Mark Latham Commodity Equity Intelligence Service

Friday 1st May 2015
Background Stories on www.commodityintelligence.com

News and Views:








Macro

China goes organic

Image titleTsinghua University is the #1 rated university in China.Image titleHere are all the chops from co-authors.

http://www.rff.org/Documents/Events/150420-Zhongying-ChinaEnergyRoadmap-Slides.pdf

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Houthi rebels in Saudi attack

Three Saudis were reportedly killed after an incursion by Yemeni Houthi rebels into southern Saudi Arabia on Thursday.

The assault occurred at a border post in Najran province, but was repulsed by Saudi forces after air strikes were called for.

The attack on Saudi soil will no doubt raise tensions further in the region as Saudi-led air strikes continue against Houthi rebels in Yemen.

A report from Saudi state media said that dozens of rebels had been killed following the assault in Najran, with other reports pointing to the trio of Saudi deaths.

Saudi Arabia had halted its month-long campaign of air strikes against Houthi rebels in Yemen – called Operation Decisive Storm - as it said it favoured a political solution – termed Operation Restoring Hope - to end a conflict following the threat to the rule of President Abd-Rabbu Mansour Haddi.

http://www.upstreamonline.com/live/1398731/houthi-rebels-in-saudi-attack?utm_source=dlvr.it&utm_medium=twitter
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Oil and Gas

OPEC oil output in April climbs to highest since 2012 -survey



OPEC oil supply in April has jumped to its highest in more than two years, boosted by record or near-record supplies from Iraq and Saudi Arabia, a Reuters survey showed, as key members stand firm in their focus on market share.

The increase from the Organization of the Petroleum Exporting Countries puts output further above forecasts of demand for OPEC oil in the first half of the year, although second-half demand is expected to be stronger.

OPEC supply has risen in April to 31.04 million barrels per day (bpd) from a revised 30.97 million bpd in March, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

"We are in an oversupplied market, and this oversupply is unlikely to disappear any time soon," said Eugen Weinberg, analyst at Commerzbank in Frankfurt.

If the total remains unrevised, April's supply would be OPEC's highest since 31.06 million bpd in November 2012, based on Reuters surveys.

Besides Iraq, the main reasons for the rise are higher Nigerian exports and a further small gain in Libyan production despite the unrest there. Top exporter Saudi Arabia has kept output near a record high in April, sources in the survey said.

Iraq has increased its northern exports further following a deal between Baghdad and the Kurdistan Regional Government, offsetting a slight decline in flows from the south which produces the bulk of Iraq's oil.

Based on this survey, Iraqi exports this month look set to exceed March's record high of 2.98 million bpd. Iraq was hoping to reach 3.1 million bpd of exports in April.

OPEC's largest African producer Nigeria has shipped more cargoes in April, helped by a return to a more typical export rate from its largest crude steam, Qua Iboe.

Iran increased exports as some buyers who stayed away in March in response to U.S. pressure during negotiations on a preliminary nuclear deal, resumed purchases in April, sources in the survey said.

There was not a corresponding increase in Iranian production in April, sources said, as the extra barrels were shipped from storage.

Saudi Arabian output dipped after a rise in March to a record high, the survey found, but remained above 10 million bpd due to increased local requirements in power plants.

Saudi Oil Minister Ali al-Naimi said April output was "around" 10 million bpd.

Riyadh was the driving force behind OPEC's refusal last year to prop up prices by cutting its output target of 30 million bpd, in a bid to discourage more costly rival supplies.

Of countries with lower output, the biggest decline was in OPEC's other West African producer, Angola, where outages at BP's Saturno and Plutonio fields contributed to the drop.

http://www.reuters.com/article/2015/04/30/opec-oil-survey-idUSL5N0XQ37G20150430
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Is Saudi at full capacity?

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Saudi Arabia to restructure Aramco, separate it from oil ministry-Arabiya TV

Saudi Arabia's Supreme Economic Council has approved a restructuring of state oil company Saudi Aramco that includes separating it from the oil ministry, Al Arabiya television channel reported on Friday, citing sources.

There are no indications that the move will lead to changes in the fundamental way the world's top crude exporter makes its oil decisions.

"Saudi Supreme Economic Council agrees on Deputy Crown Prince Mohammed bin Salman's vision of restructuring oil-giant Aramco," Arabiya reported on its Twitter account.

"Restructuring of Saudi Aramco includes separation from petroleum ministry," the channel said.

The Supreme Economic Council is a new body formed by King Salman earlier this year to replace the Supreme Petroleum Council, which used to help set the kingdom's oil policy.

The new council is headed by the king's son Prince Mohammed, a move seen by analysts as laying the ground for a generational shift in how Riyadh develops its energy and economic strategies.

The main tenets of Saudi oil policy, including  maintaining the ability to stabilise markets via an expensive spare-capacity cushion and a reluctance to interfere in the market for political reasons, are set by the top members of the ruling Al Saud family.

On Wednesday, King Salman appointed Saudi Aramco's chief executive as chairman of the state oil firm and health minister, as part of a major reshuffle in the OPEC kingpin.

http://www.reuters.com/article/2015/05/01/saudi-oil-aramco-idUSL5N0XS0BI20150501
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JODI on final demand

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Exxon quarterly profit falls 46 percent

Exxon Mobil Corp on Thursday reported a 46 percent decline in quarterly earnings as a steep drop in crude prices cut into profits at the world's largest publicly traded oil company.

First Quarter Highlights

Earnings of $4.9 billion decreased 46 percent from the first quarter of 2014.
Earnings per share were $1.17 assuming dilution, a decrease of 44 percent.
Capital and exploration expenditures were $7.7 billion, down 9 percent from the first quarter of 2014, in line with plan.
Oil-equivalent production increased 2.3 percent from the first quarter of 2014, with liquids up 6 percent and gas down 1.6 percent.
Cash flow from operations and asset sales was $8.5 billion, including proceeds associated with asset sales of $484 million.
The corporation distributed $3.9 billion to shareholders in the first quarter of 2015, including $1 billion in share purchases to reduce shares outstanding.
Dividends per share of $0.69 increased 9.5 percent compared with the first quarter of 2014.
Production started at the Sakhalin-1 project's Arkutun-Dagi field, the last of the three fields to be developed. Peak daily gross production from the field is expected to reach 90,000 barrels and will bring total daily production at Sakhalin-1 to more than 200,000 barrels.
Production started at Hadrian South in the Gulf of Mexico with ExxonMobil's deepest subsea tie-back. Daily gross production is expected to reach approximately 300 million cubic feet of gas and 3,000 barrels of liquids from two wells.
Oil production started ahead of schedule at the Kizomba Satellites Phase 2 project offshore Angola. This capital-efficient project utilizes subsea tie-backs to optimize existing Block 15 facilities, increasing current production levels without requiring additional floating production, storage and offloading vessels. The project develops approximately 190 million barrels of oil with peak production currently estimated at 70,000 gross barrels of oil per day. The project is expected to increase total daily Block 15 production to 350,000 barrels.
Construction of an 84 megawatt cogeneration plant is underway at the Singapore refinery, which will improve the energy efficiency of the site upon completion. The project will enable the shutdown of less efficient power generation facilities and reduce carbon dioxide emissions. This project underscores ExxonMobil's commitment to improving energy efficiency, lowering emissions, and reducing costs.
Drilling resumed at Point Thomson on Alaska's North Slope as construction continues toward bringing the initial production systems, designed to produce up to 10,000 gross barrels per day of natural gas condensate, online in 2016. The initial production will provide reservoir development insights and economic benefits to Alaskans.

http://www.oilvoice.com/n/ExxonMobil-earns-49-billion-in-first-quarter-of-2015/9ecd2a81a147.aspx
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ConocoPhillips Profit Declines as Oil Prices Plunge

ConocoPhillips said Thursday that its earnings fell less than expected in the first quarter, even as the price it got for each barrel of oil plunged nearly 50%.

Shares edged up 0.7% in premarket trading as the company also backed its guidance for the year.

ConocoPhillips was the first big U.S. oil producer to slash its 2015 capital spending to deal with the plunging price of crude. In March, it said it would curb capital spending through 2017 to reflect expectations that commodities prices will remain volatile.

ConocoPhillips has said it would cut back on exploring for new sources of oil and gas, as well as on drilling in some shale formations in North America, including the Niobrara in Colorado.

For the first quarter, ConocoPhillips’ average realized price plunged to $36.96 a barrel from $71.21 a barrel a year ago. Meanwhile, its production level edged up slightly to 1.61 million barrels of oil equivalent a day, excluding Libya.

Overall, ConocoPhillips reported a profit of $272 million, or 22 cents a share, compared with $2.12 billion, or $1.71 a share, a year ago.

Excluding a deferred tax benefit, the company posted a per-share loss of 18 cents, compared with a profit of $1.81 a year ago.

Analysts polled by Thomson Reuters expected a per-share loss of 19 cents.

Operating costs fell to $2.1 billion from $2.3 billion a year ago.

http://www.wsj.com/articles/conocophillips-profit-declines-as-oil-prices-plunge-1430393936
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Vedanta writes down Rs 20k cr on oil business

In the biggest write-down in India's corporate history, Anil Agarwal-led Sesa Sterlite, which was renamed asVedanta last week, has been hit hard by falling crude prices as it booked nearly Rs 20,000 crore ($3 billion) as "goodwill impairment charges" related to its oil and gas business. The write-down resulted in the company posting the biggest quarterly loss in the country's corporate history. Vedanta reported a consolidated net loss of Rs 19,228 crore (about $3 billion) for the January-March quarter as against a profit of Rs 1,621 crore in the corresponding quarter last year.

http://timesofindia.indiatimes.com/business/india-business/Vedanta-writes-down-Rs-20k-cr-on-oil-business/articleshow/47102392.cms
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Eurasia Drilling extends deadline on Schlumberger deal

Russia's Eurasia Drilling said on Thursday it had agreed to extend a deadline on a proposed deal to sell a stake to international oilfield services firm Schlumberger from to April 30 to May 31.

It said both companies were continuing to cooperate with the Russian Federal Anti-Monopoly Service (FAS) and the Commission on Foreign Investment on the proposed merger.

Last month, Schlumberger said it planned to buy a 45.65 percent stake in Eurasia for about $1.7 billion, potentially paving the way for it to become the sole owner of Russia's most active oilfield services company.

Russian authorities have been concerned about complications that could arise from future international sanctions impeding the activity of investors operating in Russia.

The deal requires approval from the governmental commission.

Eurasia Drilling and FAS declined immediate comment.

http://www.reuters.com/article/2015/04/30/eurasia-schlumberger-delay-idUSL5N0XR1MN20150430
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U.S. shale firms revive hedging as oil rebounds, may vex OPEC

U.S. oil producers are rushing to take advantage of the rebound in oil markets by locking in prices for next year and beyond, safeguarding future supplies and possibly paving the way for a rebound in production.

The flurry of hedging activity in the past month will help sustain producers' revenues even if oil markets tumble again, which is bad news for OPEC nations, such as Saudi Arabia, that are counting on low prices to stunt the rapid rise of U.S. shale and other competitors.

Oil drillers are racing to buy protection for 2016 and 2017 in the form of three-way collars and other options, according to four market sources familiar with the money flows. In some cases, that means guaranteeing a price of no less than $45 a barrel while capping potential revenues at $70.

Implied volatility - a gauge of options prices - tumbled nearly 30 percent this month to a four-month low reflecting increased options selling.

"A lot of producers that have hedges on for 2015 are under-hedged for 2016," said John Saucer, vice president of research and analytics at Mobius Risk Group. The crude's rally from six-year lows plumbed in January and easing option premiums have opened a "great opportunity" to buy extra insurance against a new slump, he said.

Analysts tracking hedging say that U.S. shale producers are protected as much as 50 percent less in 2015 compared with 2014. With new hedges now, producers have found an opportunity to maximize cash flow by selling calls and protecting the downside.

http://www.reuters.com/article/2015/05/01/oil-hedging-idUSL2N0X51HP20150501
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Phillips 66 shelves plans for oil processing projects

Facing falling oil prices and a possible slowdown in oil production, Phillips 66 has shelved plans for two projects aimed at processing the glut of oil unleashed by the U.S. shale boom.

Months after the company applied for a permit to build a new condensate splitter, the project has been placed on the back burner for at least a year until prices recover, company officials said Thursday during an earnings call with investors.

The delay underscores the ongoing ambiguity surrounding the rules regarding exporting condensate, an ultra-light oil unlocked from shale, said Colton Bean of Tudor, Pickering, Holt & Co.

A decades-old ban prevents companies from sending shipments of crude overseas, but in confidential rulings last year, the Commerce Department’s Bureau of Industry and Security said two companies — Enterprise Products Partners and Pioneer Natural Resources — could export condensate after distilling it and separating into various components. Other companies have clamored for more clarity, but the agency has not issued further guidance.

Phillips 66 on Thursday also said it will similarly push back plans for a second fractionator, which separates natural gas liquids into its component parts. The first fractionator, under construction at the company’s Sweeny refinery, is slated to start operations later this year.

The Houston-based refining, pipeline and chemicals company said it remains committed to its slate of projects, including the nearly complete fractionator and a liquid petroleum gas export terminal in Freeport

http://fuelfix.com/blog/2015/04/30/phillips-66-profits-fall-37-percent-as-midstream-chemicals-weaken/

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U.S., Canada ready oil train safety measures

Canada's transport minister will be in Washington on Friday for a joint announcement with her U.S. counterpart aimed at harmonizing safety regulations on shipping crude oil by rail, a politically sensitive issue on both sides of the border.

Lisa Raitt and U.S. Transportation Secretary Anthony Foxx are expected to demand that railroad companies equip cars with electronically controlled pneumatic brakes, a proposal the industry has aggressively resisted.

They are also expected to address the timetable for each country to remove older rail cars from service, as well as set a requirement for thicker hulls on new cars. 

The rail and energy sectors have both resisted measures that they have said are too costly to implement for the small safety improvement they deliver.

Electronically controlled pneumatic brakes trigger all axles simultaneously rather than one at a time in current design and many safety advocates have said it is an important advance.

Large rail operators have lobbied against including an ECP brake mandate in the oil train rules, telling U.S. regulators in March that they "would not have significant safety benefits" and "would be extremely costly."

On Thursday, the leading voice for the refining industry said a five-year phase out of existing tank cars - a timetable endorsed by the U.S. National Transportation Safety Board - was unrealistic.

Of particular concern to regulators is crude oil originating from North Dakota's Bakken energy patch, where about 70 percent of the roughly 1.2 million barrels of oil produced daily moves by rail.

http://www.reuters.com/article/2015/05/01/usa-oil-railsafety-idUSL1N0XR30320150501
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Alternative Energy

Myth Of Offshore Wind Being Expensive Debunked

As for efficiency, it is now reported that China’s wind power produces more electricity than the United States’ nuclear power plants.

Now there are reports that wind power isn’t just more efficient than both gas-fired and nuclear power, but is also cheaper. This also includes offshore wind too.

According to Minds, Mike Parr, an analyst from Denmark, uncovered that today’s wind generators are actually cheaper to build and maintain, and they produce cheaper electricity; up to 60 percent cheaper. Utilizing public information on offshore wind turbines, Parr came up with such a conclusion that all three are associated to the fact that wind energy does not require the acquisition of fuel to operate.

“When we analyze the available data, we can draw some interesting conclusions about the evolution of costs in offshore wind. Offshore wind turbines already appear to be cheaper than combined-cycle gas turbines.”

Mike Parr actually goes into further detail in his article for Energy Post, in which he provides answers to some of the big questions pertaining to wind energy. It is also in this article Parr that debunks the myth that offshore wind turbines are too expensive. Apparently, the reason for such a belief is because said offshore wind turbines are receiving large subsidies. However, they are technically not needed, as the efficiency of the offshore wind turbines is analysed to be efficient, ergo its operators are making a ton of cash.

http://www.inquisitr.com/2054210/myth-offshore-wind-expensive-debunked-wind-power-cheaper-than-gas-fired-nuclear-power/
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Tesla Ventures Into Solar Power Storage for Home and Business

In recent years, the fast-growing popularity of solar panels has intensified a central challenge: how to use the sun’s energy when it isn’t shining.

Now, Tesla Motors, the maker of luxury electric sedans, says it is taking a big step toward meeting that challenge with a fleet of battery systems aimed at homeowners, businesses and utilities. The company’s foray into the solar storage market will include rechargeable lithium-ion battery packs that can mount to a home garage wall as well as battery blocks large enough to smooth out fluctuations in the grid.

“We’ve obviously been working on building a world-class battery, a superefficient and affordable way to store energy,” said Khobi Brooklyn, a Tesla spokeswoman. “It’s just that we’ve been putting that battery in cars most of the time.”

To herald its ambitions in the field, the company scheduled an event Thursday night at its design studio in Hawthorne, Calif., with Elon Musk, its chief executive, presiding.

In a news conference before the event, Mr. Musk said the consumer battery, called the Powerwall, would sell for $3,500, and was derived from the batteries that Tesla uses in its Model S vehicles. The device, which Tesla will start producing later this year, will be installed by licensed technicians.

The batteries will be connected to the Internet and can be managed by Tesla from afar. Customers can connect up to nine battery packs to store larger amounts of power.

“If you have the Tesla Powerwall, if the utility goes down, you still have power,” Mr. Musk said. He added: “The whole thing is an integrated system that just works.”

Energy and auto analysts have generally responded positively to Tesla’s move. “Elon thinks that there’s a long-term gain to be made or a long-term play not only in electric cars but also in electric energy storage — and he’s probably right,” said Karl Brauer, an analyst at Kelley Blue Book. “There’s a universal application for portable energy and storable energy that goes to everybody. It’s really just a matter of getting the business model together.”

Tesla’s announcement comes as energy companies are moving in the same direction. Sungevity, a leading solar installer, announced a partnership this week with Sonnenbatterie, a smart energy storage provider in Europe, to begin offering their systems to its customers. NRG, one of the largest independent power producers in the United States, is also developing storage products.

“We have to be in this space,” said Steve McBee, chief executive of NRG Home. “If your goal is to build a meaningful solar business that is durable over time, you have to assume that that solar business is going to morph into a solar-plus-storage solution. That will be mandatory at some point.”

http://www.nytimes.com/2015/05/01/business/energy-environment/with-new-factory-tesla-ventures-into-solar-power-storage-for-home-and-business.html?_r=0
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SunPower, First Solar Report Loss as They Hold Onto More Solar Power Assets

SunPower Corp. reported its first loss in two years as the second-largest U.S. solar manufacturer pursues a new strategy to keep control of certain power assets instead of selling them.

The net loss was $9.6 million, or 7 cents a share, compared with profit of $65 million, or 42 cents, a year earlier, San Jose, California-based SunPower said in a statement Thursday. Excluding one-time items, per-share profit was more than the 8-cent average of eight analysts’ estimates compiled by Bloomberg.

SunPower said in February its plan to put some power plants and a group of rooftop solar systems into a joint venture with competitor First Solar Inc. would reduce profit. The so-called yieldco will be publicly traded and a guaranteed buyer of their assets, reducing capital costs. The entity, which will be controlled by its parents and named 8Point3 Energy Partners LP, offers investors steady returns from long-term power contracts.

SunPower slashed its first-quarter guidance 90 percent after announcing the joint venture, dropping it to 5 to 15 cents a share from as much as $1.50 on an adjusted basis. It withdrew its forecast for 2015 profit without providing new figures.

China will be the company’s fastest growing region in the next five years, Chief Executive Officer Tom Werner said in an April 24 interview with Bloomberg Radio. SunPower and Apple Inc. are building two 20-megawatt solar power plants in China’s Sichuan Province.

http://www.bloomberg.com/news/articles/2015-04-30/sunpower-reports-loss-as-it-holds-onto-more-solar-power-assets

First Solar Inc. swung to a loss in the first quarter as revenue plunged, saddled by project delays and completed projects held ahead of its proposed joint venture with fellow solar-panel maker SunPower Corp.

The Tempe, Ariz., company had warned last quarter it would post a loss in the quarter as it held on to completed projects, rather than sell them, as it moved to form a “yieldco” with SunPower.


http://www.wsj.com/articles/first-solar-swings-to-a-loss-1430430087


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Caterpillar Expands Renewable Power Offerings in Conjunction with First Solar

Caterpillar and First Solar, Inc. today announced a strategic alliance to develop an integrated photovoltaic (PV) solar solution for microgrid applications. Under the agreement, First Solar will design and manufacture a pre-engineered turnkey package for use in remote microgrid applications, such as small communities and mine sites. The package will feature Cat-branded solar panels manufactured by First Solar and will include a balance of system components.

Caterpillar will exclusively sell and support the integrated solution featuring Cat-branded solar panels through its worldwide Cat dealer network, along with its current offerings of generator sets and energy storage. Acting as a central source, Cat dealers will be uniquely positioned to provide customers with this fully integrated and supported single solution in the large and rapidly growing microgrid market today.

Microgrids provide value to prime power diesel and gas customers by integrating renewable energy, such as solar power, with generator sets. With these solutions, Caterpillar can help deliver reliable, cost-effective and sustainable energy for customers.

http://www.prnewswire.com/news-releases/caterpillar-expands-renewable-power-generation-offerings-in-conjunction-with-first-solar-300075532.html
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Agriculture

Potash Corp. misses 1Q profit forecasts

Potash Corp of Saskatchewan's quarterly profit missed estimates and the company cut its full-year profit forecast, citing lower-than-expected potash prices.

Smaller U.S. rival Mosaic Co also reported a profit that fell short of estimates, hurt by lower phosphate margins.

Both Potash and Mosaic reported higher prices for potash in the quarter ended March 31. But Potash, the world's biggest fertilizer company by market value, warned that 2015 prices for the crop nutrient would likely be lower than expected.

Potash prices are yet to recover after a collapse in 2013, which was triggered by top producer Russia's Uralkali exiting a trading venture with Belarus. Prices have improved since then but are under pressure due to increased competition.

Potash cut its full-year profit forecast to $1.75-$2.05 per share from $1.90-$2.20 per share, sending its shares down 3.3 percent in premarket trading.

The company also forecast second-quarter profit of 45 cents to 55 cents per share, lower than analysts' average estimate of 56 cents, according to Thomson Reuters I/B/E/S.

Potash, the second-biggest potash producer by output after Russia's Uralkali OAO, reported an adjusted profit of 44 cents per share, missing the average analyst estimate of 49 cents.

Potash's revenue slipped marginally to $1.67 billion, Mosaic's rose 7.7 percent to $2.14 billion.

http://www.reuters.com/article/2015/04/30/mosaic-results-idUSL4N0XR5DL20150430
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Mosaic posts 36 pct rise in quarterly profit

U.S. fertilizer company Mosaic Co reported an about 36 percent rise in quarterly profit, helped by lower costs and higher phosphate and potash prices.

Net earnings attributable to the company rose to $294.8 million, or 80 cents per share, in the first quarter, from $217.5 million, or 54 cents per share, a year ago.

Mosaic earned 70 cents per share excluding items in the first quarter, missing analysts' average estimate of 74 cents.

Revenue rose 7.7 percent to $2.14 billion.

http://www.reuters.com/article/2015/04/30/mosaic-results-idUSL4N0XR5BX20150430
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Precious Metals

Ruthenium

  1.  Regulatory Standards - Environmental Protection Agency            www.epa.gov/cleandiesel/reg-prog.htm              Beginning June 1, 2006, refiners began producing ultra-low sulfur diesel fuel with ... In addition, emission standard for large commercial marine diesel vessels ...
  2. Image titleWithin a year of the new EPA standard Ruthenium roofed it!
  3. . Ruthenium disulfide appears to be the single most active catalyst, (in the refinery desulphiseration process).
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Goldcorp posts loss as gold prices decline

Goldcorp Inc., the world’s biggest gold producer by market value, reported first-quarter earnings that missed analysts’ estimates after gold prices fell.

The net loss was $87-million, or 11 cents a share, compared with net income of $98-million, or 12 cents, a year earlier, the Vancouver-based company said Thursday in a statement. Earnings excluding one-time items were 1 cent a share, trailing the 9– cent average of 16 estimates. Sales increased to $1.02-billion from $878-million, topping the $962.9-million average estimate.

“The decrease in adjusted net earnings was a result of lower realized margin on gold sales, higher depreciation and depletion expense and a higher effective tax rate,” Goldcorp said in the statement.

Like many of its peers, Goldcorp is working to lower costs and focus on the most profitable operations following two consecutive annual declines in the price of gold. The company, which operates in North and South America, is also ramping up production at new mines in Argentina and Canada.

Gold futures averaged $1,217.46 an ounce in the first quarter on the Comex in New York, 5.9 per cent less than a year earlier.

Goldcorp’s all-in sustaining costs, a measure to compare miners’ performance, were $885 an ounce in the first quarter, better than the preliminary guidance of $900 the company reported April 8.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/goldcorp-posts-loss-as-gold-prices-decline/article24182917/
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Base Metals

BHP declares force majeure due to blockades at Cerro Matoso

BHP, said on Thursday that union blockades at its Cerro Matoso nickel operation had forced it to declare force majeure with some customers. 

Unionised workers have been blocking access to the Cerro Matoso ferronickel mine and processing plant in Colombia since April 14 to protest a change to 12-hour shifts from eight previously. Since last week, BHP has been flying some workers into the ferronickel plant with a hired helicopter in order to resume production, at least partially, despite the blockades that the company says are illegal. 

"As a result of an illegal union work stoppage and blockade of its plant facilities at the Cerro Matoso operation, it is operating at less than full capacity," a company spokesperson said in an emailed statement. "As a result, and, as is normal practice, we have taken the prudent step of issuing force majeure notices to customers and the Colombian State Mining and Environmental Authorities."

 "The company will continue to pursue a resolution of this matter, which relates to a change in work rosters within some business units, directly with the union and through legal avenues."

http://www.miningweekly.com/article/bhp-declares-force-majeure-due-to-blockades-at-cerro-matoso-2015-04-30
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Kenmare gets revised bid from Australia's Iluka

Irish titanium miner Kenmare Resources Plc said it had received a revised bid from Iluka Resources Ltd and that it would work with the Australian company on the proposal in the interests of its shareholders.

Kenmare said the revised proposal would trade 0.016 share of Iluka for every Kenmare share.

Kenmare rejected Iluka's offer of 0.036 new Iluka share for each Kenmare share in June 2014. Both shares have fallen since then.

http://www.reuters.com/article/2015/04/30/kenmare-res-ma-iluka-idUSL4N0XR3SY20150430
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Steel, Iron Ore and Coal

Brazil's Vale plans to substitute out old production, reports Q1

Brazil's Vale SA said on Thursday it expects to replace some old higher-cost iron ore production as new capacity comes on stream, the clearest sign yet the miner could cut future output forecasts due to weak prices.

Any move to curb output growth by the world's largest producer of iron ore will be closely watched by a market currently in oversupply due to new capacity from Australia and Brazil combined with slower demand growth in China.

This glut, as well as expectations it could get worse, has caused the price of iron ore to fall 47 percent over the past 12 months.

This year "we are removing 22 million tonnes which have less important, weaker margins," Vale's Head of Ferrous Peter Poppinga said during a conference call to discuss first quarter results. This will be replaced with new, cheaper iron ore coming on stream from expansion projects, he said.

"If the market demands, we are prepared to reduce production from the south and southeast system," Poppinga added, referring to the company's mines in the Brazilian state of Minas Gerais.

Poppinga said Vale's production forecast for 2015 would remain 340 million tonnes, but did not specify whether adjustments could be made to forecast for next year and beyond.

Vale has previously said it expects to continue increasing production over the next few years, reaching 376 million tonnes next year and 453 million tonnes in 2018.

The company reported a first quarter net loss of $3.2 billion on Thursday as it grapples with lower iron ore prices.

http://www.reuters.com/article/2015/04/30/vale-results-call-idUSL1N0XR1WA20150430
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India to cut export tax on low-grade iron ore in boost for Goa

India will cut an export tax on low-grade iron ore to 10 percent from 30 percent, Finance Minister Arun Jaitley said on Thursday, in a big boost for top exporting state Goa which is close to restarting its mining industry.

Court action against illegal mining has shut the industry in Goa for more than two years, although companies including top miner Vedanta Ltd are starting to get approval to resume work in about a month.

The new export duty will be effective from June 1, Jaitley told the parliament on Thursday. The tax stays at 30 percent for higher grades.

Iron ore prices have almost halved in the past 12 months, and are hovering near their lowest in a decade. This has made Goa's low-quality ore, which contains less than 58 percent iron, unappealing to traditional buyers in China, who can now buy better grades of the steelmaking raw material at competitive prices.

Goa Mineral Ore Exports Association Secretary Glenn Kalavampara welcomed the move.

"Now the head is slightly above water," Kalavampara said. "We can at least breath now but prices are still a concern."

Goa is unlikely to be able to start exports before October at the earliest pending some approvals and as the four-month monsoon season begins in June, an official with a mining company in Goa said.

http://in.reuters.com/article/2015/04/30/india-ironore-idINKBN0NL1GI20150430
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Atlas Iron to keep mining, mega producer cuts may help

Australia's Atlas Iron Ltd , which halted mining in April after a slump in iron ore prices pushed it into the red, said it will keep producing at two of its mines this month, supported by its contractors and a rebound in prices.

Australia's fourth-largest iron ore miner, which has been in talks with its creditors to keep it afloat, said it would now seek more permanent arrangements with key contractors so it can operate in the long term.

Tumbling iron ore prices fell to decade lows in early April, hurt by a rise in output from mega miners as demand growth slows in China, threatening the survival of many smaller producers, like Atlas.

"The company's operational review, while incomplete, is generating encouraging results and negotiations with key creditors (including secured creditors) are ongoing," it said in its quarterly production report.

Analysts said the miner's position had been improved by firmer prices and a new product it can sell at a premium, but it may benefit most from signs that mega miners may be more cautious on big production increases.

Brazil's Vale, the world's top iron ore miner, said on Thursday it would cut 30 million tonnes of high-cost production over the next two years with prices still wallowing near 10-year lows.

"What that really says is: 'We're not going to compete on price anymore.' It's a signal that the iron price has hit a bottom," said Mike Harrowell, director of resources research at broker BBY Ltd.

Spot iron ore rallied 25 percent between April 10 and 28, with the benchmark 62-percent grade .IO62-CNI=SI hitting $59.20 per dry metric tonne on Tuesday, its highest since March 5. It stood at $56.90 on Thursday.

Atlas, which aimed to produce 13 million tonnes this year, said its new operating model was based on breaking even at an iron ore price of less than $50 a tonne, including its interest and sustaining capital expense.

The price rebound was partly spurred last week after world no.3 producer BHP Billiton's flagged it would slow its long term expansion by 20 million tonnes.

Analysts do not expect rival Rio Tinto to follow suit as it has long had a mantra to keep producing at full tilt as long as it's making a profit.

Atlas said its Abydos mine had continued operating and it would reopen its Wodgina mine, its lowest-cost operation, in May. It was assessing options for its Mt Webber mine.

It said it significantly cut costs at two of its three operations with the help of its contractors, transport group McAleese Ltd and stevedore group Qube Holdings Ltd

The miner said it remained solvent and had not breached any debt covenants on its $275 million five-year loan which matures in 2017. Its shares, which were put on a voluntary suspension on April 7, would remain suspended.

http://www.reuters.com/article/2015/05/01/atlas-iron-australia-idUSL4N0XR8JW20150501
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