Mark Latham Commodity Equity Intelligence Service

Wednesday 22nd July 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro
    Oil and Gas
    Alternative Energy
    Uranium
    Precious Metals
    Base Metals
    Steel, Iron Ore and Coal

    Macro

    A Chinese energy giant has entered the global market.

    China’s State Power Investment Corporation (SPI) was formed through the merger of China Power Investment Corporation (CPI) and State Nuclear Power Technology Corporation (SNPTC).

    The merger was approved by the State Council on 29 May.

    The combined company, which was formally established yesterday, has a registered capital of CNY 45 billion (£4.5bn), with total assets of CNY 722.3 billion (£74.55bn) and almost 14 million employees.

    The business has hydro, thermal and nuclear power as well as new energy sources.

    SPI has an installed generating capacity of 98GW.

    The company also covers electricity, coal, aluminium production, logistics, finance and other sectors. Annual sales are expected to exceed CNY 200 billion (£21bn).

    http://www.energylivenews.com/2015/07/21/chinese-launches-giant-energy-player/
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    BHP beats fiscal 2015 iron ore guidance, takes copper hit

    BHP Billiton beat its own production guidance for iron ore in fiscal 2015 and said it was on track for additional growth in the current year following major expansion work.

    The global miner also flagged a further hit to its full-year underlying profit of up to $650 million, chiefly linked to writedowns in its copper business.

    The impairments come on top of $2 billion in post-tax writedowns to its U.S. shale oil division announced last week.

    Output at its Western Australia iron ore mines increased by 13 percent to a record 254 million tonnes in the year ended June 30 versus previous guidance of 250 million tonnes, the company said on Wednesday.

    "Better productivity will be the sole source of volume growth at Western Australia Iron Ore in the 2016 financial year with production forecast to increase by 7 percent and unit costs are expected to fall to US$16 per tonne," Chief Executive Andrew Mackenzie said in the latest company production report.

    Further productivity improvements would contribute to an increase to 290 million tonnes a year over time, BHP said. The miner in April deferred a port project that would have boosted output to 290 million tonnes by mid-2017.

    BHP is facing ever-stiffer competition from Vale and Rio Tinto for its share of the seabourne iron ore trade, which many analysts believe will not meet bullish forecasts, contributing to a collapse prices.

    BHP said it saw a 41 percent decline in the price of its ore in fiscal 2015 to $61 per wet metric tonne. Iron ore .IO62-CNI=SI is trading around $52 a tonne, down from prices above $190 in early 2011 on slowing demand growth in China.

    The June quarter output for BHP's share of production of 60.1 million tonnes was in line with analysts' estimates of 60 million tonnes. The full-year production figures and guidance take into account the share of output for BHP's joint venture partners in some mines.

    Rival Rio Tinto this month cut its calendar 2015 target for shipments by 10 million tonnes to 340 million tonnes after two cyclones disrupted operations.

    BHP said it expects the latest impairments to total between $350 million and $650 million, mostly tied to its Cerro Colorado mine in Chile and redundancies in the overall copper business. A reduction in the use of rigs will also contribute between $50 million and $150 million to the writedown.

    http://www.reuters.com/article/2015/07/21/bhp-australia-production-idUSL3N10163V20150721
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    BHP Output Cuts Seen Flagging Bottom

    As commodity prices tumbled this week to a 13-year low, the world’s biggest miner said it will cut production of three of its four most important raw materials.

    Petroleum, copper and coal output will fall in fiscal 2016, while iron ore is the only one of its so-called four pillars forecast to post a rise, BHP Billiton Ltd. said Wednesday. The average prices for all its key commodities fell in the first half of the year, BHP said.

    Raw materials have tumbled about 9 percent in the past two months, driving the Bloomberg Commodities Index down as economic growth slows in China, the largest buyer of metals and energy. The drop comes as debate intensifies among producers about the merits of curbing output in oversupplied markets.

    “It looks to be a signal that, outside of iron ore, we are looking at the bottom of the market,” according to Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne. “If they’re turning supply down, they must think that the market is nearing the bottom.”

    BHP, which flagged charges and impairments totaling as much as about $4.7 billion for fiscal 2015, fell 1.4 percent to A$26.44 at 1:44 p.m. in Sydney, extending its decline this year to 3.7 percent.

    U.S. crude slumped on Monday below $50 a barrel for the first time in more than three months, while the LMEX Index of six base metals hit a six-year low earlier this month. The rout has extended to the currencies of economies tied to commodities such as Australia, Canada and Norway.

    The weaker oil prices mean BHP will defer development of U.S. onshore gas fields, while declining copper grades and a coal mine closure will also crimp production.

    Full-year petroleum output will fall 7 percent to 237 million barrels of oil equivalent, as copper production declines 12 percent to 1.5 million metric tons. Coking coal output will slip 6 percent as thermal coal production by 2 percent. Iron ore output is forecast to expand by 6 percent.

    http://www.bloomberg.com/news/articles/2015-07-22/as-commodity-rout-deepens-bhp-output-cuts-seen-flagging-bottom
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    After Betting on an Oil Rebound, Small Factories Are Getting in Trouble

    Planning for a pickup in sales, some small manufacturers borrowed money from their larger counterparts to ramp up production. Now, a growing number can't pay for the investments as their forecasts aren't panning out, with energy-related companies being among the hardest hit.

    Small factories sometimes borrow from other manufacturers (who tend to be bigger) to pay for goods, with a commitment to repay them at some point in the future. Credit managers for the manufacturers who are owed the money are reporting that more of their clients are so far behind in their bills that the "act of last resort" is being taken: hiring a collection agency to recoup money owed, said Chris Kuehl, economic adviser for the National Association of Credit Management.



    The main culprits of this financial distress are small energy companies who supply large oil firms. When planning for this year, many of these companies expected the price of oil to rebound, he said. This "unjustified optimism" has left many of these companies in bad shape, Kuehl said.

    There may be more strain ahead. That's because credit managers “live in the future,” forecasting whether customers can pay invoices as many as four months from now, Kuehl said, and evidence is building that more energy companies are finding it increasingly difficult to make good on their debts.

    http://www.bloomberg.com/news/articles/2015-07-21/after-betting-on-an-oil-rebound-small-factories-are-getting-in-trouble-with-their-creditors
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    Oil and Gas

    Simon Henry sells £423,400 worth of stock in Royal Dutch Shell Plc

    Chief Financial Officer Simon Henry sold 20,000 shares ofRoyal Dutch Shell Plc stock in a transactiondated Tuesday, May 5th.

    The stock was sold at an average price of GBX 2,117 ($33.04), for a total transaction of £423,400 ($660,736.58).

    Simon knows more than we do about Shell’s ill-fated 2015 Arctic Drilling campaign.  

    The cost thus far is north of $6 billion, without a thimble full of oil to show for it.

    With further mishaps, growing global opposition and time fast running out for the 2015 drilling season, he will probably soon flog some more shares, before ordinary investors start taking flight.

    http://royaldutchshellplc.com/2015/07/21/simon-henry-sells-423400-660736-58-worth-of-stock-in-royal-dutch-shell-plc/
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    ConocoPhillips halts shale gas talks with CNPC for Sichuan field

    ConocoPhillips ended talks with China National Petroleum Corp. on a shale gas development in the country after a two-year study.

    “The right commercial decision was to halt further discussions on this block,” ConocoPhillips’s China unit said in an e-mail response to questions Wednesday. The company said it made the decision “some time ago.”

    While China has sought to replicate the U.S. shale boom, the nation last year cut its 2020 shale gas production target to about a third of its original estimate amid difficult geology, lack of infrastructure and limited exploration rights. The nation holds the world’s largest shale gas reserves.

    “We remain positive on China’s shale gas potential, and we sincerely hope that ConocoPhillips can play an important role in developing this supply of clean energy to fuel the Chinese economy,” the Houston-based company said.

    Qu Guangxue, CNPC’s Beijing-based spokesman, didn’t answer two calls to his office.

    The halt to the talks was reported earlier by the National Business Daily. ConocoPhillips signed an agreement with CNPC’s listed unit PetroChina Co. to evaluate shale potential in the Neijiang-Dazu field in the Sichuan basin in February 2013.

    https://www.energyvoice.com/oilandgas/82957/conocophillips-halts-shale-gas-talks-with-cnpc-for-sichuan-field/
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    Baker Hughes sees no respite from 'unfavourably market conditions'

    Oilfield services provider Baker Hughes Inc, which is being acquired by larger rival Halliburton Inc, said it expects unfavorable market conditions to persist for the rest of the year.

    The forecast comes days after industry leader Schlumberger Ltd said it expects an uptick in demand in North America later this year.

    Halliburton also said on Monday that it expects an uptick in activity later this year, though it does not expect a "meaningful recovery" until 2016.

    Oilfield service companies have seen demand decline due to a steep fall in global crude prices since June last year.

    "In North America, we don't anticipate activity to increase while commodity prices remain depressed," Baker Hughes Chief Executive Martin Craighead said in a statement on Tuesday.

    Houston-based Baker Hughes, which previously said it would cut about 10,500 jobs, or 17 percent of its global workforce, has also closed and consolidated about 140 facilities worldwide.

    Excluding a one-time restructuring charge, the company posted a loss of 14 cents per share, matching analysts' average estimate, according to Thomson Reuters I/B/E/S.

    Revenue from North America, which accounted for nearly 38 percent of the company's total revenue, fell 47 percent to $1.50 billion in the second quarter ended June 30.

    The net loss attributable to Baker Hughes was $188 million, or 43 cents per share, compared with a profit of $353 million, or 80 cents per share, a year earlier.

    Revenue dropped 33 percent to $3.97 billion, but beat the average analyst estimate of $3.78 billion.

    Up to Monday's close of $59.46, Baker Hughes' stock had risen nearly 17 percent since Nov. 13, when news of a possible deal first emerged.

    http://www.reuters.com/article/2015/07/21/baker-hughes-results-idUSL3N10146Q20150721
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    Weatherford makes Revolution RSS commercially available

    Weatherford International has announced the commercial release of its Revolution rotary-steerable system.

    Weatherford said its point-the-bit technology delivers clean, accurately placed, and completion-ready wellbores. With advanced sensors and telemetry, the system gives operators a reliable method for drilling from vertical to horizontal in a single run.

    “Revolution RSS allows single-run drilling of curve and lateral sections, as well as high-pressure/high-temperature (HP/HT) and high-dogleg applications. This enables operators to make better petrophysical measurements while maximizing borehole exposure to the reservoir delivering superior productivity indexes. In the last year and a half, Revolution RSS has drilled 284 vertical-curve-lateral wells in a single run, totaling 2.4 million ft [731,520 m],” said Etienne Roux, vice president of Drilling Services at Weatherford.

    The system allows operators to drill in HP/HT zones with temperatures exceeding 300°F (149°C).

    The Revolution RSS is compatible with the full Weatherford suite of logging-while-drilling formation evaluation services, including real-time feedback on tool settings and status.

    http://www.offshore-mag.com/articles/2015/07/weatherford-makes-revolution-rss-commercially-available.html?utm_source=dlvr.it&utm_medium=twitter
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    Americans Heading Back to Work Drive at Record Pace Through May

    U.S. drivers put a record number of miles on their cars in May, helped by a growing economy and cheap gasoline.



    American motorists traveled 275.1 billion miles in May and have totaled 1.26 trillion so far this year, a record for the first five months of the year, Federal Highway Administration data show.

    Why are the roads getting more crowded? More than four million Americans have gotten jobs since the beginning of 2014, creating more daily commutes, and gasoline prices are down 26 percent from last year’s peak.

    “It is possible that U.S. driving may set new records all summer,” Doug Hecox, a spokesman for the highway agency in Washington D.C., said by phone yesterday. “Normally, the peak of the travel season is June, July and August.”

    The data include all travel on all U.S. roadways, amounting to about 1,100 miles for every American over the age of 16, according to federal data. That’s the highest level since August 2010.

    All of this driving is good news for U.S. refiners, who processed a record amount of crude into fuel last week. The profit for making fuel along the Gulf Coast, where about half of the nation’s refineries are located, is the highest for this time of year in at least a decade, according to data compiled by Bloomberg.

    http://www.bloomberg.com/news/articles/2015-07-21/americans-heading-back-to-work-drive-at-record-pace-through-may
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    Southeastern takes 21% stake, pushing changes at Consol Energy

    An activist investor that recently raised its stake in Consol Energy Inc. to more than 21 percent of its shares is pushing the Cecil-based company to sell or spin off some natural gas holdings to raise money while it battles low prices.

    Southeastern Asset Management, which three years ago helped bring huge management changes to shale driller Chesapeake Energy, told federal regulators it will discuss with Consol management, board members and potential buyers its ideas for getting more money from those gas assets.

    “While Southeastern applauds many of the actions of the board and management of (Consol) over the last two years, in our view it is now time for the company to accelerate its efforts to build and realize value per share,” the Memphis-based firm wrote in a Securities and Exchange Commission filing late Monday.

    Southeastern is Consol's largest shareholder and said its officials have had “productive” discussions with management in the past.

    Consol said it's interested in hearing details from Southeastern.

    “We value the opinions of all of our shareholders, and certainly a major shareholder such as Southeastern,” Consol spokesman Brian Aiello said. “We are confident in the strategic direction we are in the process of executing, and look forward to working with Southeastern and all of our shareholders to continue to unlock the inherent value of Consol Energy.”

    Read more: http://triblive.com/business/headlines/8779655-74/consol-southeastern-company#ixzz3gbPGuJTW
    Follow us: @triblive on Twitter | triblive on Facebook
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    Ridgewood launches deep-water Gulf fund, oil $20 per barrel or less

    Ridgewood Energy is not letting $50 oil shift its aim. The energy company focused on the deep-water Gulf of Mexico closed a $1.9 billion private equity fund that it contends will still prove profitable.

    Houston- and New Jersey-based Ridgewood said its new Ridgewood Energy Oil & Gas Fund III is its biggest yet and exceeded its initial $1.5 billion target.

    As other companies slow down their expensive deep-water Gulf investments, Ridgewood says it can find and develop oil there for $20 a barrel or less. Competitors moving out of the space will actually help the firm, said Kenny Lang, Ridgewood president and chief operating officer.

    “We have the ability to find and develop significant oil reserves for a very low cost per barrel,” Lang said in a prepared statement. “Our disciplined approach allows us to deliver strong returns across a range of oil price environments, and recent dislocation in the sector has created even more compelling opportunities for investment.”

    Ridgewood was founded in 1982, but started focusing on the deep-water Gulf in 2008. Ridgewood also has managed significant capital from New York-based Riverstone Holdings since 2010.

    Ridgewood’s last fund closed with $1.1 billion in early 2014.

    http://fuelfix.com/blog/2015/07/21/ridgewood-launches-huge-deep-water-gulf-fund-says-it-can-find-oil-20-per-barrel-or-less/#34117101=0
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    Canadian natural gas producers losing ground to US competitors

    Vancouver Sun reported that Canadian natural gas producers are losing more ground to US competitors as an acute shortage of pipeline space is forcing them to curb growth.

    Producers have been shutting in supplies this year over a capacity squeeze poised to last another few months on TransCanada Corporation's NGTL system in Alberta, as the pipeline company undertakes inspections and repairs ordered by regulators. Less space on the 23,500-kilometre system, which gathers two-thirds of Western Canada’s gas output, has also contributed to volatile prices for supplies shipped on other regional pipelines.

    The constraints are the latest dilemma for Canadian producers selling increasingly less gas into the US because of a supply boom there. Delays to expansion plans may prevent them from taking full advantage of cheaper drilling costs as the fall in oil prices has lowered service rates.

    Mr Darren Gee, CEO of Peyto Exploration and Development Corp, said that “We’re struggling to get our gas to market. This is the first time in our 17-year history that we’ve experienced this.”

    Peyto, Tourmaline Oil Corp. and NuVista Energy Ltd. are among producers that have curtailed gas output because of the transportation issues. Peyto reduced production by about 10% in May because shipments were pushed off pipelines.

    Mr John Stephenson, CEO and founder of Stephenson & Company, said in Toronto that “Companies have warned investors about the challenges and mostly factored slower output growth into their 2015 forecasts. Still, until the bottlenecks are eased, fund managers will view lower cash flow as a drag on Canadian producers relative to their US peers.”

    The transportation issues represent another negative, though Mr Stephenson said that he hasn’t reduced his small holdings in Peyto and Tourmaline.

    He said that “You have less growth, so you have less potential for upside and you have uncertainty in terms of timing. It’s another mental hurdle for an investor to get over.”

    http://steelguru.com/gas-oil/canadian-natural-gas-producers-losing-ground-to-us-competitors/430065#tag
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    Chesapeake Energy to suspend dividend payments

    Chesapeake Energy Corp, the second-largest U.S. natural gas producer, said it would suspend dividend payments starting in the current quarter to save up to $240 million a year.

    The company, which like other oil and gas producers has been hurt by a drop in prices, had planned to pay an annual dividend of 35 cents per share.

    In suspending its dividend for the first time since 1998, Chesapeake joins other companies in the energy industry that have cut or suspended dividend payments to save capital.

    Chevron Corp said in May it would not raise its dividend in the second quarter and that it would see "where things shake out long term" before raising its payout.

    Oklahoma City-based Chesapeake reported a first-quarter loss in May and said it would raise production this year.

    The company said on Tuesday that money saved by not paying a dividend would be used to develop its "high-quality" assets.

    http://www.reuters.com/article/2015/07/21/chesapeake-enrgy-dividends-idUSL3N1013ZC20150721
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    Alternative Energy

    Distributed solar power revenues may triple in decade - Navigant

    According to the industry analyst Navigant Research, global revenues from distributed solar photovoltaic power are expected to more than triple in a decade as the technology becomes viable without subsidies.

    Navigant said in an e-mailed study that revenue from the installations, which are typically small-scale and deliver power to areas near the point of generation, is forecast to rise to USD 151.6 billion in 2024 from USD 40.6 billion last year.

    Mr Roberto Rodriguez Labastida, an analyst at Navigant, said that “The distributed solar PV generation market continues to transition from being dependent on lavish feed-in tariffs and environmentally conscious wealthy homeowners to a cost-effective source of electricity that is gaining traction.”

    Navigant predicted about 346 GW of new distributed solar PV panels will be installed globally from this year through 2024, producing total revenue for the industry of USD 668.5 billion. Over that time, subsidies are expected to be reduced 'significantly' as installation costs decline 4% to 6% a year.

    http://steelguru.com/power/distributed-solar-power-revenues-may-triple-in-decade-navigant/430090#tag
    Attached Files
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    LG Electronics’ NeON 2 Solar Panel Available in the United States

    LG Electronics announced that the LG NeON 2, will be available in the United States in August. The LG NeON 2 is equipped with newly developed LG "Cello" technology, which consists of 12 thin wires instead of three busbars. The company said that technology offers significantly improved performance and reliability even over the original NeON high-performance solar panel. For its "groundbreaking idea and technological innovation," the LG NeON 2 was recognized last month with the Intersolar Europe Photovoltaics Award.

    LG Solar is also bringing the "Mono X NeON 72," to the U.S this fall, an all-new series of 72-cell solar modules, suited for commercial installations.

    Two models will be available, designed to deliver high-efficiency outputof up to 360 and 365 watts respectively, in a giant 77- by 39-inch panel. This series builds on LG's 60-cell Mono X NeON that uses LG's N-Type double-sided cell structure that allows the light reflected from the rear of the module to be reabsorbed, also generating additional power.

    Cello — which stands for Cell Connection, Electrically, Low Loss, Low Stress and Optical Absorption Enhancement — uses circular-shaped wires to scatter light more effectively for better absorption, while reducing the electrical loss by spreading the current with 12 cell busbars, according to the company.

    LG said that the NeON 2 is ideal for home owners with a limited rooftop space, boasting 6.4 kWp capacity with 20 modules (60 cells) while the capacity of a 285W p-type Mono with the same number of modules generates only 5.7 kWp and the capacity of a 255W p-type Poly with the same number of modules generates only 5.1kWp.

    http://www.renewableenergyworld.com/articles/2015/07/lg-electronics-neon-2-solar-panel-available-in-the-united-states.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+RenewableEnergyNewsRssFeed+%28Renewable+Energy+News+RSS+Feed%29
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    Uranium

    China National Nuclear Power H1 output surges 55 pct

    China National nuclear Power Co., Ltd., the country’s first listed nuclear company, saw its nuclear power output rise 54.5% on year to 36.67 TWh in the first half of 2015.

    The company attributed the marked increase to the commencement of new generating units in Fujian and Zhejiang provinces.

    Fuqing Nuclear Power Plant’s No. 1 Unit, which was located in Fujian and put into operation in November 2014, generated 4.46 TWh of electricity over January-June this year.

    Qinshan No. 1 Nuclear Power Plant’s Fangjiashan No. 1 and No. 2 Unit, which were located in Zhejiang and came on stream last December and this February successively posted a 656.8% year on year increase to 9.46 TWh in the first half.

    Qinshan No. 2 Nuclear Power Plant saw power output rise 4.11% on year to 10.04 TWh over January-June, while Qinshan No. 3 Nuclear Power Plant showed a year-on-year drop of 5.02% to 5.13 TWh.

    Tianwan Nuclear Power Plant, located in Jiangsu, embraced a year-on-year growth of 1.91% to 7.58 TWh.
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    Precious Metals

    Alrosa’s rough diamonds sales down 22% in first half of the year

    Russia’s Alrosa, the world's top diamond producer by output in carats, said Tuesday it sold 18 million carats of rough diamonds for $2.1 billion in the first half of 2015, significantly less than in the same period last year, when it raised $2.7 billion from about 21.1 million carats.

    The company, hit by a sustained slowdown in the diamond market during the second quarter of the year, said its rough prices declined by 3% during the three months ended June 30 and by 6% in the first half of the year.

    Alrosa’s mines generate 25% of the world's diamond output and it competes with De Beers, a unit of Anglo American (LON:AAL), to rank as the world's leading diamond miner.

    Production, however, was up 13% compared to the first half of 2014. In fact, Alrosa’s mines generate 25% of the world's diamond output and it competes with De Beers, a unit of Anglo American (LON:AAL), to rank as the world's leading diamond miner.

    At the Karpinskogo-1 pipe of the Lomonosov deposit (Severalmaz), diamond output increased to 600,000 carats after production began in October 2014.

    Higher grade ore was processed from extra stockpiles at the open pit of the Udachnaya pipe.

    At the Mir underground mine, diamond output almost doubled through measures to reduce water inflow, while the first 481,000 carats of diamonds were produced from the Botuobinskaya pipe after its launch in March 2015.

    Earlier this month, Alrosa's president Andrey Zharkov visited Angola to discuss further cooperation in developing new diamond projects in the African nation.

    http://www.mining.com/alrosas-rough-diamonds-sales-down-22-in-first-half-of-the-year/?utm_source=twitterfeed&utm_medium=twitter
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    Saracen's costs fall as Gold production rises

    After having announced record quarterly and yearly gold production earlier this month, gold miner Saracen Mineral Holdings on Wednesday said it had also achieved record quarterly and full-year all-in sustaining costs (AISC), as well as record operational cash flow. 

    The miner previously reported that gold production for the full year had reached 167 531 oz, compared with a previously announced guidance of 160 000 oz. Quarterly production also reached a record of 46 563 oz. Saracen on Wednesday noted that AISC for the quarter was a record low of A$871/oz, compared with the A$1 112/oz reported in the previous quarter, while full-year AISC reached A$1 139/oz, well below the guidance of A$1 150/oz. 

    All-in cash expenditure for the year fell by A$5.6-million to A$40.6-million for the full year, mainly owing to openpit mining coasts falling by some A$4.1-million during the year, as mining reached the base of the Whirling Dervish openpit mine. 

    Gold sales were also strong, with some 44 002 oz sold in the quarter ended June at an average sales price of A$1 552/oz, for revenue of A$68.3-million. Operational cash flows during the quarter generated a record A$36-million, beating the previous record of A$21.6-million set in the March quarter. 

    The cash flow was determined after taking into account all openpit and underground mining costs, ore haulage, processing and site administration expenses, as well as royalties, sustaining capital and underground development. 

    Saracen was currently working on bringing its Thunderbox mine into production, to complement the Carouse Dam operations. With the addition of the Thunderbox operation, Saracen’s production was expected to double to 300 000 oz/y within two years.

    It is our preference that if you wish to share this article with others you should please use the following link:

    http://www.miningweekly.com/article/saracens-cost-falls-as-production-rises-2015-07-22
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    Base Metals

    South32 warns of $1.9bn impairment, despite posting production records

    Triple-listed diversified miner South32 has reported production records at four of its operations during its first quarter of production since its break from major BHP Billiton. However, the miner has warned of a $1.9-billion asset impairment on its Australian and South African manganese smelters, as well as its Wolwekrans Middelburg Complex, within the South African energy coal division. 

    The miner said the cumulative noncash impairment of $1.3-billion on its manganese assets was largely offset by the previous fair value uplift of $2.1-billion described in its listing documents. South32 made its market debut in May, after BHP shareholders agreed to the divestment of South32, which comprises the aluminium, coal, manganese, nickel and silver assets previously held in the BHP portfolio. 

    “This was an historic period for our company as shareholders approved the demerger and we listed on the ASX, LSE and JSE,” said South32 CEO Graham Kerr. During the three months ended June, production records were set at the Brazil aluminium operations, the Illawarra coal project, in Australia, as well as at the manganese operations in Australia and South Africa. 

    The group’s alumina production increased by 1% quarter-on-quarter to 1.2-million tonnes, while aluminium production was down 1% to 242 000 t. The Brazil aluminium operation produced 337 000 t of alumina and 330 000 t of aluminium for the quarter, an 8% and 16% respective increase on the previous quarter. The Worsley alumina operation produced 929 000 t of alumina during the quarter, down 1% on the previous quarter. Aluminium production at the Hillside and Mozal refineries were broadly unchanged during the quarter, as efficiency gains offset a significant increase in load-shedding events during the year. The South African aluminium operations produced 175 000 t during the quarter, while the Mozal plant delivered 65 000 t. 

    Manganese production increased by 3% during the quarter to 1.12-million tonnes, with 81 000 t of manganese alloys produced, a 26% decline on the previous quarter. South32 said on Wednesday that the company had responded to challenging market conditions by temporarily suspending capacity at its Metalloys plant and prioritising higher-value manganese ore production. The South African Metalloys operation was also affected by a fatality during the quarter, which led to the initial suspension of operations, before a decision was taken to restart only one of the four furnaces in response to market conditions. 

    “We are fast-tracking the implementation of our regional operating model and have established a strong foundation for our agile and entrepreneurial culture. The curtailment of aluminium production at Alumar and manganese alloy production at Metalloys demonstrates our commitment to maximise financial performance per share, rather than volume,” Kerr said. 

    Meanwhile, metallurgical coal production increased by 23% quarter-on-quarter to 1.9-million tonnes, while energy coal production reached 8.5-million tonnes in the June quarter.

    http://www.miningweekly.com/article/south32-warns-of-19bn-impairment-despite-posting-production-records-2015-07-22
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    First Quantum restarts Ravensthorpe

    Canadian miner First Quantum has started re-commissioning work at the Ravensthorpe nickel mine, in Western Australia. 

    The company said on Wednesday that the atmospheric leach circuit at the mine had been restarted earlier this month, after being shut down in December last year following a tank failure. Operations at the 38 000 t/y nickel plant was suspended following an acid spill. 

    First Quantum said on Wednesday that steady-state production would likely be achieved by the end of July, at which point the circuit should operate at 50% of production capacity, with a throughput of 80 t/h. It is planned that this capacity would continue for the next six months while out-of-service leach tanks were progressively refurbished.

    http://www.miningweekly.com/article/first-quantum-restarts-ravensthorpe-2015-07-22
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    Steel, Iron Ore and Coal

    Qinhuangdao coal stocks hit 3-mth high on reduced shipment

    Coal stocks at Qinhuangdao port, the benchmark for China’s domestic market, hit a 3-month high at 7.06 million tonnes on July 18, due to persisting weak demand and typhoon-interrupted shipping activity.

    On July 21, coal stocks at the port was 6.99 million tonnes, down 0.43% on day but up 6.72% from a week ago, showed data from Qinhuangdao Port Group.

    Daily inbound coal railings to Qinhuangdao port averaged 0.59 million tonnes during the week ended July 21, down 6.6% on week; while outbound shipment was 0.53 million tonnes on average each day over the same period, plunging 22.3% on week.

    Coal demand from utilities recovered a bit this week, as plants gradually resumed chartering activities after typhoons and hot weather.

    Coal stocks at power plants under the six coastal utilities stood at 13.04 million tonnes on July 21, down 0.1% from a week ago; daily coal consumption averaged 0.6 million tonnes, up 4.3% from the previous week. That was enough to cover 21.7 days of consumption, down from 22.7 days a week ago.

    http://en.sxcoal.com/0/127159/DataShow.html
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    China Coal Energy H1 coal output down 22pct on yr

    China coal energy Co., Ltd., the country’s second largest coal producer, produced 46.27 million tonnes in the first half of the year, down 22.1% on year, it said in a statement late July 21.

    The drop was mainly due to the company’s output cut amid weak demand and a supply glut in the market on the back of slowing Chinese economy.

    In June, China coal produced 9.6 million tonnes of coal, down 5.3% year on year and down 3.3% from May – the 12th consecutive year-on-year drop, said the company.

    Total coal sales over January-June reached 66.12 million tonnes, down 12% on year, with the June sales at 13.71 million tonnes, down 2.7% on year but up 0.3% from May.

    The company sold 8.92 million tonnes of self-produced coal in June, accounting for 65.1% of the total, down 13% year on year and down 3.9% from May. Total self-produced coal sales between January and June dropped 16.8% on year to 55.26 million tonnes.

    http://en.sxcoal.com/0/127215/DataShow.html
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    Adani suspends two Carmichael contractors - SMH report

    India's Adani Mining has suspended two major contractors on its A$10 billion ($7.4 billion) Carmichael coal project in Australia, the Sydney Morning Herald reported on Wednesday, raising fresh doubts about the project's future.

    Project manager Parsons Brinckerhoff and Korea's POSCO Engineering & Construction Co Ltd, which is also touted as an investor in the final project, were told late last week to stop work on the Carmichael mine, rail and port project, the newspaper said, citing sources.

    Adani's office in Australia did not immediately respond to requests for comment on Wednesday. A spokeswoman for Parsons Brinckerhoff referred a query on the contract to Adani. POSCO could not immediately be reached for comment.

    Both contractors have big roles in the project. Parsons Brinckerhoff are the principal project management consultants, while POSCO is due to build Adani's 388-kilometre (242 mile) rail line from the mine to the sea and take a financial stake in the development.

    Adani had raised concerns about the project's financing last month when it said it was rejigging the budget for the mine.

    Adani intends to ship most of the coal to India for use in generating household power, which would help Indian Prime Minister Narendra Modi achieve his goal of connecting the whole country to the electricity grid during his tenure.

    The company said then that the project's budget, based on previous anticipated approval timelines and milestones, was no longer achievable due to delays in receiving various approvals from the Queensland state government. It also confirmed it had suspended the contracts of four engineering firms while waiting for those approvals.

    Adani has signed up buyers for about 70 percent of the 40 million tonnes of coal the Carmichael project is due to produce in its first phase.

    The project mainly hinges on environmental approval to deepen a port on the fringe of the Great Barrier Reef in order to ship the coal, a proposal generating opposition worldwide.

    http://www.reuters.com/article/2015/07/22/adani-ent-carmichael-idUSL3N1021E820150722
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    China’s Jun coking coal imports surge 170pct on mth

    China’s coking coal imports surged 170.2% from May’s 1.88 million tonnes to 5.08 million tonnes in June, showed the latest data from the General Administration of Customs (GAC).

    Industry insiders attributed to the increase mainly to increased buying from end users amid bottom-out prices in late-May, which led to an influx of vessels arrived in June.

    However, it was still a drop of 11.2% year on year, the fourth consecutive year-on-year drop, indicating persisting weakness in domestic demand.

    Imports from top supplier Australia rose 12.8% from the previous year and tripled the month-ago level to 2.85 million tonnes in June.

    Coking coal imports from Mongolia – China’s second largest supplier – fell 31.5% on year but surged 141.5% from May to 1.28 million tonnes during the same month.

    Canada’s June exports to China was nearly 5.4 times of the May volume, reaching 0.43 million tonnes, plummeting 35.5% from the year before.

    Imports from Russia reached 0.22 million tonnes in June, falling 56.6% from a year ago and down 18.5% from the previous month.

    During the first half of the year, China imported a total 21.64 million tonnes of coking coal, down 30.1% year on year.

    Top supplier Australia contributed 10.86 million tonnes or 50.2% during the same period, down 27.7% year on year.

    http://en.sxcoal.com/0/127214/DataShow.html
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    China key steel mills daily output down 1.52pct in early-July

    Daily crude steel output of key Chinese steel producers dipped 1.52% from ten days ago to 1.705 million tonnes over July 1-10, showed data from the China Iron and Steel Association (CISA).

    http://en.sxcoal.com/0/127169/DataShow.html
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