Mark Latham Commodity Equity Intelligence Service

Prices of energy, logistics and some raw materials in China have surpassed those in the United States, according to the 2015 China Purchasing Development Report, released on Thursday by the China Federation of Logistics and Purchasing.

The report said that the United States has slashed its energy costs with exploitation of shale gas, increasing the competitiveness of American manufacturers.

"Many raw materials are cheaper in the United States," the report said. "For example, US cotton is 30 percent cheaper than that in China." It also pointed out China's price disadvantages with statistics in sectors including logistics and industrial land.

Citing a survey by the Boston Consulting group, the report said the cost advantage of China's manufacturing industry over the United States has plummeted to 4 percent in 2014 from 14 percent in 2004.

"If the trend continues, China's cost advantage in manufacturing could be completely wiped out by 2020," the report predicted.

It suggested China steps up innovation and relies on made-in-China equipment and Chinese brands to sustain growth in the futur

Attached Files

Back to Top

Oil and Markets

The fluctuations in crude oil have dictated the direction for the stocks. A slide in oil futures has more times than not resulted in a tumble in the broader stock market. Conversely, a rise in oil prices, as was seen on Monday when West Texas Intermediate oil CLZ5, +0.60% saw a 2.5% pop to settle at $41.74 a barrel, has delivered a bump to stocks. The following table from Dow Jones data show that a strong positive correlation between oil and stocks has really taken hold in July and August of this year.

All the main U.S. indexes surged sharply higher on Monday, highlighted by a more than 230-point rally in the Dow Jones Industrial Average DJIA, +1.38%

Year	Same Direction (Down days)	Same Direction (Up days)	Total Same Direction	Total Days	% of Days
2014	64	67	131	252	51.98
2015	78	57	133	221	60.18
Since Aug. 19	25	20	45	63	71.43
Aug. 19-Nov. 14, 2014	17	17	34	63	53.97
Aug. 19-Nov. 15, 2013	26	19	45	64	70.31

More than 70% of the time that oil has moved in a given direction, stocks have followed. Compare that with a roughly 52% correlation for 2014. For all of 2015, the correlation is a little over 60%, according to Dow Jones data.

Back to Top

The West should not right off the Middle East

http://www.capx.co/the-west-shouldnt-write-off-the-middle-east/

We should respond with similar generosity to some of the words spoken immediately after the Paris abominations. Bernie Sanders said terrorism was a consequence of climate change. Janine di Giovanni said: “What really worries me is that these attacks will help the Right wing”. Jean-Claude Juncker said that the murders strengthened the case for the free movement of migrants in Europe. Stop the War said that France brought the attacks on itself by bombing Syria. In each case, people were responding in the way that human beings do to trauma, by retreating into the familiar, by saying, in effect, “This just proves whatever it was I was arguing a moment ago.”

Our larger purpose, though, was to engage with local politicians. It is worth recalling what sparked the revolution in 2010 – which spread from Tunisia across North Africa and the Middle East. The risings began when Mohamed Bouazizi, a market trader, was driven to the horrific extreme of self-immolation because he had been denied ownership of his own goods and the right to engage in commerce. His was a protest against the violation of property rights, and he was not alone. In an authoritative study of the Arab Spring, the Peruvian economist, Hernando de Soto, chronicled hundreds of cases of entrepreneurs in Arab countries being driven to suicide by police corruption and harassment.

The Arab Spring, in other words, began as a movement against arbitrary government. Citizens were fed up with living under regimes that could make up the rules as they went along, seizing property without due process, rigging the law in favour of their clients. They wanted freedom: freedom of speech, freedom of assembly, freedom of worship, freedom of association and, not least, freedom to enjoy their own property.

The answer ought to be obvious. Religion isn’t going to disappear, much as some Leftists might like it to. The question is whether observant Muslims can be represented by values-based democratic parties, of the sort that the Western Right takes for granted, but that have so far barely existed in the Arab world except in Morocco and Tunisia.

No one can definitively answer that question, and the recent history of North Africa cautions against excessive optimism. Still, as Benedikt Koehler – a fellow CapX contributor and also a conference delegate – has regularly argued here, freedom and free markets were an integral part of early Islam. The aspiration to liberty is universal. Don’t write off an entire region.

Attached Files

Back to Top

Sumitomo Metal seeks stakes in copper, gold mines

Sumitomo Metal Mining is looking to snap up stakes in copper and gold mines, taking advantage of its sound finances and a slump in commodity prices to bolster future growth, its president said.

"We have a perfect opportunity now to make use of strength and pursue good deals that would benefit us in future," Sumitomo Metal President Yoshiaki Nakazato told a news conference.

A number of companies had approached the firm about possible sales, he said, but declined to elaborate.

Several miners have indicated they are on the look out for copper assets, as slowing demand growth in China, the world's biggest consumer of industrial metals, has pushed copper prices to six-year lows. Gold is at nearly five year lows.

Companies such as Glencore have come under pressure from investors to cut debt amid a broadranging slump in commodity prices.

Nakazato said Sumitomo Metal was sticking with a long-term goal to boost its annual copper output from the mines in which it holds a stake to 300,000 tonnes in 2021, up from planned output of 175,000 tonnes this year.

Sumitomo Metal was also unlikely to reach full capacity at its Sierra Gorda copper mine in Chile until April or May, he said, confirming indications from another company official last week that the schedule would be delayed from December.

The delay was due to problems with the mine's molybdenum plant, he said.

The Sierra Gorda mine, owned jointly with Polish producer KGHM Polska Miedz, began commercial production at the end of June and the setback adds to a slew of production delays at Chilean copper mines this year.

While its basic finances are healthy, Japan's second-biggest copper producer still slashed its full-year profit forecast this month, blaming the plunge in the prices of copper and nickel and the delayed ramp-up at Sierra Gorda.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/sumitomo-mtl-min-ma-idUSL3N13C08Y20151117#KX7gSHl6YoFUvB03.99

Attached Files

Back to Top

BHP Reviews Mine Operations Management After Dam Disaster

BHP Billiton Ltd. said it’s reviewing the operating structure of mining joint ventures with companies including Glencore Plc and Anglo American Plc in the wake of the deadly Brazil mine disaster.

The world’s biggest mining company is reviewing Samarco Mineracao SA, its joint iron ore operation with Vale SA in Brazil’s Minas Gerais state, after tailings dams burst Nov. 5, sending a torrent into a valley below and killing at least nine people. It’ll also assess the Antamina copper operation in Peru and its Cerrejon coal venture in Colombia, BHP Chief Executive Officer Andrew Mackenzie told investors Monday on a conference call.

Three of its mining joint ventures - Samarco, Antamina and Cerrejon - are operated by standalone entities owned by the partners, while in BHP’s petroleum business one of the partners acts as the operator, he said. BP Plc and Chevron Corp. are among BHP’s oil partners. Of 19 major assets in its portfolio of wells to mines, BHP operates 12 of the sites, according to a March filing.

“That is the kind of arrangement we need to review and have been reviewing,” Mackenzie told investors on the call. BHP will assess “whether a more petroleum-type model might be more appropriate in the future,” he said.

While any changes to the structure of joint ventures could speed up decision-making and allow for the adoption of more unified standards and working practices, it would be complicated for companies that own an equal share of a joint venture to select a single producer to take the lead, said Sydney-based Deutsche Bank AG analyst Paul Young.

“The issue is, when you have equal ownership and you have one operator, who’s going to be the operator and who do you choose?” Young said by phone. Any change would likely take years, rather than months, he said.

BHP and Glencore both hold a 33.75 percent stake in Compania Minera Antamina, which operates Peru’s Antamina copper mine, while Teck Resources Ltd. has 22.5 percent and Mitsubishi Corp. holds 10 percent, according to filings. Glencore, BHP and Anglo American each have a third share in Cerrejon Coal Co., the filings show.

In addition to its consideration of operating structures, BHP is also conducting a review of dam facilities across the organization, Mackenzie told investors on the call. “We are hungry for the lessons that we can learn from Samarco,” he said. “We are clearly looking at ways we can run the vast bulk of our business even better.”

http://www.bloomberg.com/news/articles/2015-11-17/bhp-reviews-mine-operations-management-after-brazil-dam-disaster

Back to Top

CO2 Emissions Data

Back to Top

Boart Longyear Q3 loss widens

Boart Longyear's third quarter loss has widened 58 per cent and the drilling services company does not expect the impact of its cost cutting measures to show in results until the next financial year.

Boart's net loss for the three months to September 30 was $US24.8 million ($A34.87 million), compared to $US15.7m for the prior corresponding period, after revenue dropped 21.9 per cent to $US186.8m.

"Drilling activity levels continue to be low and we are also battling headwinds in prices and foreign exchange rates," executive chairman Marcus Randolph said.

Chief executive Richard O'Brien stepped down in August after Boart reported a blowout in half year losses to $US152.3 million ($A214.13 million) to June 30.

International driller Boart Longyear sees its cost and productivity improvements are continuing to gain traction despite a statutory operating loss of $US24.8M in the Sept qtr (Q3), a 58% deterioration from Q3 2014. The loss from trading activities was $7.7M ($6.2M).

Q3 revenues fell 22% to $186.8M ($293.3M), due to lower volumes and unfavourable $US exchange rates. Liquidity improved to $153M, $8M higher than at end-June.

http://www.businessspectator.com.au/news/2015/11/16/resources-and-energy/boart-longyear-q3-loss-widens

Back to Top

Chinese firm to invest $2.15b in Mexico's energy sector: report

Chinese firm to invest $2.15b in Mexico's energy sector: report

China National Corporation for Overseas Economic Cooperation (CCOEC) is set to invest $2.15 billion in Mexico's energy sector, it was announced at a bilateral trade forum which ended in Mexico City on Thursday, Xinhua News Agency reported on Saturday.

The government of Mexico's northern state of Durango signed the agreement with the Chinese partner as part of the 2015 China-Mexico Trade and Investment Expo and Forum, which took place in Mexico City through November 10-12.

The project, in which the CCOEC will be the main investor, calls for the construction of what is known as a combined cycle plant with capacity of 1,500 megawatts.

The plant "will be built over three different stages of 500 (MW) each," said Durango's Secretary of Economic Development, Ricardo Navarrete Gomez.

"Each stage will be developed over a two-year period, generating 1,500 direct jobs," he explained.

China is supplying 85 percent of the investment needed, with the remaining 15 percent coming from Mexican sources, he said. "This is quite a large investment for Durango, but it opens up future investment" possibilities.

President of CCOEC, Huo Xuejun, noted bilateral business in various fields has been "steadily" strengthened.

http://en.chinamining.com.cn/Investment/2015-11-16/1447636437d74494.html

Back to Top

China Oct power consumption down 0.2pct on year

China’s power consumption stood at 449.1 TWh in October, edging down 0.2% on year and down 1.58% on month, showed data from the National Energy Administration (NEA) on November 16.

Power consumption by the residential segment was 56.6 TWh, rising 4.7% from the year prior but down 17.3% from September.

For the non-residential segment, the primary industries – mainly the agricultural sector – used 7.3 TWh of electricity in October, rising 6.6% on year but down 28.4% on month.

The secondary industries – mainly the industrial sector – consumed 329.8 TWh of electricity, falling 1.9% on year but up 5.43% from September.

The industrial sector specifically, consumed 324.5 TWh of electricity in October, decreasing 1.9% from the year before but up 5.77% from September, with the heavy industry accounting for 83.4% or 270.5 TWh, dropping 1.5% year on year but up 8.46% on month.

Power consumption by tertiary industries – mainly the services sector – reached 55.4 TWh in October, increasing 4.6% year on year and 14.8% lower from the month prior.

Over January-October, China consumed a total 4,584 TWh of electricity, up 0.7% from the same period last year, the NEA said.

Power consumption by the residential segment amounted to 614 TWh during the same period, gaining 4.6% from the previous year.

Under the non-residential segment, the primary industries used 87.9 TWh of electricity, up 3% year on year; the secondary industries used 3,285.8 TWh of power, down 1.1% year on year, with the industrial sector at 3,228.5 TWh, down 1%; while the tertiary industries consumed 595.9 TWh, up 7.1%.

Meanwhile, the average utilization of power generating units across the country dropped 7.56% year on year to 3,279 hours over January-October this year.

Hydropower plants logged average utilization of 2,989 hours during the same period, dropping 3.67% from the previous year; while thermal power plants logged average utilization of 3,563 hours, falling 7.86% from a year ago.

China added 82.57 GW of power generating capacity from January to October, including 12.58 GW of new hydropower capacity and 43.36 GW of new thermal power capacity.

http://en.sxcoal.com/0/134961/DataShow.html

Attached Files

Back to Top

Australian Senate passes China-Australia FTA

The Australian Senate has passed the China-Australia Free Trade Agreement (CAFTA), paving the way for implementation from January 1 next year that will help lower the import tariff on coal selling into China.

Australian media reported that the Customs Amendment (China-Australia Free Trade Agreement) Bill 2015 and the complementary Customs Tariff Amendment (China-Australia Free Trade Agreement) Bill 2015 passed the Senate on November 9, after being approved by the House of Representatives on October 22.

The agreement will come into effect after gaining approval from China’s legislative body.

China and Australia are important trade and investment partners. Australia is the second largest destination of Chinese overseas investment after Hong Kong. China is the largest trade partner of Australia, and its largest import and export destination.

If tariffs come down, there would be a 96.45% export tariff cut for Chinese products, totaling $1.6 billion yuan, in force for three years from ratification.

The CAFTA will benefit Australia’s exports of coking coal, thermal coal and aluminium oxide, enhancing Australian miners’ competitiveness in the seaborne market and cutting production cost for coal chemical, steel and aluminium producers of China.

Upon implementation, China would scrap the existing 3% import tariff on coking coal, and lower the current 6% import tariff on thermal coal to 4%, and gradually reduce to zero in 2017.

This will directly improve profitability of Chinese holding companies or subsidiaries in Australia, such as Yancoal Australia.

Half of China’s imported coking coal comes from Australia. Over January-September, China imported 19.59 million tonnes of coking coal from Australia, down 6.1% on year, accounting for 53.8% of China’s total coking coal imports, customs data showed.

During the same period, China’s imports of thermal coal -- including bituminous and sub-bituminous coals -- from Australia fell 25.8% on year to 33.89 million tonnes, taking 53.3% of China’s total thermal coal imports, the data showed.

http://en.sxcoal.com/0/134802/DataShow.html

It seems likely that an Article 4 meeting would conclude that the Paris massacres, given their scale and scope, should be considered an attack under Article 5. That would be entirely appropriate. The terrorist attacks — assuming that the Islamic State is, in fact, responsible for them — are the culmination of a long-running humanitarian disaster in Syria that has destabilized the Middle East and initiated the flow of millions of refugees into the heart of Europe. NATO can no longer pretend the conflict does not affect its most basic interests.

http://foreignpolicy.com/2015/11/14/natos-turn-to-attack-paris-terrorist-isis/

Attached Files

Back to Top

Oil and Gas

Eni selling remaining Galp shares

Italian oil company Eni has started, through an accelerated book building procedure, the sale of shares it owns in Galp Energia, a Portuguese oil and gas company.

Eni is selling 33,124,670 ordinary shares of Galp. This means the Italian company is actually selling its entire participation it has in Galp, which is around 4% of Galp’s total share capital.

The shares were underlying its Exchangeable Bonds under which the terms of conversion are expired. The shares will be placed with qualified institutional investors with Goldman Sachs International and Merrill Lynch International acting as Joint Bookrunners.

Over the last few months Eni has completed the disposal on the stock exchange of approximately 4% of the share capital of Galp.

Following the completion of the Offering, Eni will not hold any participation in Galp’s share capital, completing the disposal process of the initial 33.34% stake, sold through several transactions starting from 2012.

http://www.offshoreenergytoday.com/eni-selling-remaining-galp-shares/

Back to Top

Brazil Said to Study Hybrid Securities for Petrobras: Estado

Brazil is studying the possibility of using hybrid securities to boost capital at struggling state-controlled oil producer Petroleo Brasileiro SA, Agencia Estado reported, citing government officials it didn’t name.

The operation is being discussed between Brazil’s Treasury and Petrobras’s management, and no amount has been defined yet, Estado said. The government and Rio de Janeiro-based Petrobras aren’t considering a share sale to minority investors as an option to raise cash at this time, Estado said. Petrobras declined to comment.

Hybrid securities like contingent convertibles -- or Cocos, as they are known -- provide companies with a way to raise money without immediately diluting shareholders, as is the case when a firm issues new stock.

The instrument, which doesn’t impact the country’s surplus or the public net debt, was used by former Finance Minister Guido Mantega to fund state-controlled banks in recent years, the paper said.

In Brazil, the securities have been used by banks only and the government would still need to find an intermediary to transfer the money to Petrobras, as the producer is not a financial institution, Estado reported.

The government could use Brazil’s Treasury to get Petrobras an advance payment for a capital increase, Eliseu Martins, a former securities regulator and accounting specialist, said by phone. The Treasury would issue securities without a firm deadline to convert them into Petrobras shares, he said.

“When market conditions improve, the company could then call investors for a capital increase,” Martins said, adding he isn’t aware of the government’s discussions.

Petrobras’s debt has surged fourfold in the past five years as the company boosted investments to tap giant oil fields deep in the South Atlantic, while at the same time subsidizing fuel imports during the commodities boom as part of a government effort to contain inflation. Standard & Poor’s cut the company’s ratings to junk in September amid rising leverage and a corruption scandal that has resulted in some of its suppliers filing for bankruptcy.

http://www.bloomberg.com/news/articles/2015-11-19/brazil-said-to-study-hybrid-securities-for-petrobras-estado

US natural gas in storage hits 4 Trillion cf


					Historical Comparisons
	Stocks billion cubic feet (Bcf)				Year ago (11/13/14)		5-year average (2010-14)
Region	11/13/15	11/06/15	net change	implied flow	Bcf	% change	Bcf	% change
East	934	929	5	5	892	4.7	926	0.9
Midwest	1,124	1,117	7	7	1,051	6.9	1,091	3.0
Mountain	214	217	-3	-3	185	15.7	213	0.5
Pacific	381	382	-1	-1	349	9.2	358	6.4
South Central	1,347	1,340	7	7	1,119	20.4	1,205	11.8
Salt	377	373	4	4	329	14.6	288	30.9
Nonsalt	970	967	3	3	790	22.8	917	5.8
Total	4,000	3,985	15	15	3,596	11.2	3,793	5.5

Working gas in storage was 4,000 Bcf as of Friday, November 13, 2015, according to EIA estimates. This represents a net increase of 15 Bcf from the previous week. Stocks were 404 Bcf higher than last year at this time and 207 Bcf above the five-year average of 3,793 Bcf. At 4,000 Bcf, total working gas is above the five-year historical range.

http://ir.eia.gov/ngs/ngs.html

Attached Files

Back to Top

Tanker rate spike dents efforts to store oil glut at sea

Record high freight rates are creating more headaches for traders looking to house millions of barrels of unsold crude oil and who already face potential losses due to record high stocks.

They have to decide on whether to use tankers for longer term storage until they can sell their cargoes, or dump them at even more discounted prices in order to keep wells running.

This is expected to come at a bigger cost as rates for supertankers have soared - reaching their highest since 2008 at over $100,000 a day last month and currently around $70,000 a day.

Some have already been caught out with extra oil, and had no choice but to keep it on vessels. Trade sources said the expensive freight meant this was not a money-making play - and is unlikely to become one any time soon.

"They're losing money, and they want to place the vessel as fast as possible," said Eugene Lindell, senior crude market analyst with JBC. "It's putting pressure on anyone who has to take a vessel out."

Booking a supertanker on a one-year time charter has also spiked to over $50,000 a day - double the rate last year - with the overall monthly cost of storing oil on a vessel estimated at just over $2 million.

A combination of bargain buying by oil importers and refineries and fewer new vessel deliveries this year meant that the tanker market was having its best year since the 2008 financial crisis, Omar Nokta with Clarksons Platou Securities said.

"Capacity utilisation has jumped sharply as a consequence, nearly reaching 90 percent, the highest level since 2008," Nokta said. "As seasonal factors now turn up, we expect to see more of the above with floating storage possibly becoming an even bigger factor."

Placing crude in storage is only profitable if prices for delivery in the future are at a large enough premium to the current levels - a market structure known as contango. The contango also has to be large enough to pay for the cost of storage, which is usually much higher on ships than land tanks.

Earlier this year, as much as 50 million barrels of oil was estimated to have been earmarked for sea storage options with traders looking to sell the cargoes later on at a profit.

That speculative play fizzled out as the contango flattened quickly.

"If it (a wide contango) gets there, it would be a very, very small amount of time ... before the freight rate goes up and it closes," one oil trader said. "(Tanker) owners are notoriously bad at hiking the rates in no time at all."

The trading strategy was last used in 2009, when slumping prices led traders to park more than 100 million barrels of oil on tankers at sea before stocks were sold off. At the time, oil tanker rates were at rock-bottom levels, and owners were keen for long-term leases.

This time round, tanker owners have the upper hand, with worldwide bottlenecks and heavy traffic to oil refineries keeping vessels fully booked.

Read more at Reutershttp://www.reuters.com/article/2015/11/19/oil-tankers-storage-idUSL8N13D42B20151119#mj8lAovUm0oAwKdO.99

Attached Files

Back to Top

IEA Says Natural Gas to Play Key Role in Climate Talks

Natural gas, the “least carbon-intensive fossil fuel,” could play a key role in reaching global climate goals, an issue at the center of upcoming talks in Paris, said the head of the International Energy Agency.

Fatih Birol, the agency's new executive director, noted that energy production and use account for two-thirds of global greenhouse gas emissions, so energy policies will be key at the Paris talks starting Nov. 30, which have the aim of achieving a global deal to fight climate change, largely through commitments to cut carbon dioxide emissions.

Speaking at the agency's Nov. 17–18 ministerial meeting, which brought together energy ministers from the Paris-based agency's 29 members, including the world's advanced economies and many of its biggest energy users and carbon dioxide emitters, Birol said IEA ministers approved his three-pillar plan for modernizing the agency's strategy to face today's “transformed” global energy landscape.

That starts with doing more to bring emerging economies into the IEA's work, Birol said.

IEA's members now account for less than 50 percent of global energy consumption, but including non-IEA emerging economies, that rises to over 75 percent, according to Birol.

The meeting included representatives from the biggest emerging economies: Brazil, China, Indonesia, India, Mexico, Morocco, South Africa and Thailand, with Mexico and Chile announcing plans to join the agency. Some 30 leaders from business and the energy industry also attended.

U.S. Energy Secretary Ernest Moniz, who chaired the meeting, said natural gas will play an important part in shorter term U.S. efforts to cut power sector greenhouse gas emissions, but special technologies could be needed to “really squeeze down” on emissions from gas in the very long term.

http://www.bna.com/iea-says-natural-n57982063725/

Saudi Oil Minister Says OPEC With Others to Stabilize Market

Saudi Arabia is working with other OPEC members and producers from outside the group to stabilize the market, Saudi Oil Minister Ali al-Naimi said.

The world economy is going through an unstable situation, al-Naimi said. Crude demand is expected to rise by 1 million barrels a day every year in this decade, and the world requires more investments in oil to compensate for decline rates, he said. The decline rate of recovery at the world’s oil fields is at about 4 million barrels a day, he said.

“Saudi Arabia is a very reliable supplier. We cooperate with OPEC and non-OPEC countries to stabilize the market,” al-Naimi said at a conference in Manama, Bahrain. “We need billions of dollars to continue exploration and producing oil and to invest in spare capacity to stabilize the market.”

Threatened by surging production mainly from North America and Russia, the Organization of Petroleum Exporting Countries has been pumping above its quota for 17 months as it seeks to take market share from higher-cost regions. Oil tumbled since the middle of last year as U.S. stockpiles and production expanded, creating a global oversupply.

Saudi Arabia, the world’s top crude exporter, led OPEC to reject demands from members including Algeria and Venezuela to cut supply to bolster prices. The group opted to maintain its production target to protect market share at the last meeting in June. OPEC ministers are due to meet Dec. 4 to assess the market and decide on production levels.

Arab countries hold 57 percent of the world’s oil reserves, and that will grow on new discoveries, al-Naimi said. Arab countries need $700 billion of energy investments over the next 10 years, and oil consumption in the region is about 10 percent of the world’s demand, he said.

http://www.bloomberg.com/news/articles/2015-11-19/saudi-oil-minister-says-opec-with-others-to-stabilize-market

Marathon Ups Cash Offer for MarkWest 2nd Time – Deal in Trouble?

For a second time in as many weeks, Marathon Petroleum has increased the amount of cash it’s willing to pay as part of the deal to purchase Marcellus/Utica midstream giant MarkWest Energy.

Last week Marathon upped the cash portion of the deal from $675 million to $1.075 billion–a hefty $400 million increase . Yesterday Marathon announced they have increased it again–they’re now willing to pay $1.28 billion in cash, in addition to unit swaps and other financial high jinks in a deal worth $15 billion (initially was worth $20 billion). That is, Marathon has just added another $205 million to the dowry they’re offering.

Does the increase have anything to do with former MarkWest CEO John Fox telling everyone MarkWest is crazy for selling itself for such a low price (see Former MarkWest Energy CEO Urges Vote Against Marathon Buyout)? MarkWest is attempting to win a PR battle against Fox. In their announcement about receiving more cash as part of the deal, MarkWest claims three big unit
holders (i.e. shareholders) representing a collective 15% of the outstanding units (i.e. shares) say they will vote in favour of the deal.

That’s still a long way from 51%. We wonder if this deal is in trouble…

http://marcellusdrilling.com/2015/11/marathon-ups-cash-offer-for-markwest-2nd-time-deal-in-trouble/?utm_source=dlvr.it&utm_medium=twitter

Back to Top

Russia struggles to sell Siberian light crude

Russia's Siberian Light crude oil hits lowest level against Dated Brent since 2008, after Nov loading program struggled to clear

@PlattsOil

Russia Resolves to Make Most of Soviet Oil as New Finds Delayed

Russia plans to squeeze all the oil it can from Soviet-era discoveries to hold crude output stable for the next two decades as new finds are delayed by sanctions and slumping prices, according to the Energy Ministry.

“We’ve got a safety cushion until 2035,” Deputy Energy Minister Kirill Molodtsov said in an interview in Moscow. “The potential for output growth at oil fields already in operation is higher than in unexplored territories.”

Russia, which relies on oil and gas for almost half of its budget revenue, has repeatedly broken post-Soviet production recordsthis year as drillers benefit from a weakening ruble. Nevertheless future barrels may be at risk as exploration campaigns, mostly in undeveloped areas offshore, have tailed off following investment cuts.

Exploration drilling dropped 21 percent in the nine months through September after increasing in 2012 to 2014, government data show. State-run energy giants Rosneft OJSC and Gazprom PJSC are delaying some offshore drilling by two to three years, according to the Natural Resources Ministry.

Production Outlook

Exploration drilling is first in line when companies trim spending, according to Molodtsov. Adding wells at existing fields or using chemicals or fracturing to push out more oil provide a quicker return than tapping new territories, he said, estimating steady annual output of 525 million metric tons (about 10.5 million barrels daily) through 2035 even in a conservative scenario.

A tax system that provides the right incentives could help drive volumes to 540 million tons in the coming years, he said.

Russia plans to boost offshore oil production by 33 million tons to 50 million tons in the next two decades, according to its long-term energy strategy.

Alternatively, “with the right motivation we can get those 33 million tons in West Siberia,” Molodtsov said. Russia has 21,500 idle wells in its main oil-producing province, the Khanty Mansiysk region, mostly explored during the Soviet Union era. It’s there that production needs to be “intensified,” according to the deputy minister.

Insufficient Capacity

The International Energy Agency has taken a less optimistic view on Russia. The nation doesn’t have the capacity to wring enough crude from existing fields to support longer-term growth, the IEA said in its World Energy Outlook 2015 report published this month.

For more than three years, Molodtsov’s ministry has been pushing the government to agree to a new profit-based tax system to spur crude output, while the Finance Ministry has suggested Russia should wait until at least 2017 given the economy’s recession.

Russia’s oil and gas industry deserves incentives because it’s “the driver of the economy,” Molodtsov said. The country should encourage its “strongest” players by stimulating output at existing fields, he said.

http://www.bloomberg.com/news/articles/2015-11-17/russia-resolves-to-make-most-of-soviet-oil-as-new-finds-delayed

Back to Top

India's Oct fuel demand surges at fastest pace in nearly 12 years

India's annual fuel demand in October surged at its fastest pace in nearly 12 years driven by higher sales of gasoil and gasoline ahead of festival season in Asia's third-largest economy.

Fuel consumption, a proxy for oil demand, rose 17.5 percent in October from a year ago, the biggest jump since April 2004, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

India last month consumed 15.2 million tonnes of refined oil products, the data showed, with gasoil sales rising to their highest level in five months.

Consumption of gasoil or diesel, which makes up about 40 percent of refined fuels used in India, rose 16.3 percent to 6.34 million tonnes. Campaigning ahead of an election in the eastern Bihar state also fuelled diesel demand last month.

Sales of gasoline climbed 14.5 percent to 1.85 million tonnes from a year earlier on robust passenger vehicles sales in the month.

Cooking gas or liquefied petroleum gas (LPG) sales increased 12.5 percent to 1.69 million tonnes, while naphtha sales rose 31.32 percent to 1.05 million tonnes.

Construction activity also likely rose due to drier conditions with the data showing sales of bitumen, used for making roads, were 64.99 percent higher, while fuel oil use was up 27.98 percent in October.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/india-fuel-demand-idUSL3N13C3D820151117#DOSX0t7WpAqOM0jo.99

Attached Files

Back to Top

Schlumberger acquires Fluid Inclusion Technologies, Inc.

Schlumberger announced the acquisition of Fluid Inclusion Technologies, Inc. (FIT), a US-based oil and gas service company specializing in laboratory analysis of trapped fluids in rock material, and advanced borehole gas analysis on drilling wells.

'FIT offers innovative and proprietary technologies that will further strengthen our ability to deliver integrated rock and fluids solutions to our customers,' said Amir Nessim, president, Testing Services, Schlumberger. 'This acquisition is a natural extension of our comprehensive reservoir fluids and rocks services. Customers can expect even stronger one-stop-shop evaluation of rock and fluids from their developments, which Swe offer through our global network of Schlumberger Reservoir Laboratories.'

'As a Schlumberger company, we will be able to furthele integrated workflows from Schlumberger field and laboratory services. For example, customers can bring cuttings or rock samples to the Schlumberger Reservoir Laboratory and obtain full analytical information supported by Schlumberger domain knowledge and expertise. Services include integrated studies covering the type and origin of rocks and hydrocarbons, and comprehensive understanding of reservoir heterogeneities and gradients. Through FIT, proprietary geochemical logging technology is being added to Schlumberger's advanced mud gas logging portfolio.

http://www.oilvoice.com/n/Schlumberger-acquires-Fluid-Inclusion-Technologies-Inc/3a04e77c3a75.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29

Back to Top

North Dakota's Bakken Pumps Less Oil for First Time in Decade

The state’s Bakken oil region produced less oil in September than it did the previous year, the first time that’s happened in more than a decade. Output fell as low oil prices, exacerbated by the region’s remoteness, caused companies to scale back drilling operations and delay completing new wells.

North Dakota’s portion of the Bakken produced 1.11 million barrels a day in September, down 1.1 percent from the same month a year ago, according to state data. Half the oil left the state by costly truck and rail routes, forcing producers to offer steep discounts. Along with an overall decline in crude prices, that’s prompted drillers to idle 67 percent of the rigs that were in the region last year.

“The production drop was inevitable with the rig decline and the low-price environment,” Carl Larry, head of oil and gas for Frost & Sullivan LP, said by phone. “The cost of rail and trucking hasn’t gone down enough to keep production profitable, so it’s a precarious area to keep production steady or growing.”

The year-over-year decline was the first since August 2004, when the region produced just 1,500 barrels a day. The drop was set in motion nearly a year ago, when falling oil prices made oil companies curtail spending and idle rigs.

Companies that are drilling wells are waiting longer to complete them with hydraulic fracturing crews. The number of drilled but uncompleted wells, known as the fracklog, rose to 1,091 by the end of September, the first time it exceeded 1,000, according to data from state regulators.

The price drop was felt harder in North Dakota because there’s only pipeline space for a fraction of the state’s output. Pipelines are cheaper than rail or truck transportation, so sellers have to offer discounts to make up for the difference in transportation cost. Oil at the wellhead in the Bakken region sold for $29.74 a barrel Friday, compared with $37.40 in West Texas, according to the trading unit of Royal Dutch Shell Plc.

http://www.bloomberg.com/news/articles/2015-11-16/north-dakota-s-bakken-pumping-less-oil-for-first-time-in-decade

Trafigura Reveals $4.3 Billion in Oil Payments to Governments

Trafigura Pte Ltd. disclosed $4.3 billion in oil-related payments to governments in 2013 as part of a push toward more transparency by the third-largest independent oil trader.

The firm said the funds were used to purchase crude oil, refined petroleum products and gas from national oil companies in countries that have signed up to the Extractive Industries Transparency Initiative, or candidate countries. It revealed payments made in Colombia, Ghana, Nigeria, Norway, Peru, and Trinidad and Tobago in its inaugural responsibility report.

The commodity trading industry, much of it centered in Switzerland where traders aren’t directly regulated, has long been noted for its opacity and lack of disclosure. While Trafigura is based in Singapore it has major operations in Geneva, as do closely held competitors Vitol Group -- the largest independent oil trader -- and Gunvor Group Ltd. In the past, the traders have cited competitive reasons for their furtive ways.

Trafigura is the first major independent commodity trader to report oil-related payments to member-states of the EITI, a voluntary disclosure program for oil and mining companies aimed at rooting out and preventing corruption. The report “sets out an ambition to become acknowledged leaders in our sector in the way we manage corporate responsibility,” Chief Executive Officer Jeremy Weir said in a statement. “It also expresses our awareness that we have more work to do.”

Trafigura’s decision to report payments comes amid a schism among members of Switzerland’s tight-knit commodity-trading industry, which accounts for about 4 percent of the nation’s gross domestic product.

The country that’s home to more than 500 commodity-trading companies has decided not to impose mandatory regulations on the sector despite calls to do so by non-governmental organizations. Government officials have encouraged other trading houses to join Trafigura in disclosing payments under the EITI framework to improve transparency.

http://www.bloomberg.com/news/articles/2015-11-16/trafigura-reveals-4-3-billion-in-oil-payments-to-governments

Back to Top

Oil Theft Soars as Downturn Casts U.S. Roughnecks Out of Work

The moon was a waning crescent sliver Sept. 9 when a man emerged from an oil tanker, sidled up to a well outside Cotulla, Texas, and siphoned off almost 200 barrels. Then, he drove two hours to a town where he sold his load on the black market for $10 a barrel, about a quarter of what West Texas Intermediate currently fetches.

“This is like a drug organization,” said Mike Peters, global security manager of San Antonio-based Lewis Energy Group, who recounted the heist at a Texas legislative hearing. “You’ve got your mules that go out to steal the oil in trucks, you’ve got the next level of organization that’s actually taking the oil in, and you’ve got a gathering site -- it’s always a criminal organization that’s involved with this.”

From raw crude sucked from wells to expensive machinery that disappears out the back door, drillers from Texas to Colorado are struggling to stop theft that has only worsened amid the industry’s biggest slowdown in a generation. Losses reached almost $1 billion in 2013 and likely have grown since, according to estimates from the Energy Security Council, an industry trade group in Houston. The situation has been fostered by idled trucks, abandoned drilling sites and tens of thousands of lost jobs.

“You’ve got unemployed oilfield workers that unfortunately are resorting to stealing,” said John Chamberlain, executive director of the Energy Security Council.

In Texas, unemployment insurance claims from energy workers more than doubled over the past year to about 110,000, according to the Workforce Commission. In North Dakota, average weekly wages in the Bakken oil patch decreased nearly 10 percent in the first quarter of 2015, compared with the previous quarter, according to the Federal Reserve Bank of Minneapolis.

With dismissals hitting every corner of the industry, security guards hired during boom times are receiving pink slips. That’s leaving sites unprotected.

“There are a lot less eyes out there for security,” said John Esquivel, an analyst at security consulting firm Butchko Inc. in Tomball, Texas, and a former chief executive of the U.S. Border Patrol in Laredo. “The drilling activity may be quieter, but I don’t think criminal activity is.”

States are trying to get a handle on the theft, which can include anything from drill bits that can fetch thousands on the resale market, to copper wiring that can be melted down, to the crude itself. Texas lawmakers met earlier this month in Austin to craft a bill that would increase penalties related to the crime. A similar measure passed both houses of the legislature this year, but Republican Governor Greg Abbott vetoed it, saying it was “overly broad.” Lawmakers, at the urging of industry, are hoping to revive it next legislative session.

In Oklahoma, law-enforcement officers recently teamed with the Federal Bureau of Investigation to intensify their effort. In North Dakota, the FBI earlier this year opened an office in the heart of oil country to combat crimes including theft, drug trafficking and prostitution.

http://www.bloomberg.com/news/articles/2015-11-16/oil-theft-soars-as-downturn-casts-u-s-roughnecks-out-of-work

Back to Top

India Plans to Free Natural Gas Prices Under New Auction Rules

India plans to free prices of locally extracted natural gas and allow producers marketing autonomy as part of new rules for auctioning exploration blocks.

The government also proposes to introduce a revenue-sharing model with operators, replacing the current profit-sharing mechanism, according to a notice on the oil ministry’s website. The plan includes a uniform licensing policy that will allow operators to explore all forms of oil and gas resources, including coal-bed methane, shale gas and oil, tight gas and gas hydrates.

The government’s initiative follows petitions from gas producers that the current tariff is too low to support exploration and production costs. State control on fuel pricing has prompted oil majors such as Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell Plc to stay away from India’s exploration-block auctions, which started in 1999. BP Plc, Europe’s second-biggest oil company, is the only overseas company with any significant presence in India’s exploration sector.

Reliance Industries Ltd., which produces gas from a deepwater block in the Bay of Bengal, reversed morning losses in Mumbai, rising as much as 0.5 percent to 937.35 rupees. Cairn India Ltd. rose as much as 1.2 percent, overcoming a decline of up to 1.3 percent . Oil & Natural Gas Corp. gained as much as 0.9 percent, recovering from a 3.3 percent drop.

Prime Minister Narendra Modi has made energy security a priority for India, which imports the bulk of its oil and gas. The government announced open-market rates for gas extracted from 69 small fields slated for auction by next month, Oil Minister Dharmendra Pradhan said on Sept. 2.

“On the similar lines, it is proposed to provide pricing and marketing freedom for natural gas to be produced from the areas to be awarded under the new contractual and fiscal regime in order to incentivise production from these areas,” according to the statement.

India will also move to an open acreage licensing policy, allowing companies to submit bids for areas of their choice, according to the statement. The new rules, which have been sent to the explorers for their opinion by the end of this month, are aimed at “ease of doing business.”

http://www.bloomberg.com/news/articles/2015-11-16/india-plans-to-free-natural-gas-prices-under-new-auction-rules

Attached Files

Back to Top

G20-Russian Energy Minister sees oil supply-demand imbalance narrowing

Russia, the world's top oil producer, sees the gap between global oil supply and demand narrowing gradually, the country's Energy Minister Alexander Novak told reporters on the sidelines of the G20 summit in Turkey.

He added that excessive oil supply could be eliminated in the second half of next year.

The Organization of Petroleum Exporting Countries (OPEC) was ready to hold consultations with Russia to assess the situation on the global oil market, Novak said, adding however that there was no joint position within OPEC regarding oil output cuts.

Read more at Reutershttp://www.reuters.com/article/2015/11/16/g20-turkey-russia-oil-idUSR4N13B00920151116#oikLAgLmdTwzeHS3.99

Back to Top

No value in equity unless Oil rebounds

Oil Dealmakers Find Slim Pickings Among Premium-Priced Explorers
Crude needs to rebound to justify valuations, FirstEnergy says
Industry will have `almost no value' if oil doesn't recover

Wannabe dealmakers in the oil industry are stymied by a fundamental problem: there’s a mismatch between the price of crude and the value of companies.

Oil’s slump prompted speculation that explorers and producers, collectively known as E&Ps, were on the cusp of an acquisitions boom as many of the smaller companies burned through cash. That’s unlikely with crude languishing below $50 a barrel, according to research from FirstEnergy Capital LLP.

“Many names among the E&Ps require a much higher oil price than $60 a barrel to justify their valuation and you won’t have a transaction if you don’t pay a premium to the share price,” Stephane Foucaud, an analyst at FirstEnergy in London, said by phone. If crude doesn’t rebound, “there’s almost no value in the oil exploration and production sector.”

Image title

Royal Dutch Shell Plc’s $70 billion move for BG Group Plc helped lift the value of merger and acquisition proposals this year to about $150 billion, from roughly $110 billion in the same period last year, but deals involving smaller companies have been failing, according to data compiled by Bloomberg. Almost $30 billion of this year’s takeover approaches have been rejected, the data show.

Santos Rebuff

Santos Ltd. rejected an offer worth $11.3 billion including debt from Scepter Partners, calling it “opportunistic.” Canadian Oil Sands Ltd. snubbed a C$6.6 billion ($4.96 billion) bid from Suncor Energy Inc. saying it “substantially” undervalued the company.

“Reaching a consensus on fair value between buyer and seller presents challenges,” Martin Ewan, an oil and gas corporate partner at law firm Pinsent Masons LLP, said by e-mail. “Oil price volatility adds a layer of complexity to M&A deals not typical during more stable market conditions.”

A gauge of volatility in U.S. crude prices has almost doubled on average this year to the highest since 2009.

French oil giant Total SA said in October it wouldn’t bid for overvalued explorers and producers, which were trading as if crude were at $70 to $80 a barrel. Adding a takeover premium would bring their valuation closer to a $100 scenario, Chief Financial Officer Patrick de la Chevardiere said Oct. 29.

Out of 18 oil E&P companies tracked by FirstEnergy, only four can give positive returns for shareholders with oil at $60 a barrel, Foucaud said. Should prices rise to about $83, all but one would deliver returns.

Brent, currently trading at about $44-$45 a barrel, will probably recover to $58 in 2016 and may take a further two years to reach $70, according to the median estimate of 48 analysts surveyed by Bloomberg.

Feeding Frenzy

Most recently Anadarko Petroleum Corp., the third-largest U.S. natural gas producer, said it withdrew an all-stock offer for Apache Corp. after the company refused to engage in substantive talks. In a prolonged slump, targeted companies may find themselves less able to refuse prospective buyers.

Crude’s collapse has hit E&Ps hard, wiping off about 45 percent of their market value this year according to the index of 18 companies tracked by FirstEnergy. In comparison, the Stoxx Europe 600 Oil & Gas index, which includes the largest energy companies, has returned 3.5 percent.

The lack of completed deals “indicates that people aren’t yet at the completely distressed point, or on the buy-side they don’t believe that prices have bottomed out yet,” said Michael Wachtel, a partner at Clyde & Co., who has worked for more than 20 years in the oil and gas industry. The price slump has left many companies facing mounting debts and ratings cuts. A “feeding frenzy” may ensue in the first half of 2016 once buyers believe prices have reached their lowest point, Wachtel said.

There’s no shortage of funds for takeovers. The world’s six biggest publicly traded producers have more than a half-trillion dollars in stock and cash to snap up rival explorers, according to data from corporate filings compiled by Bloomberg. Ewan of Pinsent Masons said he’s noticing a “very healthy” interest in North Sea exploration and production assets.

“We are in a transition period where industry players have to adjust to a lower price environment and where buyers and sellers need to find a common ground for deals to happen,” said Lionel Therond, a London-based equity analyst with Standard Bank Group Ltd. “No doubt that price aspirations will go down as desperation sets in.”

Attached Files

Back to Top

US Bound VLCC's at 4 year high.

Back to Top

U.S. oil drillers add rigs for first week in 11: Baker Hughes

U.S. energy firms this week added oil rigs for the first week in 11, data showed on Friday, despite continued weak crude prices.

Drillers added 2 oil rigs in the week ended Nov. 13, bringing the total rig count up to 574, oil services company Baker Hughes Inc said in its closely followed report.

That total is about a third of the 1,578 oil rigs operating in same week a year ago. Over the prior 10 weeks, drillers cut 103 oil rigs.

The additions this week showed that at least some drillers were willing to start drilling again even with U.S. oil prices trading in the $40s a barrel in hopes of higher prices in the future.

U.S. oil futures averaged $43 a barrel so far this week, down from $46 last week.

Crude futures were on track for their biggest weekly loss in more than two months as swelling stocks weighed on the market. [O/R] In the minutes after Baker Hughes released the report, U.S. crude prices dipped about 20 cents to around $40.50 a barrel.

Energy traders noted the rate of weekly oil rig reductions over the past two months, about 10 on average, was much lower than the 19 rigs cut on average over the past year or so since the number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.

U.S. crude futures for next year were trading around $46 a barrel, according to the full year 2016 calendar strip on the New York Mercantile Exchange. That however was down from $49 last week.

Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel.

In response to those higher prices, drillers added 47 rigs over the summer.

Drillers added rigs in just one of the four major U.S. shale oil basins this week. They added one in the Eagle Ford in South Texas, while removing two in the Permian in West Texas and eastern New Mexico and one in the Bakken in North Dakota and Montana. The number of rigs in the Niobrara in Colorado and Wyoming remained unchanged.

Despite the increase in oil rigs this week, total oil and natural gas rig count slid to a fresh 13-year low due to a decline of six gas rigs.

Read more at Reutershttp://www.reuters.com/article/2015/11/13/us-usa-rigs-baker-hughes-idUSKCN0T224S20151113#V3tqiIyyAC66RmXd.99

Back to Top

BG, partners to spend $1.7 billion on drilling for Queensland LNG venture

BG Group and its Asian partners in the $US20.4 billion Queensland Curtis LNG venture have given the go-ahead for a further $1.7 billion of investment to drill up to 400 more wells to maintain gas supply, providing a welcome lift to resources industry spending.

Drilling for the Charlie project will take place during the next two years in permits west of Wandoan in the Surat basin, with Leighton Contractors winning the main contract to carry out the work, which will create up to 1600 jobs.

The large investment underscores the ongoing spending commitment required by Queensland coal seam gas-based LNG projects, which need to keep drilling new wells every year to maintain gas supplies for their export plants in Gladstone. BG started shipments from its QCLNG venture in January, marking the first gas exports from Queensland, and has so far delivered 62 cargoes to Asia.

It also shows that British-based BG has not deviated from investment required to support the QCLNG project, even as it is set to be acquired by Royal Dutch Shell in a proposed $US70 billion ($98 billion) takeover and as returns from the venture are squeezed by low commodity prices.

Environmental approval for the Charlie project, which will supply gas into an existing processing plant at Woleebee Creek, was already granted by the federal Environmental Minister in December 2014.

As partners in QCLNG, China National Offshore Oil Corporation and Tokyo Gas will fund part of the work, but the British company will shoulder most of the investment in line with its 73.75 per cent stake in the gas permits.

In addition to the wells, the project involves 725 kilometres of water and gas gathering lines and a compression station as well as other pipelines, power lines and water-handling facilities over a total footprint of 2500 hectares. The key infrastructure will be built on land owned by BG.

Tony Nunan, managing director of BG's QGC subsidiary, described the project as "a vote of confidence in the secure, long-term future of Queensland's natural gas industry".

Read more: http://www.smh.com.au/business/energy/bg-partners-to-spend-17b-on-drilling-for-qld-lng-venture-20151113-gkykmz.html#ixzz3rdYLyx8d
Follow us: @smh on Twitter | sydneymorningherald on Facebook

Alternative Energy

SunSetEdison

SUNE is down almost 8% this morning, back under $3.00, as yesterday Twitter-based "Blackstone buying SUNE Debt" rumour is dashed in the epic realization that you might be the last one in line for the exits...

Down 40% this week alone and over 60% in 2 weeks... this is a bloodbath

As we recently noted, a "possible credit event is looming."

A brand new note by Axiom Capital Research titled "The Nightmare Before Christmas” – Credit Event Appears More Likely than Presaged, in which the analyst Gordon Johnson sees at least another 33% of downside before the stock finally stabilizes at something resembling a fair value of $2.00

Lots more detail: http://www.zerohedge.com/news/2015-11-19/sunsetedison

Back to Top

Solar power could be 10% cheaper than Indian coal-based power by 2020 - KPMG

Consultancy firm KPMG said that solar power could be up to 10% cheaper than coal-based power by 2020.

KPMG said that "Today, in India, solar prices are within 15% of the coal power prices on a levelised basis. While this may not fully capture costs such as grid integration costs for solar, our analysis suggests that even after considering the same, solar prices would be competitive with coal. Our forecast is that by 2020, solar power prices could be up to 10% lower than coal power prices."

Solar power tariff in India touched a record low early this month with US-based SunEdison's winning bid of INR 4.63 per unit for a contract to sell 500 mw of solar energy to state-run NTPC Ltd. The tariff is about 15% less than the industry average and 8% below the previous low of INR 5.05 per unit quoted by Canada's SkyPower for a tender in Madhya Pradesh.

http://steelguru.com/power/solar-power-could-be-10-cheaper-than-coal-based-power-by-2020-kpmg/439274#tag

Attached Files

Back to Top

Floating windfarm offshore Portugal will be Europe's second ever

Europe's second-ever floating windfarm will be built off the coast of Portugal under plans set out on Monday by a group of energy utilities and engineering companies.

Floating offshore windfarms hold huge potential as the technology opens up large parts of the oceans, which would otherwise be too deep for traditional structures that can only be built in seas with maximum depths of about 50 metres.

French gas and power group Engie, Portugal's EDP Renewables, Japan's Mitsubishi Corp and Chiyoda Corp, along with Spanish energy group Repsol , are teaming up to build the windfarm, which will comprise three or four turbines.

The 25 megawatt (MW) facility is planned to be operational in 2018.

The project will be the second floating offshore windfarm pilot in Europe, after Norway's Statoil said this month it would invest about $236 million in a 30 MW, five-turbine floating windfarm off Scotland.

Engie said the aim of its project is to further demonstrate the economic potential and reliability of the floating offshore technology. It gave no financial details of the operation.

EDPR has already tested a semi-submersible wind generator carrying a 2 megawatt Vestas turbine and which has produced more than 16 gigawatt-hours over almost four years of operation, having withstood extreme weather conditions.

http://www.reuters.com/article/2015/11/16/engie-renewables-idUSL8N13B35H20151116#fPjbphsemxcwvS0D.97

Back to Top

Molycorp restructure plan includes asset sales

Molycorp, the beleaguered rare earths producer that was forced into bankruptcy in June, has announced a plan to restructure that may include the sale of its Mountain Pass mine in California.

The plan filed with a U.S. bankruptcy court in Delaware would allow Molycorp, the only rare earths miner and processor in the United States, to emerge from Chapter 11 bankruptcy protection "either a stand-alone reorganization that would substantially de-lever its balance sheet or a sale of substantially all of its assets," according to a press release. If approved, the plan could reduce Molycorp's debt by $1.9 billion as well as cut interest payments, "putting us on a more solid financial and operational footing going forward,” stated Geoff Bedford, president and CEO.

In July Molycorp received $130 million in debt financing from Oaktree Capital Management LP. In August the Greenwood, Colorado- based company moved its Mountain Pass facility intocare and maintenance, while continuing to serve customers through its production facilities in Estonia and China.

Mountain Pass was expected to be America’s flagship source of rare earths. In 2010 Molycorp sensed an opportunity to capitalize on reduced rare earth oxide exports from China – which supplies about 90 percent of the world's rare earth minerals – which caused the prices of REOs to spike. When China subsequently relaxed export rules, however, prices fell, leaving Molycorp holding the bag on a $1.25 billion expansion of Mountain Pass.

Hit by lower rare earth prices, Molycorp had warned in March it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.

http://www.mining.com/molycorp-restructure-plan-includes-asset-sales/

Back to Top

Sandy solution for renewable energy storage

SAND is emerging as a key ingredient in the race to develop a viable electricity storage system for renewable energies.

Latent Heat Storage has developed a low cost thermal energy storage system based on the latent heat properties of silicon derived from sand.

The device – known as TESS – is being developed in South Australia with the help of an AUD $400,000 government grant to take it from prototype to commercial reality.

The TESS device stores electricity as thermal energy by heating and melting containers full of silicon. The high latent heat capacity and melting temperature of silicon makes it ideal for the storage of large amounts of energy.

Latent Heat Storage Chief Executive Officer Jonathan Whalley said storage was the next big challenge for energy generation worldwide.

“Renewable energy sources generally spill energy due to supply and demand mismatches, so we’ve designed the TESS device to capture this ‘spilt’ energy for later use or release to the grid,” Whalley said.

“Our system also means that energy consumers will be able to purchase stored electricity off-peak at low tariffs, which ultimately means cheaper energy.”

A key benefit of the TESS device is its capability to handle an increasing workload from 500kW applications through to an industrial scale of up to several hundred megawatt hours – enough to power about 7000 homes for a day.

The patented device is small enough to fit inside a 20-foot shipping container but is readily scalable as demand requires.

TESS is suitable for grid and off-grid applications and has been designed to overcome the intermittent nature of renewable energies such as wind and solar by providing a stable energy output suitable for base load power.

It can be integrated anywhere within an electricity network and is suitable for commercial and industrial businesses where heat and electricity are required such as hotels, schools and hospitals.

“After three years of research and development, our key objective now is to complete building a commercial prototype of the TESS device and start showcasing its potential to global markets,” Whalley said.

A commercial prototype will be ready in early 2016 to be used as a selling tool to potential clients and Whalley said devices would initially be built to meet the needs of individual sites rather than mass produced.

http://reneweconomy.com.au/2015/sandy-solution-for-renewable-energy-storage-63185

Back to Top

Solar Power Is Booming and Its Biggest Component Is Dirt Cheap

Prices for polysilicon, the main ingredient in solar cells, have dropped to a record low amid a supply glut that won’t end soon.

There’s so much of the shiny black stuff on the market that suppliers including Europe’s Wacker Chemie AG, Hemlock Semiconductor Corp. in the U.S. and South Korea-based Hanwha Chemical Corp. are losing money at spot prices that reached $14.76 per kilogram this month, down 31 percent in the past year, according to data compiled by Bloomberg New Energy Finance.

The global surplus is unlikely to ease with polysilicon manufacturers reluctant to curtail production because demand for solar power is surging, said Jenny Chase, lead solar analyst at New Energy Finance. It’s reminiscent of the panel glut that struck the industry a few years ago that drove down module-makers’ earning, and shows that the solar-power industry is still experiencing growing pains on its path to becoming a mainstream source of energy.

“It’s another sign of how good the solar industry is at losing money,” Chase said in an interview Wednesday. “You don’t want to close an entire factory just because of a temporary drop in prices. It can take six months to shut down and start up again.”

Prices can’t stay this low for long before producers start to cut back, said Jade Jones, a solar analyst at GTM Research in San Francisco. For a healthy industry, a price of $20 is more fair based on manufacturing costs.

“We thought prices might start to tick-up in the fourth quarter as demand climbs but that’s not happening,” Jones said. Increased competition to garner market share has created a price war that’s not sustainable. “If the price stays this low in 2016 then I’d expect ramp-downs.”

Low prices are taking a toll. Hemlock’s parent company Dow Corning Corp. reported a 9 percent decline in third-quarter sales, due in part to declining polysilicon revenue. Not only are prices low, some orders are being delayed.

“Results continue to be impacted by fewer polysilicon shipments to Hemlock Semiconductor’s long-term contract customers,” Chief Financial Officer J. Donald Sheets said in an Oct. 28 statement.

The current price is a huge drop from polysilicon’s heyday back in early 2008, when manufacturers were getting as much as $475 a kilogram -- some companies are still benefiting from long-term contracts panel makers signed back then. Suppliers also sell higher-grade polysilicon to semiconductor makers at higher prices.

However, 90 percent of the world’s polysilicon supplies ended up in solar panels in 2014, up from 27 percent in 2001, according to GTM Research. While demand for panels is expected to climb 30 percent this year, polysilicon capacity is also increasing.

Polysilicon production capacity currently stands at about 350,000 metric tons a year, and there are plans to increase that by at least 10 percent next year, according to New Energy Finance. That oversupply, combined with existing inventory, will continue to pressure prices.

Wacker Chemie, the second-biggest producer, doesn’t see it that way. Chairman Peter-Alexander Wacker is predicting a rebound as strong demand for panels in the U.S. and China soaks up excess supplies.

“We always have swings based on demand but this trough in price seems to be saying that even the biggest producers are finding it difficult to rein back production,” Wacker said in an interview in Berlin.

He’s planning to open a new factory in Tennessee next year and is running the rest at full capacity, according to slides from the company’s third-quarter earnings presentation.

That’s partly why New Energy Finance’s Chase sees little chance for price recovery. “Next year does not look much better for polysilicon manufacturers.”

http://www.bloomberg.com/news/articles/2015-11-13/solar-power-is-booming-and-its-biggest-component-is-dirt-cheap

Attached Files

Back to Top

Uranium

New York expresses opposition to re-licensing Indian Point

New York Governor Andrew Cuomo is strongly opposed to the renewal of the operating licenses for the two reactors at the 2,069-MW Indian Point nuclear plant and has asked the US Nuclear Regulatory Commission to deny Entergy's application to extend its operations.

In a letter dated Monday, Jim Malatras, director of New York state operations, reiterated the state's opposition to relicensing the units as the Atomic Safety and Licensing Board began hearings to address issues raised during the application process.

The hearings began Monday and will continue through the week.

The plant's proximity to a major population center, with more than 20 million people within 20 miles of the two-unit plant makes it impossible to have an effective safety and evacuation plan, Malatras said. The reactors generate about 25% of the power for New York City and Westchester County.

"Given the deterioration of this aging plant, it should not be permitted to operate for another 20 years," the letter said.

Entergy's plan to address defects does not justify putting the lives of so many New Yorkers at risk, Malatras said.

Specifically, Malatras noted that the reactor pressure vessels has become brittle and that metals on key reactor components are fatigued. The two units entered commercial operations in 1974 and 1976.

"Recently, unplanned shutdowns at the facility, for reasons ranging from transformer fires to unplanned replacement of parts in the reactor head, have plagued the plant," the letter said.

Entergy's proposed inspection and monitoring will not solve the serious concerns at the plant, Malatras said.

Entergy applied for a 20-year relicensing of plants units in 2007. The 40-year license for Unit-2 expired in 2013 and the license for Unit-3 expires in December. The NRC allows the units to operate under expired licenses until a final decision is made on relicensing.

"This is far and away the most complex relicensing the NRC has dealt with," Neil Sheehan, an NRC spokesman, said Wednesday in an interview.

All the issues that the licensing board is addressing are related to the age of the units, Sheehan said. They include whether the license application is deficient because it fails to include an adequate aging management program for the embrittlement of the reactor pressure vessels, whether it fails to include an adequate aging management program for metal fatigue on key reactor components and whether it fails to demonstrate that the company has a program that will manage the effects of the aging of several critical components or systems.

The hearings are very technical in nature and the three administrative law judges are asking expert witnesses from Entergy, New York and the NRC questions regarding the concerns in a public setting, Sheehan said.

New York has jurisdiction over the units in two areas, water intake and discharge and coastal zone certification, Sheehan said. Earlier in November, the state said the Indian Point units do not comply with its coastal management program and renewing the operating licenses is not consistent with the provisions of the state's coastal management program.

Entergy disagrees with Malatras' comments and said the plant is safe. "Entergy has invested more than $1 billion in Indian Point since purchasing the facility, adding new layers of safety and back-ups to protect against man-made or natural events, no matter how unlikely," Jerry Nappi, an Entergy spokesman, said Wednesday.

The plant has also received the highest operational ratings from independent experts at the NRC, Nappi said.

http://www.platts.com/latest-news/electric-power/birmingham-alabama/new-york-expresses-opposition-to-relicensing-21495027

Back to Top

Agriculture

Monsanto could take lead role in agchem acquisitions-executives

Monsanto Co. executives are discussing whether they should acquire rivals, including top pesticide maker Syngenta AG, company executives said on Tuesday, as talk of consolidation continues in the global agrochemical industry.

"We've had conversations inside" about Syngenta and other agricultural companies, Monsanto President Brett Begemann said at an investor meeting at its headquarters in St. Louis.

Company executives were studying every possibility for consolidation in both the seed and agrochemical sectors.

Monsanto's chief executive, Hugh Grant, also speaking at the investor meeting on Tuesday, said the company is "best placed to be a leading consolidator or a leading partner in an industry that is changing."

The world's largest seed company abandoned a $45 billion bid for rival Syngenta in August and since then, nearly all of the major players in the farm chemicals and seeds business have been the subject of consolidation talk, amid a landscape of plummeting grain prices and farm income.

Last week, Syngenta rejected a $42 billion offer from state-owned China National Chemical Corp, Bloomberg reported. Dupont Co, Dow Chemical Co. and BASF DE have also featured in reports of talks on mergers and acquisitions.

Monsanto's internal discussions, which have been going on since the company walked away from its latest bid for Syngenta, include weighing the benefits of bidding for rivals, Begemann said.

In particular, he said Monsanto is keeping a close eye on farm chemical product lines it could acquire if rivals merged their agricultural businesses -- such as Dow Chemical and Dupont -- and were forced to spin-off assets in order to meet regulatory approvals.

But Begemann said they were focusing on chemistry, not seed, assets for such potential acquisitions.

Grant told investors that he considers China an "opportunity" for Monsanto as rising soybean consumption there drives demand for growing more beans in the United States and South America. In addition, he pointed to the potential for new traits created specifically for China and possibly licensing those traits.

Grant said any deals would need to be a "strategic fit" for Monsanto and provide incremental growth.

But he noted that Monsanto does not need to buy or partner with an agrochemical rival in order to meet its financial forecasts or growth plans.

The Wall Street Journal has reported that Syngenta has been talking to Dupont about merging with its agricultural unit, while Dupont has separately been in talks with Dow

Read more at Reutershttp://www.reuters.com/article/2015/11/18/syngenta-ag-monsanto-ma-idUSL1N13C26L20151118#mHZdgJ7CHvMqkcmw.99

Attached Files

Back to Top

Precious Metals

Lonmin shareholders approve crucial rights issue

Lonmin shareholders decisively approved the company's deeply discounted $400 million share issue on Thursday as the beleaguered platinum producer seeks cash to stay afloat.

Bruised by strikes, rising costs, a weak platinum price and slowing demand for the metal, South Africa-focused Lonmin said last month it also planned to raise another $370 million in loans to refinance debt currently due in May 2016.

Lonmin said about 88 percent of its shareholders approved the rights issue at a meeting in London after warning that if it couldn't raise the cash, shares could be suspended.

"We had no choice but to vote in favour because we will be wiped out if this doesn't go through. But does that mean we will be with the company in the next 10 or even two years? We don't know," said Anthony Guildford, a Lonmin investor since 1969.

The loss-making platinum producer had asked its shareholders to vote on five proposals, which also included consolidation of Lonmin shares. Shareholders also authorised its directors to allot new shares.

The scale of Lonmin's plight was illustrated on Nov. 9 when it priced its rights issue at just 1 pence a share - a 94 percent discount to the stock's previous session closing price of 16.25 pence on the London Stock Exchange.

Some investors, including pensioners, raised concerns about the consolidation of shares.

"There had to be a better idea than consolidation. I will never see my money (14,500 pounds in shares) back at 6 pounds where I bought ... They were 1.70 last Christmas!," one investor said.

Lonmin still has to convince the wider market it can be a viable business.

"Lonmin has got its reprieve, and existing shareholders can hardly be blamed for sticking with it. But with labour costs still high and platinum still stuck, it is hard to work out where the positive investment story lies," IG analyst Christopher Beauchamp said.

Read more at Reutershttp://www.reuters.com/article/2015/11/19/lonmin-equity-vote-idUSL8N13E2K020151119#XjIvyqVgiCIAlSV4.99

Back to Top

Indians Refuse To Give Their Gold To The Government

Now, one week after the gold scheme's official launch, we take a look at how has it has done so far. In one word, so far the "gold monetization" plan has been a disaster with a laughable 30 kilograms in gold tendered by the people from physical into "government-backed" form.

The Times of India has the details, and reports that in the first-week "collection by the government's sovereign gold bond scheme has been rather tepid with less than Rs 10 crore being reported to the Reserve Bank of India (RBI). The scheme, which closes on November 20, allows investors to purchase between 2 and 500 grams of gold-equivalent.

The spin was immediate: "bankers say that in any issue, savvy investors - including high net worth individuals - usually hold off until the closing date before locking in their funds." Or maybe they don't lock in their funds at all since giving the government your physical gold in exchange for a interest payment - in other words, converting gold into a paper asset with the government's blessing - is about as stupid as it gets.

TofI adds that "the money raised through the sale of these bonds will form a part of government borrowing. According to sources, the RBI, which manages government borrowings, is keeping track of the collections and it has got a number of below Rs 8 crore until last weekend. Of this, around Rs 6.5 crore has been reported by banks and another Rs 1.35 crore by the Post Office. The government has fixed the issue price at Rs 2,684 per gram, which means that the gold-equivalent of the bonds is less than 30kg."

http://www.zerohedge.com/news/2015-11-18/indians-refuse-give-their-gold-government-only-30-kilograms-take-part-gold-monetizat

Back to Top

Small Canadian miner finds massive diamond in Botswana

A small Canadian diamond company has found what it says is the world's second-biggest gem quality diamond ever recovered, and the largest in more than a century, at its mine in Botswana.

Lucara Diamond Corp said on Wednesday the 1,111 carat stone was found at its Karowe mine in north-central Botswana, one of the world's most prolific diamond-producing areas.

The Type IIa diamond measures 65 millimeters by 56 mm by 40 mm.

The biggest gem-quality diamond ever found is the Cullinan diamond, a 3,106-carat stone found in the Premier mine in South Africa in 1905. It was cut into several polished gems, the two largest of which are part of Britain's crown jewels.

Read more at Reutershttp://www.reuters.com/article/2015/11/19/lucara-diamond-discovery-idUSL1N13D36M20151119#mvOK6PItIDO8RhhI.99

Attached Files

Back to Top

Gold is collapsing to new lows

Gold fell towards a fresh six-year low on Tuesday.

Gold was down by just over 1% in New York, near $1,064.50 an ounce, around levels it has not traded at since 2009.

Other precious metals including platinum and silver were also lower in trading.

Gold has dropped roughly 6% this month.
Image title

Attached Files

Back to Top

Semafo Gold costs approaching $600 all in

Shares of Semafo Inc defied a fresh slump in the gold price on Thursday, after announcing better than expected third quarter financial results on the back of a strong operational performance at its Mana Mine in Burkina Faso.

After a 1% jump on Thursday bringing weekly gains to 8.5% Semafo is now worth $893 million on the Toronto Stock Exchange. The Montreal-based producer is one of only a handful of gold miners still in positive territory for the year.

The company reported cash flow of $34.8 million during the three months to end-September, down from $40 million in the same quarter 2014, but ahead of expectations. That boosted the company's cash pile to a healthy $137.8 million.

Net income came in at $14.5 million for the quarter, a 14% improvement on the back of production of 67,200 ounces during the quarter at industry leading all-in sustaining cost of $616/oz and $485/oz on a cash basis. Head grades were a mouthwatering 3.7 g/t, a 26% improvement thanks to a greater percentage of high-grade ore processed from the Fofina and Siou pits.

Semafo's 2015 production guidance is at the midpoint between 245,000 – 275,000 ounces and the firm is targeting further costs reduction with an expected AISC of $630 – $650/oz for the year. Cash costs for 2015 is now predicted at between $485 – $505/oz.

In February the company acquired Australia's Orbis Gold (ASX:OBS) in a deal valued at $139 million. The Orbis acquisition brought with it three gold projects in the West African country, notably Natougou, located about 600 kilometres east of Semafo's Mana mine.

On Thursday Semafo said the feasibility study for Natougou is now 70% complete with publication expected early in the second quarter next year.

According to an October 2014 scoping study by Orbis, Natougou has the potential for development of a large-scale low-cost open pit mine producing up to 217,000 of gold per annum (more than 700,000 in year one and two) with a 6.7 year mine life at an all-in cost of $619 an ounce. Capex for the Natougou project was put at $234 million.

Burkina Faso is the continent's fourth largest gold producer after Mali and has commissioned eight new mines over the past six years. Burkina Faso is due to hold national elections at the end of the month.

http://www.mining.com/semafo-costs-approaching-600-all-in/

Attached Files

Back to Top

Paragon Diamonds halts trading on capital, financial position woes

Africa-focused Paragon Diamonds suspended trading Monday morning ahead of the company issuing a statement that revealed a precarious financial position.

The miner, who committed to buy a 75% stake in Lesotho’s Mothae project from Canada’s Lucara Diamond (TSX:LUC) earlier this year, said it currently has limited working capital.

Until a funding package has been secured, Paragon noted, there is a “material uncertainty” over the company’s financial position.

It remains in talks with potential financers in order to secure funding to complete the acquisition of Mothae, develop the Lemphane project, also in Lesotho, and repay short-term debts

However, it said it remains in talks with potential financers in order to secure funding to complete the acquisition of Mothae, develop the Lemphane project, also in Lesotho, and repay short-term debts, including a £500,000 (US$760,000) loan due on November 18.

If that loan is not repaid within five business days, Paragon will be in default, and the lender will be able to demand immediate repayment of the loan at 120% of the outstanding amount, or the lender may convert the outstanding loan into shares in the company.

Paragon’s situation reflects the challenging times currently affecting large parts of the diamond chain. Dealers are facing increasing difficulties to sell their existing inventory into softening markets, while also facing tougher financing conditions.

At the same time, major players such as Anglo American-owned De Beers, the world’s No.1 diamond producer, are finding it difficult to place expected volumes of rough stones with traders and polishers.

And even Russia's Alrosa, the world's top diamond producer by output in carats, said last month it was able to sell only 42% of the precious stones it mined in the quarter ending in September.

Paragon’s stock was last quoted on Friday at 3.98 pence, and it has lost almost 33% of its value this year.

http://www.mining.com/paragon-diamonds-halts-trading-on-capital-financial-position-woes/?utm_source=twitterfeed&utm_medium=twitter

Back to Top

Tahoe surges on strong results

Shares of Tahoe Resources Inc shone in an otherwise lacklustre day on precious metals markets after the company announced better than expected third quarter financial results on the back of a strong operational performance and near-record breaking cash flows despite the fall in metals prices.

The Vancouver-based miner was trading 11% higher in Friday afternoon trade on the New York Stock Exchange in heavy volume with some 1.5 million shares changing hands. The $1.7 billion company like its peers is experiencing a torrid 2015 with the counter losing nearly 40% year to date.

The company reported operating earnings of $40.1 million during the three months to end-September, on revenues of $145 million generate from its Escobal silver mine in Guatemala and the La Arena gold mine in Peru.

Operating cash flow was a robust $53 million. That boosted the company's cash pile to a healthy $110.6 million. Sales consisted of 5.5 million ounces of silver, 59,814 ounces of gold, 2,557 tonnes of lead and 2,753 tonnes of zinc.

Silver production from Escobal was a record 5.8 million ounces in concentrate for the quarter, and 14.9 million ounces year to date. Escobal is the world's third largest primary silver mine.

Gold production from La Arena was 57,415 ounces in doré for the quarter and 117,697 ounces from April 1 to date. All-in sustaining cost came in at $9.72 per silver ounce produced and $729 per gold ounce produced.

Tahoe entered into a friendly $1 billion deal with Rio Alto Mining in February, acquiring La Arena and the Shahuindo gold project in Peru that is on track for first production early next year.

The project’s technical report of November 2012 will be updated before the end of the year according to Tahoe. The 2012 study detailed measured and indicated resources totalling 147.3 million tonnes with gold and silver grades of 0.515 g/t and 7.1 g/t.

Tahoe's 2015 production guidance is between 160,000 – 170,000 ounces of gold and 18–21 million ounces of silver.

Guatemala’s Constitutional Court recently ruled that a 10% mining royalty lawmakers passed in late 2014 was unconstitutional and that the 1% royalty rate in place since 1996 will stay in place until a new regime is negotiated with the new government which won a landslide election last month.

http://www.mining.com/tahoe-surges-on-strong-results/

Back to Top

Base Metals

India signals higher aluminium import tax, stoking Vedanta rally

India is considering as much as doubling the levy on aluminum imports to counter supplies from China, according to a Mines Ministry official, stoking a rally in the shares of producers Vedanta, Hindalco Industries and National Aluminium Co.

The proposal will be put forward for discussions with India’s Finance Ministry ahead of the nation’s budget speech, Mines Secretary Balvender Kumar said in an interview on Thursday on the sidelines of a conference in New Delhi. The budget is due around the end of February next year.

“We’re considering the raising of duties,” he said. “It will go up to 7.5% or to 10% from 5%.”

The prospect of a stiffer shield against imports saw Vedanta, the top Indian producer, advance as much as 3.3% in Mumbai. Hindalco jumped as much as 3.1% and Nalco 4.5%, the most in more than a month. Producers have been squeezed by a collapse in aluminum prices amid a slowdown in China’s economy and low-cost supplies from abroad.

Vedanta’s local smelters are running at 40% of capacity, chairman Anil Agarwal said yesterday.

Aluminum prices have slumped 27% in London in the past 12 months to a six-year low. Supply will top demand through to 2018, according to BMI Research.

http://www.mineweb.com/news/base-metals-and-minerals/india-signals-higher-aluminum-import-tax-stoking-vedanta-rally/

Nickel smelter developers are putting projects on hold as they struggle to get financing with metal prices near their lowest in more than a decade, industry and government stakeholders said on Wednesday.

Indonesia was the world's top exporter of nickel ore until 2014 when it banned shipments in an effort to push miners to develop downstream, or mineral processing, industries. With abundant reserves of relatively high quality ore investors say there is potential for developing nickel smelters in Indonesia, but the current market is challenging.

"Banks, primarily government banks, are allergic to providing support, credit (and) working capital etc to miners," Joseph Renyut, an advisor to smelter operator Cahaya Modern Metal Industri, told Reuters on the sidelines of a nickel industry conference in Jakarta. Indonesia's mining ministry has received applications for smelter permits from at least 30 companies but several of the projects have been postponed or delayed, a mining ministry official who asked to remain anonymous, told Reuters.

"Several need refinancing because investors have stopped. Most are from China and China is in crisis," he said on Wednesday. "If they are built they won't be economical so they are waiting." But he said the government still expects at least seven smelters to be built next year. Another official said the government expects to add at least 767 000 t of ferronickel production capacity in 2016.

Wahyu Prasetyo, deputy project manager at Karyatama Konawe Utama, a subsidiary of China Hanking Group, said his company wanted to expand from a pilot project to a 40 000 t high-grade ferronickel smelter in North Konawe, Sulawesi. "The big one is still under study because we're trying to get the process cost lower than LME prices," he said, referring to London benchmark nickel prices. "We're struggling to get financing."

Titon Mineral Utama CEO Warsito Hans Tanudjaja said his company had also invested in a small-scale nickel pig iron smelter but was facing similar difficulties expanding and was also waiting for nickel prices to improve. "When the market comes back we'll be more ready than the others," he said adding that his company needed LME nickel prices to climb above $10 500/t.

http://www.miningweekly.com/article/nickel-smelter-developers-shelve-indonesia-projects-amid-credit-squeeze-2015-11-18

Back to Top

South32 focuses on shareholder returns, safe operations – chair

Diversified miner South32’s main focus was not on increasing production volumes from its existing assets, but rather to focus on increasing shareholder return and maintaining safe operations, chairperson David Crawford told shareholders on Wednesday at the company’s first annual general meeting.

“We have adopted a simple approach to capital management, with well-defined priorities for cash flow. We also start with a commitment to maintain safe and reliable operations and an investment-grade credit rating through the business cycle,” Crawford said at the meeting in Perth.

The company made its market debut in May, after BHP Billiton shareholders agreed to the divestment of South32, which comprises the aluminium, coal, manganese, nickel and silver assets previously held in the BHP portfolio. CEO Graham Kerr said on Wednesday that despite the significant progress made at the company’s operations to date, three fatalities at the South32 operations were reported in the previous financial year, and a further two for this financial year. “A single fatality is unacceptable and not what South32 is about,” Kerr told shareholders from Perth.

Meanwhile, Crawford told shareholders that market uncertainties would likely persist for some time, adding that South32 was responding to the global challenges through a targeted programme of reducing operational and capital expenditure, and changing the way the company did business.

Kerr has previously flagged that the company would reduce its costs by at least A$350-million a year by the end of 2018, and would reduce sustaining capital expenditure by 9%, to A$650-million by 2016. “At the time of the demerger, we recognised that a fresh approach to managing our operations was required, with a focus on improving our return on invested capital, addressing resource and grade decline, and building stronger shareholder relationships, particularly in South Africa and Colombia,” Kerr said.

The company would aim to achieve these cost saving targets by reducing the layers of management, aggregating functional support at the regions, changing the capability and structure of the procurement function and implementing resource development plans, with a view to optimise performance and growth opportunities.

While South32 would not turn away merger and acquisition opportunities, Kerr said that 95% of the company’s focus would be on optimising its own assets. “We are very disciplined, but our focus is on the assets that we have. We have a lot of resources in the ground that has never been converted to reserves. So we will look at [acquisition] opportunities, but its not the primary focus.” “Looking ahead, despite the challenging market conditions, I can assure you that we have the right strategy, the right balance sheet strength and management commitment to deliver sector leading returns,” Kerr said.

http://www.miningweekly.com/article/south32-focuses-on-shareholder-returns-safe-operations-chair-2015-11-18

Attached Files

Back to Top

Teck Announces Dividend, $650 Million in Cost Reduction Measures

Teck Resources Limited announced today that it will pay an eligible dividend of $0.05 per share on its outstanding Class A common shares and Class B subordinate voting shares on December 30, 2015, to shareholders of record at the close of business on December 14, 2015.

In response to persistent low commodity prices, Teck is implementing additional measures to reduce costs and conserve capital:

Reduction in total spending of $650 million in 2016, to be achieved through $350 million of capital spending reductions and deferrals and $300 million of operating cost savings identified as part of the 2016 operating budget.
Elimination of an additional 1,000 positions across Teck's global offices and operations, through a combination of layoffs and attrition. This will include a reduction in senior management positions and brings total labour force reductions over the past 18 months to approximately 2,000 positions.
Withdrawal of the Coal Mountain Phase 2 (CMO Phase 2) project from the Environmental Assessment process and suspension of further work on the project.

The capital reductions and deferrals described above are in comparison to preliminary 2016 capital spending plans. The 2016 capital budget is still under review and Teck will announce forecast 2016 capital spending in February 2016.

http://www.marketwired.com/press-release/teck-announces-dividend-650-million-in-cost-reduction-measures-tsx-tck.a-2074802.htm

Back to Top

Rusal to decide on aluminium plant suspensions in mid-December

Russian aluminium giant Rusal plans to decide in mid-December which aluminium smelters to suspend as a part of its plans to potentially cut up to 200,000 tonnes of production, Chief Executive Vladislav Soloviev told reporters on Tuesday.

Rusal, the world's top aluminium producer, is looking to cut production, under pressure from sliding prices due to a market surplus.

"We have not decided yet. We are now looking at KUBAL," Soloviev said. KUBAL, the sole producer of primary aluminium and the largest industrial facility in Sweden, has annual production capacity of 128,000 tonnes of aluminium.

"We will take a decision along with the business plan in December," Soloviev said.

He added that apart from KUBAL, Rusal was looking at the Kandalaksha smelter in North-Western Russia with annual capacity of 76,000 tonnes of aluminium production and the Novokuznetsk smelter in Siberia with another 195,000 tonnes, as potential plants for suspending.

Three-month LME aluminium prices were at $1,467.5 per tonne on Tuesday, down from $2,029 a year ago.

Rusal has trimmed its forecast for global aluminium demand growth in 2015 to 5.6 percent and raised its forecast for a global aluminium surplus this year by a third to 373,000 tonnes.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/russia-rusal-plants-idUSL8N13C14L20151117#X0YjRAOTrZC7Mj41.99

Back to Top

Copper Is Crashing In China

Shanghai Copper is down 4.6%, hitting fresh cycle lows not seen since March 2009. No clear catalyst is evident for now aside from stronger USDollar, Codelco's cuts, and more chatter of CCFD unwinds. If COMEX Copper holds these losses, it will be down for 10 straight days - the longest on record from what we could tell.

Image title

China steel output to plunge 23 mln T in 2016: CISA

China’s steel output may plunge 23 million tonnes in 2016, equaling more than 1/4 of American annual steel output, said Li Xinchuang, one senior official with the China Iron & Steel Association (CISA) on October 18.

China’s key steel mills may see their output fall 2.9% from 806 million tonnes in 2015 to 783 million tonnes in 2016, impacted by weakening domestic demand and severer export resistance from overseas market.

The CISA data showed China’s steel output was around half of the global output. China has around 300 million tonnes of excess steel capacity that should be idled completely, not simply by cutting output, said David Humphreys, previous chief economist of Rio Tinto.

Domestic steel demand experienced the first drop in the past three decades, with steel mills suffering from losses, oversupply and falling prices.

Li predicted a further drop in steel demand, falling from 668 million tonnes this year to 654 million tonnes in 2016.

Meanwhile, China’s iron ore imports may slash 10 million tonnes from 2015 to 920 million tonnes in 2016, said Li.

China’s Crude Steel output dropped 2.2% on year to 675.1 million tonnes in the first ten months, but was still not enough to offset the plunge in demand, said the CISA.

Thus, controlling output would remain to be the key measure to save the sector; steel producers should realize transformation to form diversified competitiveness.

http://en.sxcoal.com/news.aspx

Attached Files

Back to Top

Russia's Metalloinvest posts Q3 net loss on weaker rouble

Russia's biggest iron ore producer Metalloinvest posted a third-quarter net loss of $110 million on Thursday due to foreign exchange losses as a result of the weaker rouble, the company said in a statement.

The rouble has fallen 6 percent since early October, dragged down by lower oil prices and hitting Russian companies with debt held in dollars.

"(The net loss) was mainly due to the accrual of exchange differences on the debt currency," Metalloinvest said.

Metalloinvest, owned by Russia's third-richest man Alisher Usmanov, said revenue decreased 9.6 percent quarter-on-quarter to $1.1 billion due to lower prices for its products.

Core earnings, or EBITDA, fell 13 percent to $361 million and net debt decreased 9 percent to $3.5 billion, it said.

"In the third quarter, global prices for our main product types remained under pressure from oversupply and a cooling in developing markets," said Chief Financial Officer Pavel Mitrofanov.

Mitrofanov said Metalloinvest's debt burden remained under control despite the difficult market conditions and increasing production of value-added products was a priority.

Read more at Reutershttp://www.reuters.com/article/2015/11/19/russia-metalloinvest-idUSL8N13E28V20151119#DY4l7g3cftt3u6F4.99

Back to Top

Thyssenkrupp cautious on year ahead, dividend below forecasts

Thyssenkrupp gave a cautious outlook for the year ahead and raised its dividend by less than expected.

The steel-to-elevators group said it was worried about cheap imports, especially from China, depressing steel prices. It said it expected operating profit in the current quarter to be lower than a year ago for that reason.

Thyssenkrupp, with its roots in 19th-century German steel firms, has been transforming itself into a diversified industrial group. Three-quarters of its sales now come from capital goods products such as lifts, car parts and energy-plant components.

It earned more money than it spent in the year to end-September for the first time in nine years, with free cash flow of 65 million euros ($69 million), and posted a better than expected 26 percent rise in adjusted operating profit.

But pressure on steel prices and weak demand in an economically anaemic Europe dimmed its outlook and the proposed dividend payout of 0.15 euros per share was at the bottom end of analysts' forecasts.

"Growing economic uncertainties and high import pressure on materials markets, above all from Asia, are a cause for concern. Thyssenkrupp therefore feels the need to take a cautious view of the 2015/2016 fiscal year," it said in a statement.

Shares in Thyssenkrupp were indicated down 0.7 percent at brokerage Lang & Schwarz ahead of the 0800 GMT Frankfurt open, the only decliners in a blue-chip index indicated to open 0.8 percent higher.

ArcelorMittal, the world's largest steel producer, cut its full-year profit forecast earlier this month, saying that cheap Chinese exports had hit steel prices and customers were holding off making new orders.

Some steelmakers, notably Austria's Voestalpine, are keeping profit margins relatively high by offering more specialised steel products, but Voestalpine also reported a drop in quarterly profit on China.

Thyssenkrupp said adjusted earnings before interest and tax (EBIT) could fall this fiscal year, giving a forecast of 1.6 to 1.9 billion euros ($1.7 billion to $2 billion), after making 1.68 billion in 2014/15.

It reiterated it would not be able to improve the level of dividend payout until annual EBIT reached a threshold of 2 billion euros.

"This cannot be a satisfactory dividend over the medium term. But it is a step in the right direction which also takes into account our balance sheet needs," Chief Executive Heinrich Hiesinger said in a statement.

Hiesinger has led Thyssenkrupp through a turnaround in which the group shed many of its steelmaking operations, allowing it to focus on the more profitable capital goods divisions like elevators that now account for three quarters of sales.

But the Essen-based company still remains hostage to a relentless depression of steel prices by cheap exports from China, where overcapacity in production has been amplified by slowing growth in demand for steel for construction and cars.

It has few levers in the short term to combat this other than cutting costs, which it said it did to the tune of 1.1 billion euros in 2014/15, ahead of its target of 850 million. It said it planned to cut a further 850 million this fiscal year.

Read more at Reutershttp://www.reuters.com/article/2015/11/19/thyssenkrupp-results-idUSL8N13E0CC20151119#Gwi1JJapFSbO92ER.99

Back to Top

China moves to contract coal capacity.

China should build a perfect capacity exit mechanism in the coal industry, in a bid to effectively ease oversupply and facilitate structural transformation in China, said the vice director Jiang Zhimin with China National Coal Association (CNCA) at the news conference of 2016 annual national coal trade fair on November 17.

"The CNCA is just working on designing a scientific and proper coal capacity exit mechanism for further resource consolidation," said Jiang.

China’s coal industry is still faced with downward pressure with overcapacity being the most fundamental problem, so it is in great urgency to build a more perfect capacity exit mechanism while letting the market play its regulating role, he said.

"The mechanism will be especially important for legal mines, as it is impossible for them to naturally retreat from the coal market like those mines facing resource exhaustion," said Jiang.

As the coal industry encounters new problems and challenges in a changeable world, further improvement needs to be made to China’s current coal mine firms exit policies, which were rolled out at the beginning of this century, he added.

Coal output across the country stood at 3.05 billion tonnes over January-October, posting a drop of 3.6% on year. The October output fell 1.2% from a year ago to 317 million tonnes, a slower year-on-year decline compared with previous months, indicating a greater pressure on production control.

China’s coal consumption over January-October slid 4.7% from a year ago to 3.23 billion tonnes, signaling a persisting decline trend after the first negative growth last year in the past fifteen years, data showed.

The decrease was mainly affected by the falling coal consumption seen in power, steel and building materials industries, which registered the year-on-year drop of 6.4%, 3.4% and 8.1% between January and October, respectively.

More and more coal enterprises suffered expanding losses, as impacted by continuously falling prices.

http://en.sxcoal.com/0/135141/DataShow.html

Attached Files

Back to Top

Cash constraints will slow iron ore mine expansions - FMG CEO

Fortescue Metals Group chief executive Mr Nev Power has said the global iron ore industry is likely to be "saved" by the majors' cash constraints preventing any further multibillion-dollar expansions. Taking fresh aim at the producer's larger Pilbara rivals, Mr Power said the boards of the "big players" were unlikely to approve expansions when they were struggling to generate cash to pay dividends.

He said "In iron ore, I think we have a very positive outcome in that all the big players that would otherwise be spending money to invest in capacity are basically running out of cash flow. So I don't think any of the boards are likely to sign off on a $10 billion expansion in iron ore any time soon, particularly if people are out there borrowing money to pay dividends. I think the structure of the iron ore industry is probably going to be saved because of that one point."

Mr Power said after the elimination of some global high-cost supply, the iron ore industry had "a very healthy cost curve", with the approximately 450mt of supply being produced further up the curve than the "low cost" producers likely to determine the price going ahead.

Mr Power hit back at critics of the company's cost-cutting efforts, which have questioned the sustainability of the miner's rapid cash cost reductions, labelling the reductions "absolutely sustainable". He said "I know there are a lot of people with all the scepticism under the sun about whether we can do this and whether this is achievable. That is the same scepticism of whether we would be here, whether we would get to 155 million tonnes per annum … There are people out there that are just born sceptics.”

Fortescue is targeting cash costs of $US15 a tonne by June, down from about $US50 a tonne four years ago and about half of what it was 12 months ago.

http://steelguru.com/mining/cash-constraints-will-slow-iron-ore-ine-expansions-fmg-ceo/439484#tag

Back to Top

Modi plans to sell Coal India stake - FT

Prime minister Narendra Modi’s government has approved a further 10 per cent sale of Coal India, the mammoth state-controlled mining company, as the government battles to live up to its privatisation promises and burnish its tarnished reform credentials.

The decision by Mr Modi’s cabinet was announced on Wednesday and marks the latest attempt to raise $10bn by selling state-owned assets this year, as the government strives to shrink India’s fiscal deficit. At current prices, the sale should net the government $3.2bn.

The drive to sell off state assets has progressed far slower than Mr Modi would have hoped with total proceeds so far amounting “to less than a fifth of the annual target... with only two quarters of the fiscal year left”, said Singaporean bank DBS in a recent note to clients.

The fact that the government’s target looks set to be missed “does not come as a surprise given the unimpressive past track record”, it added.

While the practice of using proceeds of such sales to lower deficit financing is unsustainable in the longer term, the sale of the 10 per cent stake in Coal India should ease pressure on government finances, analysts said. Although India, a large oil importer, has benefited from the falling oil price, analysts suggest the government is struggling to meet its current fiscal deficit goal of 3.9 per cent of GDP. Last year, it came in at 4 per cent, but it has already exceeded the government’s target for the past two quarters.

The announcement of the planned sale follows the surprise defeat of Mr Modi’s ruling Bharatiya Janata party in a state election in the north Indian state of Bihar this month, a loss expected to dent his authority and potentially slow India’s reform drive.

Recent moves to further open the Indian economy have partially reassured investors who hope this sale can kickstart other stalled privatisation efforts. The government has tentative plans to sell stakes in more than a dozen other companies including Oil India and ONGC but the falling oil price has hurt valuations and provoked delays

India is estimated to have the fifth-largest coal reserves in the world, with Coal India accounting for approximately 80 per cent of total coal production, and Mr Modi is looking for increased private participation in the sector as he pushes to bring uninterrupted power supplyto all of India's 1.3bn people by 2019..

The government currently owns about 80 per cent of Coal India and based on Wednesday’s market cap of Rs2115bn, a 10 per cent sale could be worth close to Rs212bn, or $3.2bn.

http://www.ft.com/cms/s/0/5a222c74-8df0-11e5-a549-b89a1dfede9b.html?ftcamp=published_links/rss/companies_energy/feed//product&utm_source=twitterfeed&utm_medium=twitter#axzz3rr7i79LC

Indian tribe blocks iron ore rail line of Vale protest at disaster

Financial Review reported that anger in the Brazilian city of Mariana about the Samarco tailings dam disaster is turning to action, with an Indian tribe affected by the tragedy blocking a key iron ore railroad line owned by Vale.

Many of the 350 members of the Krenak tribe who live on the banks of the Rio Doce in Minas Gerais, hundreds of kilometres downstream from the disaster site, have put on war paint and camped out on the Vale do Rio Doce railroad line that passes near their village, leading Vale to shut down iron ore shipments and other train traffic until the problem is resolved.

According to the G1 news site, Krenak chief Geovani Krevak said the murky, red-tinged slurry clogging the river water, their only source of potable water, had been undrinkable for a week. "Like us, now the trees and the animals also don't have any water. The river dies, we all die."

Though the 650 or so survivors from the smashed district of Bento Rodrigues of Mariana have been quickly and peaceably resettled in hotels and have been told they will be relocated to new homes "soon", anger is growing and public protests are being called as the red-tinged iron ore slurry continues its polluting journey to the Atlantic Ocean about 500 kilometres away along one of Brazil's most important rivers, the Rio Doce.

Samarco said the Krenak tribe had been given 8000 litres of mineral water, 140 water cisterns and a water truck to help them get through the situation. For its part, Vale said it was negotiating with the Krenak to re-establish ore shipments on the line.

http://steelguru.com/mining/indian-tribe-blocks-iron-ore-rail-line-of-vale-protest-at-disaster/439375

Back to Top

OECD agrees deal to restrict financing for coal technology

Members of the Organisation of Economic Cooperation and Development (OECD) struck a deal on Tuesday to restrict subsidies used to export technology for coal-fired power plants, ending months of wrangling.

Representatives of the world's richest countries agreed a deal to end export credits for inefficient coal plant technology to take effect from Jan. 1, 2017, with a review in 2019 that could allow the deal to be strengthened.

This week's talks at the Paris-based OECD were viewed as a final chance to end export credits for coal, the most polluting of fossil fuels, before the two-week United Nations climate summit on a global deal to curb climate change begins on Nov. 30, also in Paris.

A senior Obama administration official who participated in the talks said Tuesday OECD countries have financed over $35 billion worth of coal plants over the past seven years.

"This is a landmark agreement that's the culmination of a long process," the official said.

While the United States already restricted coal technology exports, the new OECD agreement would force countries like Japan and South Korea to limit theirs for the first time. The European Union plans to end domestic coal subsidies by 2018.

Japan, wary of regional competition from China, had been at the vanguard of opposition to phasing out coal export credits that benefit companies such as Toshiba Corp.

But prospects for a deal improved after Japan agreed to a compromise proposal with the United States last month.

Tuesday's deal modified that agreement and would limit lending for coal plants to the most efficient coal-fired power plants using ultra-supercritical technology.

A compromise provision tabled by South Korea and Australia added an exception to allow the construction of smaller, less efficient "supercritical" coal plants of up to 500 megawatts in developing countries.

It would allow some exemptions in emerging economies where up to 90 percent of the country has electricity access, including India, Indonesia, the Philippines and South Africa.

"The agreement is a victory for multilateral efforts to address climate change though it's a limited victory," said Steve Herz of the Sierra Club, adding that countries like Korea, Japan and Australia "continue to put their interests ahead of global cooperation."

He added that the deal has the potential to remove around 850 previously eligible coal plant projects out of the global pipeline,

The coal industry has said coal is still a necessary energy source, especially in poor countries that have few other options.

At a meeting in Turkey this week, leaders of the world's largest economies, the G20, reaffirmed their commitment "to rationalise and phase out inefficient fossil fuel subsidies".

Read more at Reutershttp://www.reuters.com/article/2015/11/17/oecd-coal-subsidies-idUSL8N13C47920151117#jvJIXoYQ7J9CdtLD.99

Back to Top

Cliffs Natural to temporarily idle Minnesota plant

Coal and iron ore producer Cliffs Natural Resources Inc said it would temporarily halt all operations at its Northshore iron ore mine in Minnesota by Dec. 1, aiming to reduce costs at a time when miners are hit by weak prices and low demand.

Cliffs said it expects the Northshore mine and United Taconite processing facility to be idled through the first quarter of 2016 and that inventory at both mines was adequate to meet current customer demand.

Cliffs shares were down 3.7 percent at $2.59 in early trading on Tuesday. The stock had fallen 62.3 percent this year.

The company, which has previously idled the United Taconite mine, said it will continue to operate the Hibbing Taconite mine in Minnesota and the Tilden and Empire mines in Michigan.

Cliffs and other U.S. miners have been hit by a drop in demand from steel mills and weak iron ore prices due to excess supply from big miners such as Vale SA, Rio Tinto Plc and BHP Billiton Plc.

"The historic high tonnage of foreign steel dumped into the U.S. continues to negatively impact the steel production levels of our domestic customers," Cliffs Chief Executive Lourenco Goncalves said on Tuesday.

U.S. steel companies in June had filed a complaint with the U.S. government over cheaper imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan.

Goncalves said Cliffs will immediately ramp up production by restarting idled facilities "as soon as the unfairly traded steel problem subsides and domestic steel production recovers to normal levels".

The company expects that idling the two operations will cost it $9 million per month.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/cliffs-natural-restructuring-idUSL3N13C47T20151117#7LmyqLw1ps3XTXGG.99

Back to Top

China says cuts capacity, seeks talks to solve steel trade disputes

China is actively taking measures to cut steel capacity and is looking to strengthen talks with other countries to solve steel trade disputes, China's commerce ministry said on Tuesday.

China's steel industry, the world's biggest, has been blamed by overseas steel mills for causing them hurt by exporting indiscriminately at unfair prices.

The nation is expected by analysts to ship a record 100 million tonnes-plus of steel products abroad this year to offset shrinking domestic demand amid a slowing economy.

"The overcapacity is a common issue facing the global steel industry which is under restructuring. China is actively taking measures and optimising the industry structure, including slashing large capacities," Shen Danyang, spokesman for the Ministry of Commerce, told reporters at a briefing.

Chronic overcapacity and falling demand has helped drive Chinese steel prices to their lowest level in decades, forcing domestic mills to cut output and some to shut down permanently due to heavy losses and debt.

World steel producers have complained on several occasions about Chinese steel exports. In the latest instance, nine international steel associations said in a joint statement earlier this month that the Chinese government played a big role in its steel sector and it remains a non-market economy.

Shen refuted the claims of the associations, saying such concerns should not be used to engage in discriminatory trade practices and steel trade tensions should not be linked with the status of Chinese economy.

"I don't think steelmakers in China are subsidised and the government's attitude towards the steel industry makers is very clear: Those that are not competitive should be closed," said Wang Li, an analyst with CRU in Beijing.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/china-steel-exports-idUSL3N13C2UJ20151117#EQQb0c5DkK7T3WHr.99

Attached Files

Back to Top

India needs different tariffs to combat steel imports – Mr Seshagiri Rao

Mr Seshagiri Rao, Joint Managing Director and Group CFO, JSW Steel speaking about the outlook for the steel market going forward said even after the imposition of state guard duty, imports haven’t fallen, adding that in fact imports grew by around 42 percent this fiscal. He said “In order to avoid the safe guard duty, the Chinese are under pricing the products, so there has been no relief for the domestic steel producers as such. There is need to introduce different tariffs across the supply chain to combat the problem of imports into India.”.

http://steelguru.com/steel/india-needs-different-tariffs-to-combat-steel-imports-mr-seshagiri-rao/439288#tag

Back to Top

China steel prices hit record low as crisis deepens with possible mill closure

Chinese steel prices hit record lows on Tuesday amid prolonged worries over shrinking demand in the world's top consumer that market sources say has forced one of the country's largest private producers to cease output.

The shutdown by Tangshan Songting Iron & Steel, with an annual capacity of 5 million tonnes, would be one of the biggest in the sector's years-long downturn as the world's No.2 economy slows, traders and analysts said.

The company, located in the northeastern city of Tangshan, did not answer repeated telephone calls. An official with the local government of Tangshan said it was "dealing with the issue right now in accordance with related law and regulations", without specifically stating the company had ended production.

Chinese social media showed photos and videos that were apparently of hundreds of disgruntled workers gathered outside a local government building in Qian'an, Tangshan, demanding help in the face of the closure.

A shutdown would highlight the sector's woes and fuel concerns that more closures are on the way, with a raft of mills already shuttering output.

While cuts in output would remove some of the surplus capacity that has weighed on prices, traders said the latest shutdown dented overall sentiment on the outlook for the Chinese economy.

On Tuesday, Chinese steel prices plumbed a record low of 1,748 yuan a tonne, down nearly 37 percent since the beginning of this year. That has also hit demand for steelmaking ingredient iron ore .IO62-CNI=SI, already down over 30 percent in 2015.

"I think there will be more closures in China and no capacity additions. Steelmakers and local governments don't have the incentive to build new capacity," said Wang Li, an analyst at CRU Group in Beijing.

"Generally people think that to close a steel plant would be quite difficult in China and maybe unlikely, but the fact is closures are increasing and quicker than people's expectations."

Tangshan, which is 200 km (124 miles) east of Beijing and produces more steel a year than the United States, has tens of small steel mills and has been on the frontline of China's campaigns to tackle overcapacity and pollution.

The city has pledged to reduce its annual crude steel capacity by 28 million tonnes from 2013 until 2017, roughly a fifth of its total.

Around 15 million tonnes of steel capacity in Tangshan has been shut down so far, said Cheng Xubao, an analyst with industry consultancy Custeel said.

"Local governments want to help, but they are not able to help all. More mills could shut down as demand keeps weakening. Mills are not afraid of losses, but they are worried that there is no demand."

Apparent steel consumption in China, the world's biggest producer and consumer, fell 5.7 percent to 590.47 million tonnes in the first 10 months of the year, the China Iron and Steel Association (CISA) said.

Read more at Reutershttp://www.reuters.com/article/2015/11/17/china-steel-tangshan-idUSL3N13C2BB20151117#ZRE3VslgCZctudzV.99

Coal consumption of China power industry to reach 60% by 2020

Coal consumption in China’s power industry is expected to account for 60% of the country’s total coal use by 2020, compared with the current 50%, according to the 13th Five-Year Plan.

This means that more coal would be used for power generation, as the government advocates use of the clean energy, said one official with China Electricity Council at the 3rd Global Thermal Coal Resource & Market Summit on November 13.

China’s consumption of primary energy was expected to be 4.8 billion tonnes of standard coal equivalent by 2020, with coal consumption at 4.2 billion tonnes, the official said in the summit.

Total installed power capacity across the country would reach around 1.8 TW by 2020, according to the plan, with thermal, hydropower, wind, solar and nuclear power capacity at 1TW, 350GW, 200GW, 100GW and 58GW, respectively.

By 2020, coal consumed for per kWh of power output should be limited within 310g of standard coal equivalent; while that of 600MW-above thermal units and new thermal units should be within 300g.

Coal consumption of per kWh of power output averaged 318g of standard coal equivalent in 2014.

Power consumption has slowed in China this year, due to lackluster industrial activity. In the first three quarters, China’s power consumption saw a slight year-on-year rise of 0.8%, and the average growth of the whole year is expected to be 1% or so.

Over January-September, power consumption in industrial sector fell 4.6% on year; while service sector and residential sector rose 7.43% and 3.9%, respectively.

The utilization of power generating units saw a decline of over 200 hours from the previous year. The operation hour of thermal units for the whole year is expected to reach 4,448 hours, with that over January-September at 3,245 hours.

The newly-added installed capacity may reach 1.77 TW this year, compared with last year’s 1.66 TW.

http://en.sxcoal.com/0/134955/DataShow.html

Back to Top

Coal India Q2 net profit up 16pct

Coal India (CIL), the world's biggest coal miner, posted a 16% rise in consolidated net profit at Rs 2,543.80 crore for the quarter ended September 30 on the back of higher sales, it said on November 13.

The consolidated net sales of the company was Rs 16,957.59 crore during the quarter, registering an increase of 8%.

"The increase in earnings is largely due to the higher production and sales during the current period compared to the corresponding period in the previous year," it said.

The total expenses of CIL increased to Rs 15,067.87 crore, up 6.53% from Rs 14,144.73 crore in the year-ago period.

Coal production during the second quarter of the current fiscal was 108.20 million tonnes, up 5.88% from the second quarter of the previous year, the statement said.

Sales for the second quarter of 2015-16 was 121.99 million tonnes, up 10.91% from 110.49 million tonnes in second quarter of 2014-15, the statement added.
Total sales during the first and second quarters of the current fiscal was 251.38 million tonnes, up 9.13% from 230.09 million tonnes year on year.

http://en.sxcoal.com/0/134956/DataShow.html

Back to Top

Brazil's CSN sinks as management fails to assuage debt worries

Shares in Cia Siderúrgica Nacional SA sank the most in a month on Friday, as management failed to assuage mounting concerns over a swelling debt burden at Brazil's second-largest listed maker of flat steel.

Executives led by Chief Executive Officer Benjamin Steinbruch told investors on a conference call to discuss third-quarter results that keeping capital spending near current levels is needed to stay competitive in steelmaking and mining.

CSN, as the company is known, is pushing ahead with plans to refinance debt, sell assets, but avoid fire-sales, and raise the price of some flat-steel products. Steinbruch has likened his choices to "war economy decisions."

Investments planned for next year will add value for shareholders in the medium term, Steinbruch said.

Net debt rose to a record 6.6 times 12-month trailing operational earnings last quarter. That is twice CSN's 3.4 net debt to EBITDA ratio a year earlier. Investors are uneasy about capital spending and working capital trends, which have further eroded CSN's already weakened balance sheet, said Leonardo Correa, an analyst with Banco BTG Pactual.

Dividend payments will resume next year, pending the outcome of some aspects like asset sales, Steinbruch noted.

Shares extended losses during the call, falling as much as 9 percent to 4.92 reais. The stock has shed 50 percent over the past six months.

The price on CSN's 7 percent perpetual bond was unchanged at 45 cents on the dollar on Friday. The bond has fallen from about 75 cents at the start of the year.

"For now, the case has become very much an event-driven story, with leverage rising and depending on billions of asset sales," Correa said.

CSN's net loss reached 532.7 million reais ($140 million) last quarter, compared with a shortfall of 250.1 million reais a year ago. The result, however, was smaller than the loss of 709 million reais estimated in a Reuters poll.

More than 20 companies have shown preliminary interest in Sepetiba Tecon SA, a container terminal operator that CSN recently put up for sale, Chief Financial Officer Paulo Caffarelli said on the call.

Read more at Reutershttp://www.reuters.com/article/2015/11/13/siderurgica-naci-results-ma-idUSL1N13821020151113#SQ3QIu7hEtER0vsV.99

Back to Top

Moody's downgrades steelmaker ArcelorMittal

In an advisory to clients at the close of markets on Thursday, the ratings agency said ArcelorMittal's corporate family rating (CFR) and probability of default rating (PDR) had been downgraded to Ba2 and Ba2-PD from Ba1 and Ba1-PD, respectively, primarily reflecting the steelmaker's “weaker operating performance since the beginning of 2015 as a result of falling steel prices, and a material decrease in EBITDA from its mining operations”.

At the same time, Moody's also downgraded ArcelorMittal's senior unsecured ratings to Ba2 from Ba1.

“The outlook on all the ratings is negative with limited opportunity for ArcelorMittal to experience a rebound in profitability over the next 12 months,” a spokesperson said.

Apart from having to contend with a challenging climate in the steel industry, ArcelorMittal also has to absorb a material EBITDA shortfall from its mining operations of 66% compared to the third quarter of 2014, which have in the past contributed up to an average of 25% of the group's consolidated EBITDA.

Moody’s added that its downgrade also reflects the current recession in ArcelorMittal's Brazilian market and a challenging operating climate in North America.

On a more positive footing, Moody's believes ArcelorMittal's liquidity is solid and expects that it will remain adequate in 2016 as evidenced by "the large amount of cash held on the balance sheet" and the committed facilities available to the company.

- See more at: http://www.digitallook.com/news/news-and-announcements/moodys-downgrades-steelmaker-arcelormittal--929101.html#sthash.yIyUX2We.gKUbRgTO.dpuf

Back to Top

Essar Steel appoints advisers to help find strategic investors

The Hindu Business Line reported that under pressure from lenders, Essar Steel has appointed ICICI Securities & SBI Capital Markets as advisors to help identify and induct strategic investors into the company.

This decision is in addition to the previously announced plans to monetise certain non-core assets to raise equity and infuse additional funds to enhance operations to full capacity.

Earlier, Essar Steel had revealed a financial plan to sell two of its non-core assets to improve its liquidity, reduce debt and focus on core business area.

According to the proposed plan, Essar Steel plans to hive off Hazira Coke Oven plant having a production capacity of 1.53 million tonnes per annum. The second one relates to 8 million tonnes per annum 267-km Visakhapatnam Slurry Pipeline (between Kiradul and Visakhapatnam)

The company statement said that “The global steel industry is facing major headwinds due to falling steel prices and increased exports from China. The effects of these are already being seen in North America, Canada and Europe. Major steel companies across the world are taking suitable steps to cut costs and raise money.”

It said that “India is no different and it is important that measures are taken now to maintain the long-term health of the steel industry. It is in this context that Essar Steel has taken a proactive decision to induct strategic / financial investors into the company.”

http://steelguru.com/steel/essar-steel-appoints-advisors-to-help-find-strategic-investors/439027#tag

Back to Top

Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.