Mark Latham Commodity Equity Intelligence Service

Friday 22nd May 2015
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    Oil and Gas

    OPEC Refuses to Yield in Battle for Oil-Market Share

    OPEC will stick with the strategy of favoring market share over prices when it meets next month because rival producers are already starting to buckle.

    All but one of the 34 analysts and traders surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will maintain its daily production target of 30 million barrels when it meets in Vienna on June 5.

    Saudi Arabia, the biggest of OPEC’s 12 members, shaped the strategy at the last meeting in November, arguing that the usual response of cutting output to boost prices would not address the threat from shale and other higher-cost suppliers. Prices rose 46 percent since mid-January as producers cut spending plans and the number of active U.S. drilling rigs fell by the most ever.

    “Dramatic cuts in spending and drilling are finally having an impact, so why on earth would Saudi Arabia change course now their strategy is just starting to bear fruit,” Mike Wittner, head of oil research at Societe Generale SA, said by phone . “Anyone who expects anything to happen at this meeting is going to be sorely disappointed.”

    Brent crude, an international benchmark, traded at $66.37 a barrel at 12:26 p.m. Singapore time. While that’s 43 percent below last year’s high, it’s 47 percent more than the low reached Jan. 13.

    OPEC’s 12 members pumped about 31.2 million barrels a day of crude in April, almost 3 million a day more than the average amount the world requires from the group this quarter, according to the Paris-based International Energy Agency.

    While some members, such as Iran and Venezuela, said they opposed the Nov. 27 decision to maintain production, several OPEC officials have signaled this month that the group will continue with its current course. Iranian Deputy Oil Minister Roknoddin Javadi said on May 18 that that the existing production target is appropriate.

    U.S. oil producers idled more than half of the country’s drilling rigs since October, according to data from Baker Hughes Inc. The nation’s crude production fell 1.2 percent to 9.3 million barrels a day last week, the biggest drop since July, Energy Information Administration data show.

    Global investment in oil production might fall by $100 billion this year, according to the IEA.

    Demand growth will accelerate to 1.3 million to 1.4 million barrels a day this year, Chris Bake, an executive director at Vitol Group, the world’s largest independent oil trader, said at a conference in London on May 20. Lower prices and economic growth increased demand in Europe, the Middle East and India, he said. Global oil demand rose 700,000 barrels a day last year, according to the IEA.

    “OPEC doesn’t really have a need to change course,” Francisco Blanch, Bank of America Corp.’s head of commodities research, said by phone . “The strategy has achieved its goal of reining in supply and stimulating demand.”

    http://www.bloomberg.com/news/articles/2015-05-21/opec-seen-unyielding-in-battle-with-shale-for-oil-market-share
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    Unipec sells crude stored on megatanker as prices rise -sources

    Chinese trader Unipec has sold 2 million barrels of crude held for months on one of the world's largest tankers, industry sources said, as rising oil prices prompt commodity firms to offload cargoes from floating storage.

    Storing crude on unused tankers re-emerged as a trading strategy towards the end of last year when weak demand and strong supply weighed on prices for delivery in the near future, while contracts for later delivery rose to a premium, a market structure known as contango.

    But with a narrowing contango in benchmark Brent crude , traders are trying to sell oil they have stored, re-injecting fuel into an already oversupplied market.

    Unipec, the marketing arm of Chinese oil giant Sinopec , sold 2 million barrels of Nigerian Qua Iboe crude for delivery in July to Indian refiner Hindustan Petroleum Corp , three trading sources said. They declined to be identified as they were not authorised to speak with media.

    Unipec did not respond to requests for comment, while an HPCL spokesman said he could not immediately comment.

    The crude will be delivered from the TI Europe, an Ultra Large Crude Carrier (ULCC) off Singapore. The ship, one of only two remaining ULCCs in the world as they are too big for most ports, is capable of carrying over 3 million barrels, more than 3 percent of daily global crude demand.

    Unipec chartered the vessel last September, just as Brent crude fell below $100 a barrel, the beginning of a dramatic rout in prices.

    Reuters ship-tracking data suggests it has stored crude since January 2015.

    More than 30 tankers were put on long-term charter early this year to trade contango, although most were later used for regular deliveries as prices recovered.

    "Everyone is trying to exit from storage," said a trader with a large trading house.

    At least two Very Large Crude Carriers (VLCC), slightly smaller than ULCCs, have been storing crude off West Africa since February, other traders said.

    http://www.reuters.com/article/2015/05/22/oil-storage-idUST9N0NH05120150522
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    Inpex’s $34bn Ichthys LNG project due to open in late-2016

    Japanese oil company Inpex has announced that its $34bn Ichthys project is set to open in late-2016.

    Inpex chief executive Toshiaki Kitamura told the West Australian that the Ichthys project was 68% complete.

    Industry speculation is that the project may face potential delays and would fall short of budget in addition to timetable blowouts.

    Inpex is forging ahead with the project development with its 30% project partner Total.

    The Ichthys project, which secured development approval in January 2012, started the deepwater pipelay for its 889km-long gas export pipeline in February.

    The remaining 718km offshore section of the 42in diameter GEP will be laid by Saipem's deepwater installation vessel Castorone.

    As part of the project's ongoing offshore installation campaign, mooring installation works have started in May at the Ichthys Field in the Browse Basin, 220km offshore Western Australia.

    The first of 49 foundation piles, each 66m long and weighing more than 450t, was deployed and driven into the seabed at a depth of 250m.

    According to the company, the Ichthys LNG project had installed 47km of flowlines, more than 30 flowline sleeper structures and a 6,500t riser support structure in the Ichthys Field as of May 2015.

    http://www.offshore-technology.com/news/newsinpexs-34bn-ichthys-lng-project-track-open-late-2016-4582632
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    LNG players think afresh in face of market 'disaster'

    When famed short seller Jim Chanos described the liquefied natural gas market last month as "a disaster waiting to happen", investors around the world took note.

    Fronting Woodside Petroleum's investor briefing on Thursday,  head of marketing and shipping Reinhardt Matisons told a different story.

    He put the flatlining of LNG demand over the past three years down to a lack of new supply entering the market. That is set to dramatically change, with more than 100 million tonnes of new supply - representing more than 40 per cent of the existing market - set to come on from new projects by 2020.

    Matisons acknowledged those lumpy chunks of new capacity would mean "volatile" prices as they are absorbed. But the longer-term picture still showed the need for major new investment, with demand more than doubling to about 500 million tonnes in 2030 from 240 million now.

    While there's no shortage of prospective LNG ventures aiming to capture that market, depressed oil prices will see off many of them, according to Woodside.

    In the world's biggest importer, Japan, demand is on the decline, but the expiry of several long-term contracts later this decade opens up a major opportunity for new sales. Meanwhile, the proliferation of new LNG importers, from Thailand to the Middle East, means plenty of untapped markets to target.

    Woodside is rounding out its emerging LNG trading business to take advantage, with boss Peter Coleman looking to sign up for capacity at LNG import terminals around Asia.

    Asia's tally of LNG import terminals, currently at 60, is set to surge, with 40 more under development. Access to capacity in a few of those is the missing piece in Woodside's trading division, which already involves a dedicated LNG tanker, LNG available for sale from within its expanding portfolio and through gas from a third-party plant in Texas.

    That US deal brings geographic and pricing diversity into Woodside's LNG portfolio, improving marketing prospects for projects like the Browse floating LNG venture in Western Australia.

    Woodside isn't the only local LNG player thinking of new ways to do business, with revelations from Santos this week that floating LNG may be back on the table for its Bonaparte gas resource off Australia's north. Costs could be halved to $US5 billion using the new design, which would use a plant mounted on a barge within Darwin Harbour, rather than on a larger vessel out in open seas, offering a lifeline to the otherwise stranded gas resource.

    http://www.afr.com/business/energy/gas/lng-players-think-afresh-in-face-of-market-disaster-20150521-gh6a0d
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    UK offshore workers strike ballot to go ahead

    GMB Strike Ballot Goes Ahead After Talks Fail To Resolve Dispute Over Changes To Terms For Offshore Workers In UK Waters

    We did make some progress today but sadly not enough to enable us to go back to members with proposals to resolve this dispute says GMB.

    GMB and Unite officials held further talks on 20th May on the dispute over unilateral changes to working conditions for workers covered by the Offshore Contractors Agreement (OCA) in UK waters.

    David Hulse, GMB National Officer, said 'We did make some progress today but sadly not enough to enable us to go back to members with proposals to resolve this dispute.

    We will now have to proceed with organizing an official ballot for industrial action as the members asked us to do in a consultative ballot earlier this year.

    We will concentrate now on making the necessary arrangements to enable us to go ahead with EBRS for independent ballot for action. We remain available for talks should the employers want to pull back from going ahead with the unilateral changes to working practices that has provoked this dispute.'

    Bill Murray, chief executive of the Offshore Contractors' Association, said: 'We are extremely disappointed by today's decision by trade union officials to go to an industrial ballot.

    'The industry as a whole recognises the need to make efficiencies and increase productivity in order to extend the life of the UK North Sea and maintain jobs in the sector. The offer we put on the table today - worth between an extra £1,600 and £8,000 per annum per individual - can only be paid for through productivity increases.

    'In its World Economic Outlook the International Monetary Fund highlighted that the UK has the highest operating costs of any oil producing country in the world. Even as the barrel price recovers there are other parts of the world that will be better placed to take advantage of this if we don't manage our costs.'

    http://www.oilvoice.com/n/UK-offshore-workers-to-strike/30da2f43b0bf.aspx
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    ENOC appeals to Dragon Oil investors with 735p-a-share offer

    Emirates National Oil Co (ENOC) went public with an offer to buy out minority shareholders in Dragon Oil, saying talks with a committee set up by the Turkmenistan-focused oil explorer had not yet produced the endorsement it believed its "full and fair" bid warranted.

    ENOC, which already owns 54 percent of Dragon Oil, had made an approach to buy the remainder on March 15, set at an undisclosed premium to Dragon's closing price of 509.5 pence on March 13.

    ENOC said its latest proposal, which values Dragon Oil at 735 pence a share or 3.6 billion pounds ($5.6 billion) in total, was made to the company's independent committee, set up after ENOC made its first proposal, on May 14.

    It said the offer represented a substantial increase on its opening gambit and it believed it was fit to recommend to shareholders. Dragon Oil said it had received the offer and its committee was still considering it.

    "There is great uncertainty in the sector and we believe, as a long term and supportive shareholder, that Dragon Oil has achieved as much as is possible through its existing upstream strategy," ENOC Chief Executive Saif Al Falasi said in a statement issued shortly before Thursday's London stock market close.

    "Moreover, Dragon Oil stands to benefit significantly from being part of the integrated platform that ENOC offers. To that end, we want to ensure that all of Dragon Oil's shareholders have the opportunity to evaluate the proposal on its merits."

    ENOC said buying Dragon Oil would help it become a fully-integrated global oil and gas company, by adding the target's upstream operating experience.

    http://www.reuters.com/article/2015/05/21/dragonoil-ma-enoc-idUSL5N0YC4G520150521
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    This Innovation Will Help U.S. Companies Win The Oil Price War

    Although some US oil companies are struggling with low oil prices, a new wave of innovation is hitting the oil patch, allowing for a significant reduction in drilling costs.

    Now, one small Denver-based oil company has come up with a whole new model for producing in order to further drive down costs. Described as an 'oil factory,' Liberty Resources LLC and its CEO Chris Wright have developed a novel method for extracting oil. The firm is starting out by doing everything it can to eliminate the need for trucks traveling to and from its site. The company notes that trucks are often an irritant with local residents and more importantly, they add significantly to the cost of producing oil.

    To do that Liberty will build a series of pipelines to its massive 10,000 acre Bakken site. The firm has pipelines that carry water and gas produced by wells, as well as other pipelines to carry oil. This technique is called 'centralized resources' and while other firms like Continental have explored it to some extent, Liberty is pioneering the process. In essence, the firm is trying to bring the efficiency focus of industrial engineering to the production focus of petroleum engineering.

    In addition, like Statoil and a few other larger oil firms, Liberty is also focused on creating a production process than can be stopped and started based on optimal production times, costs, and oil prices. This could be an invaluable capability. Take Russia for example. Russian oil wells will freeze if they are shut down, and the country lacks significant storage capacity. As a result, Russian oil producers cannot respond to price downturns.

    Moreover, Liberty is developing the entire 10,000-acre site to be fracked at once with nearly a 100 oil wells operating simultaneously. By drilling multiple wells at once and controlling inputs and output supply, the firm has significant cost advantages versus traditional ad hoc production methods. Even employee costs are lower, with Liberty citing the use of a third less workers than a conventional production process.

    So what is the combined result of all these efficiency improvements? Liberty says it will still make money even with oil at $50 a barrel. And the firm expects costs to keep falling as oil service companies become more efficient and lower their own prices. At these prices and efficiency levels, US production becomes competitive with virtually any other oil source. And if efficiency gains continue at this pace, the US may weather the onslaught of Saudi oil much better than many expected.

    http://www.oilvoice.com/n/This-Innovation-Will-Help-US-Companies-Win-The-Oil-Price-War/fd123efa651c.aspx
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    Bear Head LNG facility might not make it off the ground

    A U.S. energy consultant doubts a planned liquefied natural gas facility in Cape Breton will ever be built.

    The province has approved construction of a $4 billion plant in Richmond County.

    Barbara Shook, bureau chief of the Houston-based Energy Intelligence Group, says the region is competing with massive LNG projects in the U.S. that are ready to go

    "I just don't see how the Nova Scotia project can compete with somebody who actually has money, who actually has a contractor, who actually has customers, who actually has supply," she said.

    John Godbold, the project director for Bear Head LNG Corporation, sees big potential for exporting.

    The company wants to build a plant that would export eight million tonnes a year of liquefied natural gas.

    He says they're getting ahead of other projects in the region.

    "This final approval provides tremendous credibility in the global LNG market and really sets us apart from the others in terms of which project is really going to go ahead first," he said.

    Godbold says the company, with its Australian parent, is investing millions.

    The provincial approval means the company can now move to engineering design, look for customers and secure a source of natural gas.

    The company will make a final decision on going forward next year. Operations could start by 2019.

    Bear Head purchased the Point Tupper site from Anadarko Global Holdings Company in August for $11 million.

    http://www.cbc.ca/news/canada/nova-scotia/bear-head-lng-facility-might-not-make-it-off-the-ground-1.3081633
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    Oil Rout Spurs Canadian Pacific to Cut Shipments Forecast Again



    Canadian Pacific Railway Ltd. cut its forecast for moving crude by rail for a second time in four months because of production delays and lower demand for the commodity.

    This year’s total will probably be 100,000 to 140,000 carloads, Chief Operating Officer Keith Creel said Wednesday. Canadian Pacific had forecast 140,000 in January, a reduction from its original outlook of 200,000.

    “The 140,000 number is a question mark, I’ll just be honest about it,” Creel said at a Wolfe Research conference in New York. “We thought we were being conservative when we went from 200 to 140. The world has changed around all of us.”

    The prospect of an even steeper slide in oil shipments showed the widening fallout from the rout in crude prices, which have tumbled 45 percent since a 2014 peak of $107.26 a barrel. In the U.S., first-quarter oil carloads fell 14 percent from the fourth quarter, the Association of American Railroads said Wednesday without giving a tally for the Canadian carriers.

    Two customers, Exxon Mobil Corp. and Plains All American Pipeline LP, will send less crude by rail than first expected, Creel said. Exxon’s facility in Edmonton, Alberta, will rely more on pipelines, while shipments from Plains’ Kerrobert facility probably won’t start until September or October, rather than July or August, he said.

    “With those two headwinds, is 140 possible? Maybe,” Creel said. “It’s not, to me, going to be south of 100, based on the run rate that we see and with some of that business coming on line. So somewhere in between is what I would guesstimate.”

    http://www.bloomberg.com/news/articles/2015-05-20/oil-rout-spurs-canadian-pacific-to-cut-shipments-forecast-again
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    Alternative Energy

    Hanergy parent says financial condition "good" after unit's share plunge

    The parent of Chinese solar company Hanergy Thin Film Power Group said on Thursday it is "in good financial condition" a day after shares in its listed unit tumbled nearly 50 percent.

    In a statement posted on its website, the parent company also said it had not sold any of the 30.6 billion shares it holds in its Hong Kong-listed unit, which was suspended from trading on Wednesday following the share plunge.

    The Beijing-based group has not engaged in any financial derivative trading with any institutions or individuals, using its shares in its Hong Kong listed subsidiary, it added.

    Hong Kong-listed Hanergy Thin Film Power lost half its market value of nearly $40 billion in 24 minutes on Wednesday, and a source told Reuters it is now under investigation by Hong Kong's market watchdog.

    http://www.reuters.com/article/2015/05/21/hanergy-stocks-statement-idUSL3N0YC2W320150521

    Hanergy Thin Film Power Group Ltd appointed Goldin Financial Holdings as a financial adviser in February this year, a stock exchange filing showed, linking companies whose share price values have collapsed in the last two days.

    Hanergy appointed Goldin to advise it on a deal whereby Hanergy would supply solar panels to its parent company, the Hong Kong bourse filing showed.

    Trading in Hanergy was suspended on Wednesday after a plunge that saw its shares lose half their value. Goldin Financial fell by more than 60 percent on Thursday.

    http://www.reuters.com/article/2015/05/21/hanergy-tfp-goldin-fin-hold-filing-idUSL3N0YC3M120150521
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    US retailers to produce 7 billion kilowatt renewable energy by 2020

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    By the end of 2020, Wal-Mart says it wants to nearly quadruple its global production of renewable energy. And in the US, the retailer is leading the push toward greater use of solar energy.

    The world's largest retailer has set a goal of eventually being supplied by 100 percent renewable energy.

    Already, these solar panels produce two-point-two billion kilowatt hours, each year, from panels on top of its stores. That's the equivalent of powering 180,000 US households.

    The director of World Wildlife Fund Marty Spitzer says the plummeting cost of solar panels is helping the push.

    "We're in the middle of a revolution and sometimes it's hard to see what's actually happening around you in the middle of something. Whether it's homeowners putting solar on rooftops, whether it's communities investing in solar at utility scale or in community solar gardens, or whether it's corporations putting solar on their rooftops, we are at the crest of a wave," Spitzer said.

    Wal-Mart aims to go from its current global solar-power generation of two-point-two billion kilowatt hours to seven billion by 2020. That's the equivalent of powering 570,000 US homes.

    To reach its goals, Walmart also need to buy that energy from traditional utility supplies. However, some local utility companies have been resistant to integrating solar fearing it will threaten profits. But, with help from the World Wildlife Fund, Wal-Mart and 34 other major corporations are negotiating with these traditional grid suppliers to embrace solar.

    http://english.cntv.cn/2015/05/22/VIDE1432266243960204.shtml
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    Vestas wins Isle of Wight wind contract

    Danish turbine manufacturer Vestas has been selected as the preferred supplier for an offshore wind farm off the Isle of Wight.

    It will provide its V164-8 turbines for the Navitus Bay Project, which is expected to have a capacity of 970MW.

    Vestas said the project could have a maximum of 121 turbines but is waiting for an order.

    The company has already created more than 200 full time jobs at its blade production facility on the Isle of Wight.

    Andrew Turner, Isle of Wight MP said: “This is great news for our Island economy and the skilled manufacturing base that we continue to build.

    “The selection of MHI Vestas as the preferred wind turbine supplier also displays a commitment from Navitus Bay to materially benefit our local economy and communities. It also further cements the Island at the heart of the green energy revolution.”

    http://www.energylivenews.com/2015/05/22/vestas-wins-isle-of-wight-wind-contract/
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    Uranium

    China's nuclear power capacity to reach 30 GW by year end

    China will have 30 GW of nuclear power capacity by the end of 2015, said Xu Yuming, deputy director of the China Nuclear Energy Association on May 21.

    Presently there are 23 nuclear power units operating in China, with a combined capacity of 21.4 GW, while 29 units are being built or planned, Xu said.

    The government planned to increase China's total nuclear power capacity to 58 GW by 2020, a rise of 170% from the current level.

    Xu estimated this will require 100 billion yuan ($16.34 billion) of investment every year.

    It is expected that China's electricity consumption will double by 2030, Xu said, adding efforts should be made to promote clean energy including nuclear power.

    http://en.sxcoal.com/0/119232/DataShow.html
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    Agriculture

    Potash Corp evaluating SQM, ICL stakes; other holdings 'strategic'

     Potash Corporation of Saskatchewan Inc Chief Executive Jochen Tilk said on Thursday that he views the company's stakes in fertilizer companies Sinofert Holdings and Arab Potash Company as "strategic," but continues to review whether to keep its shares in ICL and SQM.

    Tilk, speaking at a BMO investor conference in New York, said if Potash Corp could not build on its SQM and ICL minority stakes, it will consider whether it should keep them.

    Potash Corp has control over how Jordan's Arab Potash Company markets its potash, and Tilk said the Sinofert stake gives Potash a window into the Chinese market.

    But the company does not have as much influence as it wants over SQM and ICL.

    Tilk said in an interview that he has not spoken with Israeli Prime Minister Benjamin Netanyahu about whether he would permit a foreign company to take control of ICL, in which the government holds a golden share.

    Potash Corp tried under former Chief Executive Bill Doyle to gain a majority stake in ICL, but ran into strong opposition and backed off in 2013.

    Tilk, who took the Potash Corp helm last July, announced a review in December of the company's four major equity stakes, which at the time were worth $4.5 billion.

    He said on Thursday he did not want to signal any plans for SQM and ICL investments.

    "We can't be counter-productive by doing or acting (to) impair the value of the companies. Timing is everything."

    ICL Chief Executive Stefan Borgas said in an interview that if Potash Corp wants to increase its stake, it should be direct with Israel's government and ICL's biggest shareholder, Israel Corp.

    "Our advice would always be for anybody who has these kind of interests, not just in ICL, but in general, is be as specific as you possibly can so there is actually a concrete proposal on the table, rather than just discussing concepts," he said on Wednesday.

    Borgas said many investors have approached ICL about interest in Potash Corp's stake.

    Potash Corp recently bought a 9.5 percent stake in Brazilian fertilizer distributor Heringer SA, but Tilk said he does not see the same need for control as in the company's other equity investments.

    http://finance.yahoo.com/news/potash-corp-evaluating-sqm-icl-162945083.html
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    Precious Metals

    De Beers puts Kimberley diamond mine in South Africa up for sale

    May 21 Diamond miner De Beers Group said it was putting its Kimberley Mines in South Africa up for sale as the operation no longer fits the company's strategic plan.

    De Beers said it hoped to conclude the sale process "in a matter of months". (bit.ly/1dmJkxU)

    The company, which has been mining at Kimberley for more than a century, said it had invested in the mine to 2018 and that the new owners would need only stay-in-business capital, potentially extending life of the mine to 2030.

    De Beers, Anglo American Plc's second-most profitable unit, produced 722,000 carats of diamonds at Kimberley in 2014. (bit.ly/1HwyMJ9)

    Anglo American said last month that it planned to cut diamond production this year in response to lower prices, as diamond demand has slowed since late 2014 due to middlemen who buy rough stones struggling with a stronger dollar and liquidity problems.

    http://www.reuters.com/article/2015/05/21/de-beers-sale-mine-idUSL3N0YC4QQ20150521
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    Base Metals

    First copper from DRC-China deal due by year end

    A joint venture between Democratic Republic of Congo's (DRC's) State miner and two Chinese companies, signed under a 2009 "minerals for infrastructure" deal, will begin producing copper before the end of 2015, the DRC's government said on Thursday. 

    Under the deal Chinese companies pledged to build $3-billion worth of roads, railways, schools, and hospitals in return for a 68% stake in a joint venture operating copper plants with state miner Gecamines in the southern Katanga province. 

    The Chinese firms involved in the Sicomines joint venture are Sinohydro Corp and China Railway Group Limited. 

    The DRC government office charged with overseeing implementation of the deal said copper output would begin "in the fall of 2015" at a rate of 50 000 t/y, rising to an expected 400 000 t/y over the next two decades. "This mutually beneficial cooperation with our Chinese partners is a strong example for others interested in investment opportunities in (Congo)," Moïse Ekanga, executive secretary of the office, said in a statement. 

    An original $9-billion deal signed in 2007 was reduced to about $6-billion after the International Monetary Fund (IMF) objected to the amount of debt DRC was taking on. 

    Ekanga led a tour of the Sicomines plants taken last weekend by the IMF's resident representative in the DRC, the World Bank's country director and several foreign diplomats. The DRC, which vies with Zambia to be Africa's top copper producer, extracted more than one-million tonnes of the metal for the first time in 2014.

     The mining sector helped power economic growth of 9.5% in 2014, according to the government. However, after two decades of armed conflict, the DRC still ranks 186 out of 187 countries in the UN Human Development Index. The government has predicted 10.3% growth for 2015.

    http://www.miningweekly.com/article/first-copper-from-drc-china-deal-due-by-year-end-govt-2015-05-22
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    Chile strikes BHP Billiton copper project off development timeline

    The Chilean government has removed BHP Billiton's $US4 billion ($5 billion) Spence copper expansion project from its 10-year development timeline, saying it expects the world's largest miner will miss its targeted deadline of first production by 2020.

    While BHP has prioritised the expansion of its massive Escondida copper mine in Chile in recent years, it has also signalled to investors its Spence Hypogene project in the north of the country, could drive its supplies of the red metal over the medium term.

    BHP has conducted a pre-feasibility study to deliver copper from the hypogene ore body that lies beneath its existing Spence mine by 2020 as part of a plan to extend the life of the facility by up to 50 years.

    However, Chile's state-run copper commission Cochilco discounted it as a project likely to take shape in the next decade, saying it expected the timeline to slip, with Escondida remaining the priority.

    In 2012, Cochilco predicted the development of $US105 billion of resources projects in Chile in the following decade.

    Three years on, and with a slump in global commodity prices hitting sentiment, Cochilco revisited its 10-year horizon earlier this week and downgraded the pipeline of projects to $US75 billion by 2025.

    "About $US25 billion of that reduction is down to projects being delayed, meaning we no longer expect them to come into production in the 10-year timeframe," Cochilco's executive vice-president Sergio Hernandez told The Australian Financial Review on Wednesday.

    "We now include the Spence project in that delayed tally."

    http://www.afr.com/business/mining/copper/chile-strikes-bhp-billiton-copper-project-off-development-timeline-20150521-gh6cpy
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    Steel, Iron Ore and Coal

    China to put Zhangtang railway into operation in mid-Nov

    China is expected to put Zhangtang railway, which connects Zhangjiakou with major steelmaking base of Tangshan in Hebei province, into operation in mid-November, local media reported on May 20.

    The 528.5 km rail line, starting from Kongjiazhuang station in Zhangjiakou City to Caofeidian North station in Tangshan City, is designed with an annual transport capacity of 200 million tonnes. Construction on the line started in March 2012.

    Zhangtang railway is the first phrase project of the Ordos-Caofeidian port line, China’s third largest energy transporting channel. The opening of the railway is expected to help move Inner Mongolian coal to coastal ports and boost economic development of the cities along the line.

    Currently, the 653 km Daqin railway, which links northern Datong of Shanxi and northern China’s Qinhuangdao port, is the artery of China's rail coal transportation. It has an annual transport capacity of 250 million tonnes.

    Shuohuang rail line, the second coal-dedicated railway linking Shuozhou of Shanxi and Huanghua Port, has a designed annual transport capacity of 350 million tonnes in the short term and 450 million tonnes in the long run.

    http://en.sxcoal.com/0/119193/DataShow.html
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    Shanxi upgrade of 3 coal units for pollution: increase capacity.

    Three thermal power projects to be fired with low calorific value coals, with capacity combined totaling 2.1 GW, have been approved, the Shanxi Development and Reform Commission said recently.

    The second phase project of Shanxi International Energy, situated at Shanyin country in north Shanxi, will expand the existing two 0.33 GW supercritical low-CV coal based generating units into two 0.35 GW ones. It will also install flue gas desulfurization (FGD), denitration and dedusting facilities, and put in place a circulating fluid bed boiler (CFBB). The project is estimated to cost 2.93 billion yuan ($0.47 billion).
      
    Jinneng Group will build the Xinlei project in Yuxian county in east Shanxi, which consists of two 0.35 GW supercritical low-CV coal based generating units, as well as a CFBB and FGD, denitration and dedusting facilities. Total investment is planned at 3.25 billion yuan.

    Datong Coal Mine Group will expand the original two 0.33 GW supercritical low-CV coal based generating units into two 0.35 GW ones, and install a CFBB and FGD, denitration and dedusting devices. The project will cost 3.49 billion yuan or so.

    http://en.sxcoal.com/0/119195/DataShow.html

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    Australia ditches iron ore probe after lobby, China-Brazil supply deal

    Australia’s government has decided to dump plans to conduct a special parliamentary inquiry into its iron ore industry, following a supply agreement between China and Brazil that could drag prices even lower, further affecting the country’s economy.

    “We certainly haven’t made any decision to have an inquiry … the last thing this government would ever want to do is interfere in a free market like the iron ore market,” Prime Minister Tony Abbott said in a brief statement Thursday.

    Announcing the decision, the treasurer Joe Hockey said that “after discussing the issue with regulatory bodies and stakeholders across the resources sector, the Government will not be initiating an inquiry at this time.”


    The move comes on the heels of a fresh deal between China and Brazil, which puts at Vale’s (NYSE:VALE) reach up to US$4 billion to finance its $16.5 billion expansion of its iron ore mines.

    According to the chair of the Australian Latin American Business Council, Jose Blanco, the agreement also implied major Chinese investment in several of Vale's giant iron ore carriers, known as Valemax ships, which can move vastly more resources and reduce transport costs by around 25%.

    The Brazilian company, the world's No. 1 producer of the steel making ingredient, is forecast to crank up production from current levels of 330 million tonnes to 450 million tonnes of iron ore by 2018. The figure is greater than the combined output of BHP Billiton and Rio Tinto.

    Australia’s decision also follows intense lobbying efforts by BHP and Rio Tinto, which warnedsuch a review would have sent a bad signal to Australia’s trading partners about potential government intervention in the market, while giving a “free kick” to competitor Brazil.

    http://www.mining.com/australia-ditches-iron-ore-probe-after-lobby-china-brazil-supply-deal/

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    China key steel mills daily output down 1.65pct in early-May

    Daily crude steel output of key Chinese steel producers fell 1.65% from ten days ago to 1.778 million tonnes over May 1-10, showed data from the China Iron and Steel Association (CISA).

    China’s total daily output during the same period was estimated at 2.269 million tonnes, down 3.5% from ten days ago.

    The decline was mainly due to persisting weak demand from downstream sectors on the back of slowing Chinese economy.

    As of May 10, total stocks in key steel mills stood at 15.87 million tonnes, up 6.08% from ten days ago.

    The CISA members produced 1.74 million tonnes of pig iron on average each day over May 1-10, down 0.78% from the previous ten days; while output of steel products was 1.63 million tonnes, down 11.63% from ten days ago.

    The price of steel products over the week of May 4-10 dropped 0.3% from the month before, showed data from the Ministry of Commerce.

    http://en.sxcoal.com/0/119231/DataShow.html
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