Mark Latham Commodity Equity Intelligence Service

Monday 18th May 2015
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    Macro

    U.S. industrial output falls for fifth straight month

    U.S. industrial production fell for a fifth straight month in April, weighed down by declines in mining and utilities output, pointing to a lack of momentum in the economy at the start of the second quarter.

    Industrial output slipped 0.3 percent after a revised 0.3 percent drop in March, the Federal Reserve said on Friday.

    Economists polled by Reuters had forecast industrial production edging up 0.1 percent last month after a previously reported 0.6 percent fall in March, which was the biggest drop since August 2012.

    The dour report added to weak retail sales data in suggesting that the economy was struggling to regain momentum after growth slowed abruptly in the first quarter.

    Mining production fell 0.8 percent as oil and gas well drilling plunged 14.5 percent. It was the fourth straight monthly decline in mining output. Utilities production tumbled 1.3 percent, likely as warmer weather reduced demand for heating.

    Manufacturing output was unchanged after an upwardly revised 0.3 percent gain in March.

    Industrial capacity use fell to 78.2 percent, the lowest since January of last year, from 78.6 percent in March.

    Officials at the Fed tend to look at capacity use as a signal of how much "slack" remains in the economy and how much room there is for growth to accelerate before it becomes inflationary.

    http://www.reuters.com/article/2015/05/15/usa-economy-industrialoutput-idUSL1N0Y52CR20150515
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    China needs more action on growth: Premier

    China's Premier Li Keqiang said the government needs "more forceful" action to stabilise growth, as the economy continues to face considerable downward pressure, the official Xinhua News Agency reported Friday.

    Mr Li cited weak growth in fixed-asset investment in April as a major concern, according to Xinhua.

    Non-rural fixed-asset investment, which includes investments in machinery and factories, climbed 12 per cent year-over-year in the January-to-April period, official data showed Wednesday. It was the lowest year-to-date growth for the measure since late 2000.

    Investment in April grew 9.6 per cent from a year earlier, the slowest pace since December 2011, according to calculations by The Wall Street Journal.

    Mr Li also said there were signs of improvement in the economy, thanks to Beijing's support measures.

    The surveyed unemployment rate dropped in April while industrial output grew at a faster pace, he said.

    "The government is confident and capable of keeping economic growth within a reasonable range," he said.

    China's policy makers have set a growth target of about 7 per cent for 2015. The economy expanded 7 per cent year-over-year in the first quarter, the slowest pace in six years.

    http://www.businessspectator.com.au/news/2015/5/15/china/china-needs-more-action-growth-premier
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    Chinese Firm Reveals World's First 3D-Printed Five Story Apartment Building

    While China's stock market continues levitating at an ever more amusing pace, this is happening at the expense of China's far more important housing market, which sadly for three-quarters of China's population (in the US 75% of household assets are in financial products, in China: in real estate) continues to deflate at a ratefaster than US housing in the aftermath of Lehman. And for better or worse, Chinese home prices are likely set to drop even more, and not due to something as arcane as glitches in fiscal or monetary policy, but something far more tangible: technological advances, and specifically - 3D printed houses.

    Meet WinSun: the Chinese company has been documented to print 10 complete houses in 24 hours, using a proprietary 3D printer that uses a mixture of ground construction and industrial waste, such as glass and tailings, around a base of quick-drying cement mixed with a special hardening agent. But while this in itself is impressive, the punchline is the cost: the houses can be produced for under $5,000, which means that if adopted widely, 3D printing can lead to a collapse in prices of new home construction across China, which while good for new buyers could be catastrophic for the economy and the banking sector where nearly $30 trillion in commercial loans are collateralized almost entirely by China's overinflated housing sector.

    Not content with building single-family houses (and WinSun's own office), WinSun recently made history when it demonstrated the world's first entirely 3D-printed five-story apartment building and a 1,100 square metre (11,840 square foot) villa, complete with decorative elements inside and out, on display at Suzhou Industrial Park.

    http://www.zerohedge.com/news/2015-05-17/chinese-firm-reveals-worlds-first-3d-printed-five-story-apartment-building
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    Oil and Gas

    Wood Mackenzie timeline for Australian LNG projects from FID until delivery.

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    Nigeria LNG revenue hit by oil prices

    Nigeria LNG, operator of the Bonny export terminal, has reportedly posted a 30% drop in its revenue for the first four months in 2015 as a consequence of weak oil prices.

    “Our prices are indexed to crude, at least a significant portion of our portfolio. The price of gas is indexed to Brent, hence if there is a fall in the prices of Brent, it means we will sell for less,” Guardian newspaper cited Deputy Managing Director of NLNG, Isa Inuwa as saying at the company’s shareholders meeting .

    According to the report, Inuwa also said that NLNG was considering increasing its gas output to help reduce the effects of the oil slump on its business.

    Nigeria LNG’s Bonny Island facility currently has six trains in operation with a total capacity of some 22 mtpa of LNG. It requires about 3.5 bcf/d feedgas intake at full production.

    NLNG is a joint venture compromised of Nigerian National Petroleum Corporation, NNPC (49%), Shell (25.6%), Total (15%), and Eni (10.4%).

    http://www.lngworldnews.com/nigeria-lng-revenue-hit-by-oil-prices/
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    BHP puts Aus LNG project with Exxon on back burner

    BHP Billiton is putting its Scarborough liquefied natural gas project with Exxon Mobil Corp. in Australia on the back burner amid lower prices and increasing competition from the US.

    “LNG prices are down quite a bit from last year,” Tim Cutt, BHP’s petroleum president, told reporters Monday in Melbourne. “We’re probably not moving quite as quickly as we were last year, but it’s still a very important asset” that will be developed at the right time, he said.

    A plunge in oil has forced companies from Royal Dutch Shell to Chevron Corp. to cut or delay spending on projects that supply super-cooled gas linked to the price of crude.

    In September, Cutt said that he backed plans to develop what could become the world’s largest floating LNG project and that BHP was “fully aligned” with partner Exxon.

    Crude oil prices could “firm fairly quickly” if countries including Brazil “wobble in any significant way, Cutt said Monday. Over the next couple of years, the market should stabilize, he said.

    While the company looks at about 200 merger and acquisition opportunities a year, right now M&A isn’t a main focus, Cutt said. BHP doesn’t want to ‘‘put a big premium on the table” to buy another company, he said.

    The oil downturn is allowing BHP, the biggest overseas investor in US shale, to pick up more acreage, he said. Any acquisitions are more likely to be assets, he said.

    http://www.mineweb.com/news-fast-news/bhp-puts-aus-lng-project-with-exxon-on-back-burner/
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    Japan refiners target power business as profits evaporate

    Japanese refiners are accelerating plans to invest billions of dollars in power stations to try to drum up more stable income as flagging oil demand at home erodes their core business, executives and analysts said.

    The slump in oil prices since last summer has caused more pain for the refining sector, with accumulated losses totalling $4.6 billion in the last year.

    Cosmo Oil said it would cut refining capacity by as much as a third by 2017.

    As well seeking to take advantage of an opening up of the 8.1 trillion yen ($68 billion) retail electricity market, refiners are also pushing into more profitable uses of crude by producing petrochemicals.

    The Ministry of Economy, Trade and Industry (METI) has been pushing refiners to cut capacity as domestic demand is forecast to fall by more than 7 percent in the next five years.

    Every week, nearly 20 gas stations close on average in Japan after demand has fallen by about 22 percent over the last decade.

    TonenGeneral Sekiyu KK has been working to build two of its first large-scale power plants.

    "Half (a) floor of people are now thinking about this stuff, so it is a serious undertaking," Managing Director David Csapo said on Friday, after TonenGeneral announced a first quarter loss.

    In the last week, three of Japan's big five refiners reported full-year results for the financial year ended March, while two announced first-quarter earnings.

    The alternative if their investments fail: mergers.

    METI wants no more than two or three major refiners, from five now, and sources say Idemitsu Kosan and Showa Shell Sekiyu are in merger talks.

    http://www.reuters.com/article/2015/05/15/japan-oil-refiners-idUSL3N0Y32O120150515
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    ConocoPhillips says to maintain capex for next 3 years

    ConocoPhillips expects to maintain capital expenditure for the next three years, after reducing it earlier this year due to the oil price drop, Chief Executive Ryan Lance told Reuters on Monday.

    The largest independent U.S. energy company, which cut its 2015 capital budget by $2 billion to $11.5 billion in January, "should hold (investment) flat for three years", despite a slight recovery in oil prices, Lance said on the sidelines at the Asia Oil and Gas Conference in Kuala Lumpur.

    Crude prices have almost halved from $115 a barrel in June 2014 as global supplies grew and demand was dented by slowing economies in places like China.

    ConocoPhillips, like other exploration and production companies, has slashed capital spending in response to persistently lower oil prices, and is further reducing its rig count for fields in the lower 48 U.S. states.

    Production is expected to fall in the third and fourth quarters in the company's shale fields, including the Permian in West Texas and the Bakken in North Dakota. But its total output was still expected to rise 2 percent to 3 percent for the year.

    The company, which is focusing on the Eagle Ford shale in Texas and North Dakota's Bakken shale, has said it would also spend less on major projects, many of which are nearing completion.

    ConocoPhillips is also preparing to sell noncore oil and gas producing acreage in the United States, in the latest sign that oil majors are becoming more accepting of lower oil prices.

    http://www.reuters.com/article/2015/05/18/conocophillips-capex-idUSL3N0Y64FT20150518
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    Brazil's Petrobras' earnings, outlook beat Street

    Brazil's state-run oil company Petroleo Brasileiro SA beat analysts' forecasts on Friday, posting first-quarter profit little changed from a year earlier, as an end to fuel subsidies helped overcome a plunge in crude prices.

    Petrobras, as the oil company is commonly known, said profit in the three months ending March 30 fell 1.2 percent to 5.33 billion reais ($1.78 billion) compared with 5.39 billion reais a year earlier, according to a filing with Brazil's securities regulator CVM.

    The result exceeded expectations of a 2.5 billion-real quarterly profit, the average estimate of seven analysts surveyed by Reuters. One of the analysts predicted a net loss.

    Petrobras also reported net sales, or sales minus sales taxes, of 74.4 billion reais, broadly in line with expectations of 79.4 billion reais.

    Earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as EBITDA, was 21.5 billion reais, more than a third higher than the 16 billion reais expected in the survey.

    http://www.upstreamonline.com/live/1400115/petrobras-profit-dips-as-output-jumps?utm_source=dlvr.it&utm_medium=twitter
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    Indian Government to allow market price for some natural gas

    The government may allow a part of the natural gas produced by firms like ONGC and Reliance Industries from new discoveries to be sold at market price as it looks to boost domestic exploration and production.

    The government, while approving a new gas pricing formula based on international hub rates in October last year, had decided that new gas discoveries in deep-water, ultra-deep sea or high-temperature and high-pressure fields will be given a premium over and above the approved price.

    The premium will be in form of allowing a fixed percentage of natural gas produced from difficult fields to be sold at market price and the remaining as per the approved price, an oil ministry source said.

    While the current domestic gas price is USD 4.66 per million British thermal unit, the market price as measured by the rate at which the fuel is imported, is USD 7-8.

    "The percentage of total volumes that can be sold at market price will be different for ultra-deep sea discoveries, deepsea finds and high-temperature and high-pressure (HTHP) fields," the source said without elaborating.

    The formula suggested by DGH was a middle path of balancing the industry expectations of market price for all of the gas and government concerns of not allowing too high a price that could have a cascading impact on cost of fertilizer and power as well as CNG and cooking gas.

    All gas producers including state-owned Oil and Natural Gas Corp (ONGC) have stated that it was uneconomical to produce gas from difficult fields at the current price of USD 4.66 per mmBtu, the source said.

    Oil Ministry, he said, after reviewing the premium formula suggested by DGH, has forwarded the same to the Finance Ministry for vetting.

    An announcement on the premium is likely soon, he said. It however not clear if the industry demand of applying the premium to existing discoveries as well, will be accepted.

    http://timesofindia.indiatimes.com/business/india-business/Govt-to-allow-market-price-for-some-natural-gas/articleshow/47315674.cms
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    US rig count decline shrinks to 6 this week, settles at 888

    The trend of shrinking declines in the US drilling rig count continued during the week ended May 15.

    Just 6 units were laid down to settle at a total of 888 rigs working, representing the smallest drop in the 23 consecutive weeks in which the count has dived, easily surpassing last week’s 11 that went offline, according to data from Baker Hughes Inc. (OGJ Online, May 8, 2015). Since Dec. 5, 1,032 units have now gone offline (OGJ Online, Dec. 5, 2014).

    The total of 888 is still higher than the nadir of 876 during the 2008-09 downturn but is 973 fewer units compared with this week a year ago.

    In an energy update early this week, Raymond James & Associates noted that weekly well permits, a primary indicator of rig count activity, “have been relatively stable as of late” despite data usually being “very lumpy.”

    Last week 863 new permits were issued, bringing the 4-week average to 870. “It now seems clear that weekly permits issued have bottomed a couple of months ago; however, the lack of a real upswing seems indicative of what we believe should be a slow recovery in rig activity,” RJA indicated.

    Canada’s overall rig count gained 2 units to 77, down 76 year-over-year and 363 since a recent peak on Jan. 16. Rigs targeting oil increased 5 units to 21, the country’s biggest rise since February, while rigs targeting gas shed 3 units to 56.

    Texas reclaimed the top spot in losses among the major oil- and gas-producing states, losing 6 units during the week to settle at 373, down 518 year-over-year and 533 since a recent peak on Nov. 21. The Permian dropped 4 units to 233, down 313 year-over-year. But that loss was partially offset by a 3-unit rise in the Eagle Ford to 108, representing the South Texas shale play’s first gain of the year.

    Beyond Texas the losses were modest. Wyoming declined 2 units to 22. North Dakota, Pennsylvania, Alaska, and Arkansas each edged down a unit to respective totals of 79, 46, 9, and 6.

    http://www.ogj.com/articles/2015/05/bhi-us-rig-count-decline-shrinks-to-6-this-week-settles-at-888.html
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    Alternative Energy

    Chinese wind earnings under pressure with fifth of farms idle

    China's wind farm firms are feeling the heat as state grid operators deliberately delay hooking them up and cut back on purchases, wasting about a fifth of the total wind power output or enough electricity to run Beijing for 40 days.

    China is now the world's top wind power producer thanks to policies designed to boost renewable energy use, with an installed capacity of over 100 gigawatts - more than a quarter of the world's total and almost enough to light up Spain.

    But capacity has raced far ahead of grid construction, with state grid operators reluctant to connect wind farms in remote areas as long as their profit margins on renewables lag that of coal-generated electricity.

    Instead, they are resorting to a practice known as curtailment, or slowing the connection of wind turbines to their grids and limiting the use of wind power. This in turn is leading to wasted capacity and lower returns on wind power investments.

    "Considering the huge growth in wind installment we saw last year, curtailment is going to be a big problem (for wind power producers) ... China is one of the worst countries affected," said Shanghai-based Shane Sun with international renewable energy consultancy MAKE.

    In the first three months, curtailment almost doubled from a year ago to 10.7 billion kilowatt-hours, nearly a fifth of total wind power generated in China, official data showed. That's equivalent to output generated with about 3.5 million tonnes of coal, or 7 percent of China's first-quarter coal imports.

    Meanwhile, generating capacity expansion continues at breakneck speed. While China still relies on coal for most of its power generation, it has more than doubled its installed wind power capacity in the past five years, and Beijing wants to double it again to 200 GW by 2020 with annual investments of $27 billion.

    Analysts said wind-related stocks like Datang Renewable have risen partly on expectations of higher wind speeds in China this year after they were down 8-12 percent in 2014.

    Even so, all those unused turbines probably won't be switched on until ultra-high voltage lines, designed to enable long-distance transmission of renewable power from the windy, remote north to population and industry hubs in the south and east, are completed in 2017.

    In the meantime, some companies like Huaneng Renewables are building wind farms in the east and south where better grid infrastructure offsets low wind speeds and land shortages.

    Some analysts say investors may be in for an earnings disappointment this year unless wind speeds improve and the government enforces a long-delayed rule requiring grid operators to buy certain amounts of power from renewable sources.

    http://www.reuters.com/article/2015/05/17/china-windpower-idUSL3N0Y24DM20150517
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    'Revolutionary' bladeless wind turbines oscillate to generate power

    A startup out of Spain called Vortex Bladeless, whose turbines look like stalks of asparagus poking out of the ground, is using pillars that shake back and forth from the vortices created by the movement of air around the structure to generate power, the Verge reported.

    Typically, a structure can only be optimized to oscillate at the specific frequencies caused by a certain wind speed, but Vortex says it is using magnets to adjust the turbine on the fly to get the most from whatever the wind speeds happen to be.

    Once the structure starts vibrating, an alternator in the base of the device then converts the mechanical movement into electricity.

    Vortex claims that energy produced by its turbines will cost around 40 percent less than energy made from today's wind turbines and a large part of that cost reduction comes from maintenance as the Vortex doesn't have moving parts or gears, it should last longer and won't require periodic lubrication.

    The simpler design also means that manufacturing costs are about half that of a traditional windturbine (those massive blades are expensive).

    As per Vortex, its bladeless design captures around 30 percent less energy than a regular turbine, but it's possible to fit more of the "silent" Vortex models in the same area.

    Vortex is working on its "Mini," a 41-foot model that should be ready for commercialization in 2016, while a larger, industrial model is in the works for 2018.

    http://zeenews.india.com/news/science/revolutionary-bladeless-wind-turbines-oscillate-to-generate-power_1596719.html

    Its makers boast the fact that there are no gears, bolts, or mechanically moving parts, which they say makes the Vortex cheaper to manufacture and maintain. The founders claim their Vortex Mini, which stands at around 41 feet tall, can capture up to 40 percent of the wind’s power during ideal conditions (this is when the wind is blowing at around 26 miles per hour). Based on field testing, the Mini ultimately captures 30 percent less than conventional wind turbines, but that shortcoming is compensated by the fact that you can put double the Vortex turbines into the same space as a propeller turbine.

    The Vortex team says there are some clear advantages to their model: It’s less expensive to manufacture, totally silent, and safer for birds since there are no blades to fly into. Vortex Bladeless says its turbine would cost around 51 percent less than a traditional turbine whose major costs come from the blades and support system. Plus, Suriol says, it’s pretty cool-looking. “It looks like asparagus,” he says. “It’s much more natural.”



    Attached Files
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    The Swedes Have Created The Most Efficient Solar Energy System

    A technology company in Sweden has installed a solar power plant, which it claims is the most efficient in the world today. It has even managed to double the efficiency of solar panels, making them more viable for general population in the near future.

    Installed by Ripasso Energy in South Africa’s sun-soaked Kalahari Desert, the solar electricity generation machine features a pair of huge, 12-meter mirror dishes that have been synched with Stirling Engine – a closed-cycle regenerative heat engine that was invented way back in 1816. The contraption uses trapped gas instead of water to propel the internal pistons and flywheel. To keep the Stirling Engine in motion, the dishes are hooked to a sun-tracking device that rotates the dishes to capture the maximum amount of solar rays and focus them into a specific point that gets super-heated and drives the gas.

    The Solar Panels Are Programed To Follow The Sun, Maximizing The Efficiency

    Though Stirling Engines might look primitive, they have been steadily adopted by the Swiss Military for use in their submarines. These engines are claimed to be an ideal companion for renewable energy systems because they can function with almost any heat source, are quiet to run, and don’t take up much space.

    Owing to their relatively diminutive footprint, the system requires just two hectares to produce a megawatt of energy. Having licensed the technology from the military, Ripasso Energy has been testing the system for the past four years. The company hopes the desert sun could offer ideal readings about the efficiency of the design. This week, the company has been able to set a new world record, reported the Guardian.

    Conventional solar panels practically turn about 15 percent of the solar energy that strikes them into electricity. But Ripasso Energy has managed to push the efficiency to 34 percent. Independent tests have confirmed the design to be super-efficient. The system in its current iteration can generate 75 to 85 megawatt hours of electricity a year. From an ecological perspective, the solar plant can prevent about 81 tons of carbon dioxide being released into the atmosphere via coal burning.


    Read more at http://www.inquisitr.com/2094887/most-efficient-solar-energy-system-using-mirrors-and-a-2-centuries-old-invention/#MChATEYRDiOipTfp.99
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    Precious Metals

    Nord Gold says Q1 net profit at $88.5m vs $24.6m in Q1 of 2014

    Russian gold miner Nord Gold said on Monday its first-quarter net profit more than tripled year-on-year to $88.5-million from $24.6-million seen a year earlier, positively affected by higher refined gold production. 

    The net profit was also affected by the fact that some gold produced at the end of last year was sold in the first three months of 2014, the company said in a statement. Ebitda, or earnings before interest, taxes, depreciation and amortisation nearly doubled in the first quarter to $189.7-million. 

    Based on its results, the company recommended an interim dividend payout for the first quarter of $6.40 a share and global depositary receipt.

    http://www.miningweekly.com/article/nord-gold-says-q1-net-profit-at-885m-vs-246m-in-q1-of-2014-2015-05-18
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    Namibian mine lifts B2Gold’s Q1 output 20%

    Canada-based gold producer B2Gold has posted record gold production of 115 859 oz in the first quarter, exceeding its target for the first three months ended March 31 by 754 oz and delivering 20% more gold than in the first quarter of 2014. The company said on Friday that the increased production was primarily attributable to the successful start of production at the new Otjikoto mine, in Namibia, in February after a strong start-up following its first gold pour in December. 

    Gold production from the company's Masbate mine, in the Philippines, was 46 241 oz, representing a 9% increase on the same period in the prior year, while the La Libertad and Limon mines, in Nicaragua, produced 25 326 oz and 13 158 oz, respectively. Consolidated cash operating costs were below budget at $701/oz for the quarter, reflecting the successful start-up of Otjikoto, the lower cost of fuel and cost-savings at the Masbate and Limon mines. 

    “Consolidated cash operating costs are forecast to be significantly lower in the second half of the year compared with the first half of the year and average between $630/oz and $660/oz for the full-year,” the group outlined in a results statement. All-in sustaining cash costs for the first quarter were $1 091/oz. 

    The group added that it was projecting a record year for gold production in 2015, with output from its operations likely to be between 500 000 oz and 540 000 oz of gold – an increase of about 35% on 2014 production. Consolidated cash operating costs were expected to be between $630/oz and $660/oz compared with $680/oz in 2014. For the first half of the year, consolidated gold production was expected to between 225 000 oz and 245 000 oz, increasing up to 295 000 oz in the second half of the year, owing to the continued ramp-up of gold production at Otjikoto and higher forecast grades for the Masbate and Libertad mines in the second half of the year. 

    B2Gold ended the quarter with cash and cash equivalents of $128.2-million and working capital of $143.4-million, with cash from operations expected to increase “significantly”, owing to gold production from the new Otjikoto mine. 

    The compamy, meanwhile, remained in discussions with its lenders regarding financing the construction of the Fekola project, in Mali, and expected to complete an updated revolving credit facility to increase the available credit facility from $200-million to $400-million in the second quarter.

    http://www.miningweekly.com/article/namibian-mine-lifts-b2golds-q1-output-20-2015-05-15
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    Base Metals

    BHP spin-off South32 debuts at lower end of expectations

    BHP Billiton's spin-off South32 debuted near the bottom of expectations on Monday as investors awarded only a small premium to the new listing amid concerns about broad weakness in the resources sector.

    Shares in the A$11 billion ($8.81 billion) spin-off first traded at A$2.13 at 0215 GMT, at the lower end of the A$2.00 to A$3.00 range forecast by analysts for Australia's biggest new listing in 15 years and the largest mining listing since Glencore Plc in 2011.

    However, the stock soon firmed slightly to A$2.18, in a weaker overall market, while BHP Billiton shares fell 7 percent.

    Dealers and analysts had said there was strong interest in the shares at the lower end of the range.

    "Looking at the total price of both BHP and South32 it's pretty clear the market's ascribed a small premium to the spinoff," said CMC Markets chief strategist Michael McCarthy.

    "Some are viewing this as the unloved part of BHP's portfolio (and) it's also the part where valuations are at multi-year lows, so there are some concerns that there's not much of an outlook for the stock."

    South32, which is being hived off by BHP Billiton to allow it to focus on its core businesses, lands just as global miners have been enjoying a small rebound in their shares.

    Before Monday, BHP's shares were up 10 percent in the past month, Rio Tinto and Glencore Plc rose about 5 percent and Anglo American was up 13 percent, which could help support the new company's debut, analysts said.

    Interest in the company, named after the line of latitude joining its main assets in Australia and South Africa, is expected to be solid as it fills a gap between the mega-miners and minnows, and offers a diverse suite of assets, from aluminium to silver.

    "There is appetite for that real good size, mid-tier, just below the BHP's and Rio's. For that reason it'll attract interest," said Matthew Keane, a resources analyst at Argonaut Securities in Perth.

    Trading in South32 is tipped to be volatile in the first few days as UK institutions who cannot hold the stock because it won't be included in FTSE indexes may be forced to sell.

    "London shareholders have been talking to Australian brokers about facilitating sales," said one analyst, who estimates South32 is worth A$2.30 a share.

    http://www.reuters.com/article/2015/05/18/bhp-billiton-south-idUSL3N0Y91FE20150518
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    Mining unions in Peru to start national strike Monday -unions

    Workers at several major mines in Peru, including two of the country's top copper producers, plan to go on an indefinite strike on Monday in a country-wide bid to press the government to strengthen labor laws, union bosses said.

    The planned work stoppages at more than 20 mines threaten to curb mineral production in Peru, the world's third-biggest copper, silver and tin producer and seventh-biggest gold producer.

    Unionized workers are demanding the government repeal a law passed last year that eases rules on firing workers and to restrict the use of contract workers by mining companies, said Ricardo Juarez, the president of a national mining federation.

    "We're not asking for a wage increase," Juarez said. "We want a series of norms and decrees that go against mining workers eliminated." Some 20,000 workers are part of the national mining federation, Juarez said.

    The following are some of the mines where Juarez said unionized workers will take part in the strike. Production levels are from the energy and mines ministry.

    -ANTAMINA Produced 362,000 tonnes of copper and 266,000 tonnes of zinc last year. BHP Billiton Ltd and Glencore Plc own 33.75 percent stakes. Teck Resources Ltd controls 22.5 percent and Mitsubishi Corp 10 percent.

    -CERRO VERDE Produced 235,000 tonnes of copper last year. Freeport-McMoRan Inc controls 53.56 percent, Sumitomo Metal Mining Co Ltd 21 percent, Buenaventura 19.58 percent.

    -ANTAPACCAY The Glencore-owned mine produced 167,000 tonnes of copper last year.

    -SHOUGANG Produced 7.2 million tonnes of iron last year. Owned by China's Beijing Shougang Co Ltd.

    -SAN RAFAEL Local miner Minsur SA produced 23,100 tonnes of tin from the deposit last year.

    http://www.reuters.com/article/2015/05/16/peru-mining-strike-idUSL1N0Y700P20150516
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    Southern Copper announces 'pause' in Peru project to end unrest

    Southern Copper Corp on Friday announced a 60-day formal "pause" in its stalled $1.4 billion Tia Maria project in a bid to quell deadly protests against it.

    The decision follows weeks of unrest in the southern region of Arequipa and a presidential address to the country urging peace and demanding the miner do more to build support for the project.

    "In the spirit of recovering the climate of peaceful coexistence the country needs, we ask for the time and terms needed to socialize the project and clear up existing doubts in the next 60 days," Chief Executive Officer Oscar Gonzales said in a statement.

    Peru, the world's third-leading copper producer, is expected to contribute a significant amount to future global supplies. But mining conflicts have held up billions of dollars worth of investments in recent years.

    Tia Maria has faced delays since 2011, when similar rallies by farmers who say the mine will pollute the surrounding agricultural valley also left three dead.

    Southern Copper, controlled by Grupo Mexico, has said it will use the highest standards and promised to build a desalinization plant to ease concerns over water supplies in its revised environmental plan, which was approved last year.

    A construction permit for the 120,000-tonnes-per-year copper mine was pending when renewed protests broke out March 23.

    "Nothing has changed, it should not be the company that makes the decision but the people," said Helar Valencia, one of four mayors in Arequipa opposed to the project.

    http://www.reuters.com/article/2015/05/16/peru-southerncopper-tiamaria-idUSL1N0Y62JI20150516
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    Rio Tinto to sell aluminium assets in $1 bln deal -paper

    Global miner Rio Tinto plans to sell some of its aluminium assets in a potential $1 billion deal, the Financial Times reported, reviving a sale plan for its Pacific Aluminium unit two years after it was cancelled.

    The Financial Times, citing "people aware of Rio's plans", said on Sunday that Rio had hired Credit Suisse to find a buyer for Pacific Aluminium, known as PacAl, which comprises a group of smelters in Australia and New Zealand.

    A spokesman for Rio Tinto said the company "doesn't comment on market speculation".

    Rio Tinto first said it could hive off PacAl in 2011. In 2013, it said it was considering selling it, before scrapping efforts, blaming poor market conditions.

    Since then the aluminium market has recovered somewhat. The aluminium price rose 6 percent in 2014 and last year, aluminium surpassed copper as the second biggest contributor to Rio's underlying earnings behind iron ore.

    In aluminium, Rio has been steadily recovering from a disastrous $38 billion acquisition of Alcan in 2007 that brought it close to bankruptcy and helped lead to the dismissal of its previous chief executive, Tom Albanese.

    http://www.reuters.com/article/2015/05/17/rio-tinto-disposal-aluminium-idUSL5N0Y80UN20150517
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    Steel, Iron Ore and Coal

    China steps up defence of steel industry

    China stepped up its defence of its steel industry on Friday after a new probe into possible dumping added fuel to a growing international trade spat over the country's steel exports.

    Ministry of Commerce spokesman Shen Danyang said China, which produces almost half the world's steel, opposes any measures against its steel exports. The European Commission on Thursday confirmed a fresh investigation into possible dumping of cold-rolled steel coil exports from China and Russia.

    Without specifically addressing the European Union, Mr Shen said Chinese steel exports have been rising sharply because of "higher demand in the global market," and said that "Chinese steel products have strong export competitiveness."

    "Under such circumstances, I feel that it's quite normal for Chinese steel exports to these countries to be rising, and it's quite justifiable," he said.

    The US, Australia and South Korea, have also signaled that they are lining up support for trade action to roll back Chinese steel exports, which rose by 50.5 per cent last year to a record 93.8 million metric tons and have continued at a high level this year, according to General Administration of Customs data.

    At home, Beijing has been pushing its steel industry to slash obsolete productive capacity to cut environmental pollution and to improve the kind of steel products it makes. The government has opened its steel sector to foreign investment, a move that has seen few takers so far.

    As steel prices have slumped, China has also taken measures to try to limit exports, cancelling an export tax rebate on a certain type of popular steel alloy in January. However, that measure was almost immediately circumvented by steelmakers who began to export similar products using a different type of alloy.

    The tenor of Mr Shen's comments suggests China is pulling back from the more conciliatory approach it had adopted last year to manage global trade complaints, analysts say. Though state officials have consistently said they believe Chinese steel exports are globally competitive, last year they said they understood the friction caused by these exports, and had sought to discuss the issue with local steel mills to try to hold down exports.

    Those discussions appear to have borne little fruit.

    http://www.businessspectator.com.au/news/2015/5/15/china/china-steps-defence-steel-industry
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    Nippon Steel says seamless pipe demand to fall 20-30 pct

    Nippon Steel & Sumitomo Metal Corp expects demand for seamless pipes used in oil drilling to fall by up to 30 percent this business year, but aims to offset most of the impact through lower fuel costs, a senior executive said.

    Nippon Steel, the world's second-largest steelmaker, is among the world's top makers of high-end seamless pipes used mainly for drilling oil and gas, along with French steel pipe-maker Vallourec and Italy's Tenaris.

    Executive Vice President Katsuhiko Ota told Reuters in an interview the company was also targetting 50 billion yen ($420 million) in other savings this year, and hoped to boost profits at its overseas units by the same amount over three years.

    "What we can say is that we'll cover a shortfall in seamless pipes by lower fuel expenses, save 50 billion yen from other cost cuts this year," Ota said.

    "In addition, we aim to boost profits of overseas units by 50 billion yen over the next three years."

    Tokyo-based Nippon Steel does not break out the financial contribution of steel pipes in its results, but analysts said the segment contributed more than 20 percent profit.

    "The pipe segment is an important profit driver for Nippon Steel," said Yuji Matsumoto, an analyst at Nomura Securities, who expected the weaker demand to cut recurring profit this year by about 45 billion yen.

    The firm sold 1.19 million tonnes of seamless pipes in the year ended in March, steady on a year earlier.

    "For this business year, seamless demand is likely to fall about 20-30 percent as oil majors have warned that they would cut their orders that much," Ota said.

    "Our product mix will get worse because seamless pipes generate higher margins than other products."

    Global oil prices tumbled to six-year lows in March. Exxon Mobil Corp, Royal Dutch Shell Plc, BP Plc and others have slashed 2015 capital spending plans by 10 to 15 percent, delaying and scrapping projects.

    http://www.reuters.com/article/2015/05/17/nippon-steel-energy-idUSL3N0Y62I220150517
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