 8 percent, and to 9 percent for open cast mining, from 20 percent.

    However, Zambia's Chamber of Mines, an industry body representing mining companies, said in a presentation to parliament that the new tax rules would hurt investor confidence.

    "It's therefore proposed that corporate tax on income should be maintained at 30 percent," it said.

    The chamber also said the provision for different royalties based on mining methods did not take into account the peculiar challenges that both open cast and underground operations faced.

    "It is recommended that the mineral royalty should be the same across the entire industry at 6 percent," it said.

    The chamber also said proposed amendments to the Mines and Minerals Development Act gave the government too much power, with wide paremeters to introduce new regulations for mining firms.
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    Steel, Iron Ore and Coal

    India’s coal imports jump 23pct in 2Q15

    Image Source: Orissa PostPTI reported that India’s imports of thermal coal jumped 23% to just under 24 million t at 12 major ports in 2Q15. Metallurgical coal volumes remained steady at 8.17 million t.

    The rise in imports comes even at India’s federal government is pushing state-owned coal miner, Coal India (CIL), to boost production to around 1 billion t by 2019 to help meet the country’s growing demand for electricity. In the last financial year, CIL recorded production of 494.23 million t and has been set a target of 550 million t in the currest fiscal.

    India’s twelve major ports handle 61% of the country’s total imports.
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    China H1 coal industry FAI down 12.8pct

    China’s fixed-asset investment (FAI) in coal mining and washing industry stood at 168.6 billion yuan ($27.55 billion) during the first half of the year, down 12.8% year on year, showed data from the National Bureau of Statistics (NBS) on July 15.
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    Iowa utility agrees to phase out seven coal plants in settlement

    Iowa utility agrees to phase out seven coal plants in settlement

    The Sierra Club said on Wednesday that an Iowa utility has agreed to phase out seven coals plants in a settlement with the U.S. Justice Department and Environmental Protection Agency, the state and the environmental group.

    Alliant Energy Corp subsidiary Interstate Power and Light agreed to install pollution controls at two of its largest coal-fired power plants, and either retire or convert the five remaining plants to natural gas.

    Interstate also agreed to pay a civil penalty of $1.1 million to resolve claims it violated the U.S. Clean Air Act.

    The Sierra Club joined the lawsuit along with the state of Iowa, the EPA and Justice Department as co-plaintiffs.

    "The days of coal-fired power plants putting Americans at risk are coming to an end," said Michael Brune, Sierra Club's executive director. "In Iowa and across the country, people are demanding clean air and clean water and they are winning."

    The group's Beyond Coal campaign has focused on legal settlements to target some of the country's oldest and dirtiest coal-fired plants. With the latest agreement, Sierra Club said it has helped shuttered 200 coal plants.

    Alliant will spend about $620 million to install pollution controls and another $6 million on environmental mitigation projects, including solar energy installations, replacement of coal-fired boilers, and installation of anaerobic digesters, which capture greenhouse gases from livestock manure.

    Cynthia Giles, assistant administrator for the EPA's Office of Enforcement, said the settlement also reflects the agency's focus on cracking down on the country's biggest polluters.
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    Coal miner Walter Energy files for bankruptcy

    Coal miner Walter Energy Inc filed for bankruptcy protection on Wednesday after struggling with a steep fall in coal prices since 2011.

    The Birmingham, Alabama-based company said its U.S. units have filed for a prepackaged Chapter 11 bankruptcy protection, but its other operations including those in Canada and the UK are not included in the filings.

    The company said terms of the restructuring assume senior lenders will convert all of their debt into equity.
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    Rio Tinto shows 2nd qtr iron ore boost but cuts shipping guidance

    Rio Tinto on Thursday posted a sharp rise in second quarter iron ore output from a year ago as it battled to maintain its top market position in China, even as selling prices deteriorate and bad weather disrupted operations.

    But the world's second-biggest iron ore miner was forced to trim it full year guidance for ore shipments by nearly 3 percent to around 340 million tonnes after two cyclones swept through its mines and ports in March and May.

    Second quarter iron ore output was still 9 percent higher than the same quarter of 2014 at 79.7 million tonnes and 7 percent above the first quarter of 2015, data released by the Anglo-Australian company showed.

    The result was as in line with analysts expectations of around 80 million tonnes, including Rio Tinto's partners in some mines.

    "We have maintained our emphasis on efficiency and protecting returns, which is reflected in this solid production performance, "Chief Executive Sam Walsh said in a statement.

    Iron ore .IO62-CNI=SI staged a modest recovery in June but tumbled to a decade low near $44 a tonne last week, as inventories at Chinese ports swelled and demand from Chinese steel mills waned.

    Amid lower margins, Rio and rival BHP Billiton have been producing at full tilt to boost profits, but are facing a fightback from Brazil's Vale , the world's biggest producer.

    The fight for China's market has turned the global seabourne iron ore trade into an oligarchy, according to Citigroup analyst Ivan Szpakowski, with the highest market concentration of any major commodity.

    Vale and BHP are also expected to show sharp lifts in quarterly production in coming days.

    Rio said it lost about 7 million tonnes of shipping capacity at its ports due to the severe weather when tropical cyclones Olwyn and Quang hit the Pilbara iron ore belt, where most of Australia's ore is mined.

    Heavy inland rains also hindered trucking operations, resulting in lost production at the mines and impacting the ability to operate rail haul lines according to scheudle, it said.

    Rio's forecast for 340 million tonnes in full-year shipments would still be up 15 percent on 2014.
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    POSCO putting Odisha steel plant project on hold

    Image Source: WikimediaNikkei reported that South Korean steel giant Posco will freeze a major blast furnace project in the eastern Indian state of Odisha, faced with opposition from residents and slim prospects of obtaining the interest it wanted.

    The project won approval from the Indian government in 2011. Posco sought an annual output of 12 million tons. There were also plans to build such facilities as a port. But the project has drawn the ire of locals worried about the environmental impact. And the company is unlikely to gain preferential rights to an interest of 600 million tons of iron ore for 30 years. In these circumstances, the company is likely to give up altogether on the plan, a Posco official said.

    Posco has pledged to halve its domestic operations and cut overseas units by 30 percent. It will aggressively exit non core areas that aren’t competitive, Chief Executive Officer Kwon Oh Joon said at a briefing in Seoul on Wednesday, without identifying which parts of the company.

    Posco is returning to its roots and focusing on improving the quality of the steel it produces as a flood of cheap exports from China pushes prices to the lowest since at least 2003.
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