Mark Latham Commodity Equity Intelligence Service

Friday 29th January 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Sharp decline in US durable goods orders


    New orders for long-lasting U.S. manufactured goods tumbled in December as lower oil prices and softer global demand put more pressure on factories, the latest sign that economic growth weakened significantly at the end of 2015.

    Stock market futures prices turned negative on the news. 

    The Commerce Department said Thursday that durable goods orders declined 5.1 percent last month, likely also weighed down by a strong dollar, after slipping 0.5 percent in November.

    Economists polled by Reuters had forecast durable goods orders, which cover goods meant to last three years or more ranging from toasters to aircraft, falling 0.6 percent last month.

    http://www.cnbc.com/2016/01/28/market-reacts-to-sharp-decline-in-durable-goods-orders.html

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    Vedanta defies commodity price collapse to post surprise profit


    Vedanta posted an unexpected profit in the third quarter as India’s biggest producer of aluminium and copper countered a slump in commodity prices by cutting costs. The shares surged the most in more than three months.

    Group net income slumped to 179.1 million rupees ($2.63 million) in the three months to December 31 from 15.9 billion rupees a year earlier, the unit of London-listed Vedanta Resources said in a statement on Thursday. Analysts projected on average a loss of 1.04 billion rupees. Sales tumbled 23% to 148 billion rupees in the quarter, beating analysts’ estimates of 144.9 billion rupees.

    Shares of Vedanta have slid 25% this month as the rout in commodities from base metals to crude oil and iron ore deepened amid forecasts for the Chinese economy to grow at the slowest pace in a generation. The parent company has cut costs and reduced overall expenditure by as much as 25% to counter the slump while betting on a recovery, chairman Anil Agarwal said last week.

    “In the weak commodity price environment, we remain committed to optimising our operations, leveraging our high quality asset base, and pro-actively managing our balance sheet,” Vedanta’s chief operating officer Tom Albanese said in the statement.

    Vedanta’s total costs fell 12% to 135.4 billion rupees in the quarter, while other income rose 35% to 5.79 billion rupees, the company said. Gross debt stood at 809.52 billion rupees at the end of December, while cash and liquid investments totaled 506 billion rupees, it said. The shares rallied 5.5% to 67.30 rupees by 3:30pm close in Mumbai, the biggest gain since October 12.

    Vedanta’s inability to mine enough bauxite has forced its aluminium smelters to operate below capacity, while courts have limited the amount of iron ore it can mine. Three-month copper prices on the London Metal Exchange fell for a sixth straight quarter to cap a third annual loss in 2015. Aluminium tumbled 19% last year while an index of six metals on LME declined 24%.

    http://www.mineweb.com/news-fast-news/vedanta-defies-commodity-price-collapse-to-post-surprise-profit/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A%20MasterGold%20%28Gold%20News%29&utm_term=MasterMetals
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    Oil and Gas

    Russia-Saudi-OPEC Deal> CNBC

    The chances of a deal between Russia and OPEC are viewed as very slim, despite an intraday spike Thursday in crude prices on talk of a proposed production agreement.

    "There's nothing new. It's another part of a stream of news that comes out of Russia and there's no indication that the Saudis have any desire to do anything," said Edward Morse, global head of commodities research at Citigroup.

    News services reported that OPEC and producers from outside the cartel would meet to discuss production cuts. There was also a report that Russian Energy Minister Alexander Novak said Saudi Arabia had proposed each country cut oil production by 5 percent to support prices. 

    Read MoreWhy oil glut not going away soon

    Dow Jones later quoted a senior Gulf OPEC official as saying that the Saudis did not ask Russia to cut output by 5 percent. The official also said the proposal was an old suggestion from Algeria and Venezuela.

    Read MoreWhy Russia and Saudi could cut output

    "I really don't think that has any legs. I don't expect we will see any talks coming from these, and the other reason I think the Saudis would not really pursue this is because the real target of the Saudis is the U.S. shale producers," said Chris Weafer, senior partner at Macro-Advisory in Moscow. "Unless they are also part of an agreement, I can't see Russia or Saudi cutting their own production to help the shale industry."


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    Kremlin says 'nothing tangible' yet on possible coordination with OPEC


    The Kremlin said on Thursday that the situation on oil markets was being actively discussed among producers, but that there was "nothing to talk about in a tangible sense" when it came to possible coordination with the OPEC group.

    "It is too early to talk about the outcome of these active discussions," Dmitry Peskov, a Kremlin spokesman, said of the talks about what action, if any, oil-producing countries might take to boost low prices.

    http://www.reuters.com/article/russia-oil-kremlin-idUSR4N0ZC010
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    Oil Spikes On Confusion Whether Saudis Propose 5% Production Cut


    Headline hockey continues in the energy complex as earlier confirmation of a pending OPEC meeting possible in February has seen more color added, via Reuters, that Saudi Arabia made a proposal that OPEC members cut production by a maximum of 5%. There remains confusion however as Bloomberg reports simply that Russian energy minister has said they "may discuss it," as opposed to being a specific proposal.

    - RUSSIAN ENERGY MINISTER STATES THAT SAUDI ARABIA MADE A PROPOSAL TO REDUCE OIL OUTPUT BY EACH COUNTRY BY A MAXIMUM OF 5%
    - RUSSIA'S NOVAK SAYS OPEC MEETING MAY DISCUSS 5% OUTPUT CUT: RIA
    - NOVAK: 5% CUT TALKS MAY INVOLVE ALL OIL PRODUCING NATIONS: RIA
    - NOVAK: OPEC, PRODUCER MEETING WOULD BE MINISTER LEVEL: RIA
    - IRAN WANTS TO RECOUP OIL MARKET SHARE AND IS A CHALLENGE IN ANY DEAL TO CUT OIL OUTPUT - OPEC SOURCES

    Headlines about "oil production cuts" are the new "Greece is saved" trial balloon.

    Following today's dizzying surge in crude oil on speculation by the Russian energy minister that the Saudis have proposed a 5% supply cut, which was subsequently trimmed to merely a statement that a "meeting may be called where a production cut could be discussed" we asked how long until the denial:

    The answer: 15 minutes when the following rejection hit:

    OPEC DELEGATES SAY NO PLAN YET FOR MEETING WITH RUSSIA

    And now that the squeeze is over, oil can resume tumbling.

    http://www.zerohedge.com/news/2016-01-28/oil-spikes-confusion-whether-saudis-propose-5-production-cut

    http://www.zerohedge.com/news/2016-01-28/saudi-production-cut-story-rejected-opec-delegates-say-no-plan-meeting-russia
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    Glencore storing crude?

    Glencore Plc is said to be storing oil on ships off the coast of Singapore and Malaysia as a market structure known as contango allows traders to benefit from holding on to supplies for sale later.

    The commodities trader has at least 4 very large crude carriers, each of which can hold about 2 million barrels, floating at sea off the nations’ coast in Southeast Asia, people with knowledge of the matter said, asking not to be identified because the information is confidential. When a market is in contango, prices for supplies today are lower than those in future months, allowing traders with access to stored crude to potentially lock in a profit.

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    Iranian oil tanker leaves sea storage fleet for China


    An Iranian oil tanker sailed from Iran headed for China, becoming the second ship in days to be despatched from the country's floating storage fleet, Reuters ship tracking showed on Thursday.

    The Sinopa tanker - capable of carrying a maximum of 1 million barrels of oil - left Iranian waters bound for the Chinese port of Dalian, the data showed. The sailing comes after the larger Serena, which can carry up to 2 million barrels of oil, left for South Korea around Jan. 15.

    A tanker tracking source confirmed the Sinopa had left and was likely to be carrying condensate, a very light grade of crude.

    Earlier this month, international oil sanctions imposed on Iran were lifted, although the pace of exports is likely to be slower than Tehran expected partly due to difficulties in securing insurance especially for foreign tankers.

    http://en.chinamining.com.cn/News/2016-01-29/1454035756d75195.html
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    BG shareholders give Shell's $52 bln acquisition final nod


    BG Group shareholders overwhelmingly approved Royal Dutch Shell's $52 billion takeover on Thursday, clearing the way for the two firms to create the world's biggest trader of liquefied natural gas (LNG).

    BG will now merge with Shell on Feb. 15, nearly two decades after the company was born from British Gas and just a few months after it reached record oil and gas output thanks to new projects in Australia and Brazil.

    At a meeting in London, 99.53 percent of BG shareholders voted in favour of the merger, a day after 83 percent of Shell's shareholders approved the deal first announced on April 8 last year.

    Shell shareholders are putting their faith in CEO Ben van Beurden's decision to focus the Anglo-Dutch company's operations in liquefied natural gas (LNG) and deep water oil production over the coming decades as the industry undergoes one of its worse downturns in decades.

    Low oil prices will remain a challenge for the combined company in the short term, however, as crude has fallen 75 percent over the past 18 months to around $30 a barrel.

    While the oil price is expected to stage a gradual recovery, Shell has said the combined group needs crude to be above $60 a barrel to break even.

    "I very strongly believe in what Shell is trying to do long term ... The idea that they try to specialise in their strengths being deepwater and LNG is absolutely the right thing to do," BG Chairman Andrew Gould told reporters.

    The acquisition will boost Shell's oil and gas production by 20 percent and bring it closer to challenging the world's top international oil company ExxonMobil.

    Combined, Shell and BG will overtake Chevron as the world's second-biggest publicly-traded oil and gas company measured by market value.

    Shell has promised to find $3.5 billion from cost savings and overlaps by 2018, from various areas including its corporate, administrative and IT operations.

    http://www.reuters.com/article/bg-group-ma-shell-idUSL2N15C0DP
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    Penn West cuts 2016 capex by 90 pct, sees 30 pct lower output


    Canadian oil and natural gas producer Penn West Petroleum Ltd cut its 2016 capital budget by as much as 90 percent from a year earlier, to weather a steep plunge in crude oil prices.

    The company, which cut its capex to C$50 million ($35 million), said it expects to produce 60,000-64,000 barrels of oil equivalent per day this year, about 30 percent lower than its 2015 production estimate.

    Penn West had cut its 2015 capital budget three times, eliminated about 35 percent of workforce in September and stopped paying dividend from October.

    "Given the present state of the commodity price environment, our 2016 capital budget reflects the reality of living within our means at current price levels and managing thebusiness on a week-to-week basis," Chief Executive Dave Roberts said in a statement on Thursday.

    Penn West said it continued to be in talks with potential buyers to divest non-core assets.

    The Calgary-based company said proceeds from any asset sale would be used to cut debt rather than to fund capital program.

    Up to Wednesday's close of 98 Canadian cents, Penn West shares had more than halved in 12 months on the Toronto Stock Exchange.

    http://www.reuters.com/article/penn-west-capex-idUSL3N15C4MI

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    Oasis Petroleum raises stock to fund lowered capex for 2016


    North Dakota oil producer Oasis Petroleum Inc launched a new stock offering to partly fund its 2016 capital expenditure of $385 million-$435 million, even though its budget is about 30 percent lower than last year.

    Oasis said on Thursday it would offer 34 million shares, with a 30-day option for underwriters to purchase an additional 5.1 million shares.

    Based on Wednesday's close of $5.32, Oasis can raise as much as $208 million from the offering, including the underwriters' option.

    Oasis Petroleum shares fell as much as 15 percent in premarket trading to $4.51. The stock has more than halved in the past year.

    The company said it expects to produce 46,000-50,000 barrels of oil equivalent per day (boepd) in 2016, compared with 50,477 boepd last year.

    About 60 percent of Oasis's oil output has been hedged at an average price of $53.36, the company said in a statement.

    http://www.reuters.com/article/oasispetroleum-capex-idUSL3N15C4W7
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    Valero Energy's profit falls on lower refining margins


    U.S. refiner Valero Energy Corp reported a 74 percent decline in quarterly profit, hurt partly by lower refining margins.

    Net income attributable to Valero's stockholders fell to $298 million, or 62 cents pershare, for the fourth quarter ended Dec. 31, from $1.16 billion, or $2.22 per share, a year earlier.

    Operating revenue fell 33 percent to $18.78 billion.

    http://www.reuters.com/article/valero-energy-results-idUSL3N15C4R2
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    Alternative Energy

    California upholds critical solar policy


    California regulators on Thursday upheld a key policy that makes rooftop solar systems affordable by allowing homeowners to sell the electricity they don't use back to their local utility.

    In a 3 to 2 vote, the California Public Utilities Commission approved a proposal that continues the state's net metering policy, with few changes.

    http://www.reuters.com/article/us-solar-california-vote-idUSKCN0V62PB
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    China’s top five power producers to bet on clean energy in 2016


    China’s top five power producers—China Huaneng Group, China Datang Group, China Huadian Group, China Guodian Group and State Power Investment Group—will continue their efforts on clean energy development in 2016 and afterwards, sources learned from their annual conferences lately.

    It has become an inevitable trend for them to develop clean energies including wind power, photovoltaic power and nuclear power generation, on account of their less environment pollution.

    The State Power Investment will also inject similar energy to transfer into a provider for comprehensive energy services focusing nuclear power business.

    The company ranked the No.1 of the industry both in the profits growth and the share of clean energy in its total energy businesses, which was reported at 40%.

    Power output of the company in 2015 reached 380.79 TWh, with profits at 13.97 billion yuan ($2.12 billion), posting a record high. The newly-added power installed capacity stood at 10.77 GW per year in 2015, boosting the total installed capacity to 107 GW per annum.

    China Huaneng Group saw the power installed capacity from low-carbon clean energy exceed 46 GW per year or 28.8% of the company’s total capacity by end-2015, which was 160 GW.

    China Huadian Co., Ltd witnessed its installed capacity reach 135 GW per year last year, and its total profits during the “12th Five-Year Plan” (2011-2015) posted a tenfold rise.

    http://en.sxcoal.com/0/140200/DataShow.html
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    £1bn biomass plant to bring 1,700 jobs to Anglesey


    Work is set to start on a £1bn combined food and power plant on Anglesey, which will create more than 1,700 jobs.

    The large biomass plant and eco park will be built near Holyhead after the company behind it, Orthios, bought the former Anglesey Aluminium site.

    The development will see more than 500 permanent jobs and 1,200 construction jobs brought to the area before 2018.

    The plant will process waste wood to create power, with heat generated used to farm prawns and grow vegetables.

    It is expected to generate 299MW of electricity, which is enough to power about 300,000 homes.

    Albert Owen, MP for Anglesey, said Orthios Eco Park had the potential "to be a catalyst in giving the local economy a much-needed boost".

    "The company intends to liaise with businesses, training providers and schools in the area - the benefits of which will be seen in the local and regional economy as well as providing career opportunities," he said.

    The plant is one of two planned for Wales - a similar facility will also be built in Port Talbot - after which the technology will be rolled out to China and developing countries.

    The idea is for a biomass power plant generating electricity with spare heat being used to warm indoor ponds for king prawn farming. The UK currently imports king prawns.

    Waste from the prawns can then be used as fertiliser to grow crops.


    http://article.wn.com/view/2016/01/29/1bn_biomass_plant_to_bring_1700_jobs_to_Anglesey/?utm_source=twitterfeed&utm_medium=twitter

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    Germany's SMA Solar says 2016 operating profit could quadruple


    Germany's largest solar power equipment maker, SMA Solar, said on Friday that its operating profit could quadruple this year due to strong demand for its inverters in markets outside Germany, notably the United States and Britain.

    Its forecasts were not as strong as some analysts had estimated, however, and its shares fell sharply.

    SMA said it expects its earnings before interest and tax (EBIT) to rise to between 80 million and 120 million euros ($87-131 million) this year from 30-33 million in 2015, SMA said as it held its investor day on Friday.

    Analysts polled by Thomson Reuters estimate 2016 EBIT of 114 million euros.

    The company also said it expected sales of between 950 million and 1.05 billion euros this year, broadly flat from last year's 1.0 billion, and below analysts' forecasts for 1.08 billion euros.

    Following years of losses and cost cuts, restructuring has helped SMA emerge from a deep sector crisis that claimed many peers over the past five years. Its turnaround has been factored into its share price, which has more than quadrupled over the past year.

    SMA shares fell more than 10 percent at one point on Friday. They were down 6.2 percent by 0919 GMT.

    Earlier this week, the company unveiled 2015 results that beat its own targets on sales and earnings, returning the business to profitability sooner than expected.

    SMA's inverters are needed to turn direct current into alternating current and feed it into the power grid. Demand has been high as countries around the world accelerate a shift towards renewables and away from fossil fuels.

    http://www.reuters.com/article/sma-solar-outlook-idUSL8N15D1CJ

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    Intelligent Energys miniature fuel cell to be used in drones


    CES showstopper Intelligent Energy has signed a Letter of Intent (LOI) with a major drone manufacturer to develop hydrogen fuel cell powered drones. The deal will see the two companies work together in the first quarter of 2016 to develop technological solutions to increase drone flight time. The goal is for the deal to lead to a formal commercial arrangement for the solutions’ rollout.

    “Our embedded fuel cell technology was well received at CES and we have had huge levels of interest from manufacturers so we are, of course, absolutely delighted to be signing our first letter of intent on the back of the show”

    Intelligent Energy was the subject of substantial international interest at CES, which is a high profile international consumer electronics show held in Las Vegas earlier this month, when it unveiled its fuel cells embedded in a range of consumer electronics devices to dramatically increase the flight time between charges. Pain points for drones, particularly for commercial use, are known to be short flight times and long periods of downtime due to battery limitations and recharging. Intelligent Energy showcased its ultra-light weight fuel cell stacks at the event, which it has developed specifically for the drone market, as well as miniaturised fuel cell stacks that can be embedded into smartphones, laptops and notebooks.

    Powering a drone with a hydrogen fuel cell could enable it to fly for hours, as opposed to minutes. Although the exact improvements to flight times will not be known until the production drone is finalised, the expectation is that a fuel cell could more than double or even triple the time a drone could remain airborne. In addition, fuel cells would reduce the downtime significantly as re-fuelling takes a matter of minutes.

    “Our embedded fuel cell technology was well received at CES and we have had huge levels of interest from manufacturers so we are, of course, absolutely delighted to be signing our first letter of intent on the back of the show,” said Julian Hughes, Acting Managing Director for Intelligent Energy’s Consumer Electronics Division. “Major shortcomings to drone development are range and flight time. Using fuel cells to power a drone can markedly increase the flight time. A longer flight time and, therefore, increased range means drones become much more viable for commercial use. We see the signing of this LOI as a very important step to the commercialisation of fuel cells in drones.”

    http://www.businesswire.com/news/home/20160128005662/en/Major-Drone-Manufacturer-Snaps-Intelligent-Energy%E2%80%99s-Game-Changer
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    Agriculture

    Potash Corp's profit misses estimates, slashes dividend


    Potash Corp of Saskatchewan reported a lower-than-expected quarterly profit and slashed its quarterly dividend, hurt by weakening fertilizer prices.

    Potash prices have fallen sharply over the past year, under pressure from bloated capacity, soft grain prices and weak currencies in major consumers such as India and Brazil.

    "Weaker fertilizer prices late in the year reduced our earnings for the quarter, giving rise to a more cautious outlook for all three nutrients as we begin 2016," Chief Executive Jochen Tilk said in a statement on Thursday.

    The company forecast 2016 earnings of 90 cents to $1.20 per share. Analysts on average were expecting $1.33, according to Thomson Reuters I/B/E/S.

    The world's biggest fertilizer company by capacity said average realized price for potash fell 16 percent to $238 per tonne in the fourth quarter, while nitrogen prices fell 29 percent to $288 per tonne.

    Net earnings fell to $201 million, or 24 cents per share, in the quarter ended Dec. 31, from $407 million, or 49 cents per share, a year earlier

    Revenue decreased nearly 29 percent to $1.35 billion.

    Analysts on average expected earnings of 30 cents per share and revenue of $1.44 billion, according to Thomson Reuters I/B/E/S.

    The company lowered its quarterly dividend by 34 percent to 25 cents per share.

    http://finance.yahoo.com/news/potash-corps-profit-misses-estimates-114324643.html

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    Base Metals

    Freeport Indonesia’s export permit expires without extension


    Freeport-McMoRan’s export license in Indonesia, allowing the US copper producer to ship concentrates from its Grasberg mine, has expired without extension, said Bambang Gatot Ariyono, director general of minerals and coal at the Energy & Mineral Resources Ministry.

    The government is waiting for the company to give a detailed response to requests regarding the permit, Ariyono told reporters in Jakarta. Freeport had asked for a license to ship 1 million tons over the next six months. The miner’s existing permit was set to expire on Thursday.

    The Phoenix-based producer is struggling to contend with the collapse in metals prices. Moody’s Investors Service lowered its credit rating four levels to junk on Wednesday, while chief executive officer Richard Adkerson has said he would consider selling any operation, in full or in part, to weather the slump. The company’s stock is down 75% in the past year, compared with a 30% average decline among peers tracked by Bloomberg.

    Indonesia has asked for a $530 million deposit toward building a new smelter in exchange for prolonging the permit, a request that Adkerson said this week was inconsistent with the company’s previous understanding with the government. Ariyono didn’t elaborate on the issue on Thursday.

    Energy and Mineral Resources Minister Sudirman Said told reporters on Wednesday that the government’s priority was to ensure operations continue so that the local economy is unaffected. He said the money would be proof of Freeport’s commitment to the smelter, as the government bids to reap more value from the nation’s mineral trove.

    Freeport, which mined $2 billion of copper and $1.4 billion of gold in 2014 from Grasberg, also wants to extend its contract to operate in Indonesia. That expires in 2021, and the company has agreed to sell shares as part of the negotiation. An Indonesian official said this month that Freeport had offered the government an 11% stake in its local unit for $1.7 billion. Freeport confirmed an offer had been made though it didn’t give details.

    http://www.mineweb.com/news-fast-news/freeport-indonesias-export-permit-expires-without-extension/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A%20MasterGold%20%28Gold%20News%29&utm_term=MasterMetals

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    BHP Billiton set to fund Aston Bay's Storm copper project


    The Canadian arm of mining giant BHP Billiton (BHP.AX) has signed a letter of intent to help fund exploration at Aston Bay Holdings Ltd's (BAY.V) Storm copper project, Aston Bay said on Thursday.

    Under terms of the preliminary deal, BHP could earn a 75 percent interest in Storm, located in Canada's far north territory of Nunavut, if it spends a minimum of C$40 million on exploration over the next few years.

    Vancouver-based Aston Bay, a small exploration company, will have no required exploration expenses for four years from the date a definitive agreement is signed. The two sides expect to finalize a deal in the second quarter, said Aston Bay.

    A definitive deal would be a huge boost for Aston Bay, which like many of its small peers has seen its share price pummeled amid the rout in commodity prices. The price of copper CMCU3 continues to languish around levels not seen since the tail end of the financialcrisis in 2009.

    Such earn-in agreements allow mining majors to secure stakes in promising early-stage projects for relatively limited up-front risk. They were fairly common when metal prices soared through much of the last decade, but have become rare in the last few years for both base metal and precious metal assets.

    The latest move by BHP comes close on the heels of similar moves by rival Rio Tinto which recently inked similar deals involving the copper assets of two Canadian juniors.

    The developments indicate the majors are beginning to be concerned about their long-term copper project pipeline as supply-demand fundamentals in the commodity remain fairly tight despite the slide in the price of copper.

    In November, Avala Resources Ltd  announced an earn-in agreement with Rio on its Lenovac project, located in Serbia, coming days after Rio signed a similar deal with Reservoir Minerals Inc on its Timok Magmatic Complex in Serbia.

    Both assets are located near the promising Cukaru Peki deposit in Serbia, part of a joint venture Reservoir has with Freeport-McMoRan Inc. That deposit has shown promising results, leading to heightened interest in the region.

    http://www.reuters.com/article/us-bhp-billiton-ltd-aston-bay-jointventu-idUSKCN0V62OX
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    Steel, Iron Ore and Coal

    China’s coal demand may maintain slow growth in 2016-20: CNCA


    China’s demand for coal may maintain a slow growth in the “13th Five-Year Plan” period (2016-2020), and yet the supply glut in domestic coal industry will continue, said Jiang Zhimin, vice chairman of China National Coal Association (CNCA), at a recent press conference.

    http://en.sxcoal.com/0/140152/DataShow.html
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    Chinese miners cut coking coal prices to ensure cash return


    China’s coking coal prices continued to drop recently, as some miners cut prices despite favorable sales to ensure cash return before the Lunar New Year starting on February 8.

    http://en.sxcoal.com/0/140156/DataShow.html
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    China coal giants to shut for Lunar New Year, cite sector slowdown


    In a break with tradition, 15 Chinese coal mining groups have said they will close operations and allow workers to leave their posts during the Lunar New Year holidays next month, taking some pressure off a sector burdened by massive overcapacity.

    Any suspension of output over the week-long holiday, which starts on Feb. 7, could underpin coal prices that shed nearly a third last year. Spot thermal coal in Qinhuangdao port has risen 1.4 percent to 375 yuan ($57.03) per tonne this week, not far from a multi-year low of 370 yuan. SH-QHA-TRMCOAL

    Lower demand and high supplies have led to the price rout, leaving the sector in a crisis, the miners said in a declaration released this week and published on company websites. Suspending operations over the holiday would ease the pressure, they added.

    Miners are normally expected to work through the holidays in order to guarantee supplies over the period when power and heating demand typically hit a peak. During the holiday, state leaders are often filmed visiting miners working underground.

    "On the condition that we can maintain safe production and stable supplies, and barring any special circumstances, we declare that we will cease operations during the 2016 Spring Festival holiday and workers will go on holiday," the miners' declaration said.

    China's top coal producers - the Shenhua Group, China Coal Energy Group and the China Datong Coal Group - that account for about a fifth of national output, have signed the declaration.

    China Coal Energy's Shanghai-listed unit said its losses in 2015 could have been as high as 2.8 billion yuan, while Datong Coal's listed vehicle also warned of about 1.7 billion yuan in losses, blaming the supply glut.

    Another signatory, the Longmay Group, based in northeast China's Heilongjiang province, said last year that it was planning to lay off 100,000 miners. Thousands had already been put on leave with reduced pay.

    http://www.reuters.com/article/china-coal-slowdown-idUSL3N15D1SD

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    Vale scraps dividend for 2016 as iron ore price slumps


    Brazilian miner Vale SA will recommend to its board that no dividend is paid to shareholders this year because of the slump in commodity prices, the company said on Thursday.

    The world's largest producer of iron ore has been hit hard by a dramatic fall in the price of the steelmaking raw material, with analysts predicting the company will be cash flow negative in 2016 unless it manages to curb costs and sell assets.

    http://www.reuters.com/article/vale-sa-dividends-idUSE5N0ZX01N
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    Atlas Iron boosts shipments, lowers costs


    Iron-ore miner Atlas Iron on Friday reported that December quarter had increased by 10% on the previous quarter, while its full cash costs for the three months fell by 9%. Atlas shipped 3.6-million tonnes of ore in the December quarter, compared with the 3.3-million tonnes in the September quarter, with full cash costs declining from A$58/t to A$54/t, including all contractor cost clawback and profit share. 

    A total of 3.5-million tonnes of ore was mined at Atlas’ various Western Australian assets, with more than 3.4-million tonnes of ore processed during the quarter under review. The Wodgina mine delivered 1.52-million tonnes of ore during the quarter, with the Abydos mine contributing 829 372 t, and the Mt Webber operation 1.14-million tonnes. 

    Atlas MD David Flanagan told shareholders that while iron-ore market has remained challenging going into January, the falling Australian dollar, low freight prices and further interim cost savings negotiated in December, would assist the company in remaining competitive during the completion of its debt restructure. 

    Flanagan said that the debt restructure agreement, which was struck during the December quarter, was an important step in making Atlas more sustainable, particularly in volatile iron-ore markets. Atlas in December last year miner inked agreements with more than 75% of its term loan B (TLB) lenders, and amended its existing syndicated facility agreement. 

    Under the two agreements, Atlas would make a pay down of the TLB loan of some $10-million and issue shares and options to the TLB lenders in exchange for the lenders retiring $132-million of debt. The TLB lenders would hold a combined 70% of the company’s shares and options on issue, immediately post the restructure. The issue of these shares and options would be subject to shareholder approval. 

    Furthermore, the existing syndicated facility agreement would be amended to include a covenant that cash was not to fall below A$55-million on any day during the implementation of the interim covenant. On implementation of the financial restructuring, Atlas would have reduced its term loan debt from $267-million to $135-million, extended the maturity date from December 2017 to April 2021, and reduced its cash interest expense by over 65% as a result of the lower debt balance and reduced interest rate.

    http://www.miningweekly.com/article/atlas-iron-boosts-shipments-lowers-costs-2016-01-29

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    EU to set dumping duties on Chinese, Russian steel imports


    The European Union will impose duties on imports of cold-rolled flat steel from China and Russia while its investigation into alleged dumping by the two countries continues.

    The European Commission has set provisional duties of up to 16 percent for China and of up to 26 percent for Russia, according to sources familiar with the Commission's plans.

    The Commission's investigation follows a complaint from Eurofer, the European steelassociation, which said Russia and China were dumping the steel - selling it below market prices at home or below the cost of production - on the EU market and thereby damaging the local industry.

    The provisional measures are due to be announced by Feb. 14 and definitive duties, if imposed at the conclusion of the investigation, by Aug. 12. Such duties would typically apply for five years.

    The Commission previously ordered customs authorities to register imports of cold-rolled flat steel from mid-December, meaning duties would apply to imports from China and Russia from then.

    Eurofer says that, since the investigation was launched in May, imports of steel - used in cars and home appliances - into the EU have increased.

    It said on Wednesday that overall imports of steel surged by 29 percent year-on-year in the third quarter of last year and by 51 percent in the final three months.

    Russia, China and Ukraine made up some 60 percent of total steel imports.

    For cold-rolled flat steel, Eurofer has said the average dumping margin - the amount by which export prices from the two countries undercut a normal market price - is 28 percent for China and 15-20 percent for Russian producers.

    Russian producers Severstal and Novolipetsk Steel said when the investigation was launched last May that they were in compliance with international trade rules and not carrying out dumping.

    China said then that the surge in Chinese steel product exports was "normal and also beyond reproach", reflecting a rise of demand and the strong competitiveness of its industry.

    http://www.reuters.com/article/steel-eu-china-russia-idUSL8N15C266

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    POSCO's Q4 operating profit down 55 pct, misses estimates


    South Korean steelmaker POSCO posted its smallest quarterly operating profit in at least three years, as steel prices fell faster than raw materials costs, pressured by record exports of Chinese steel.

    POSCO, the world's sixth-biggest steelmaker, saw its operating profit in the October-December period slump 55 percent to 341 billion won ($282.22 million) on a consolidated basis, which includes earnings of its affiliates, according to Reuters' calculations. POSCO only provided full-year earnings.

    That was below a consensus forecast of 503 billion won compiled by Thomson Reuters I/B/E/S.

    On an annual basis, the steelmaker swung to a net loss of 96 billion won, its first since at least 2010. The loss was smaller than the 300 billion won loss forecast by POSCO in October.

    http://www.reuters.com/article/posco-results-idUSS8N14N004

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    Asia Ferrochrome: Japan Prices Fall To 10-Year Low Of 60-62 Cents/LB


    Japan's spot high-carbon ferrochrome prices fell to a 10-year low of 60-62 cents/lb CIF Japan this week as keen spot sellers emerged amid the seasonal pre-Lunar New Year holiday lull, according to Platts' assessments.

    The 60-62 cent/lb level is the lowest since March 8, 2006, when prices were assessed at 61 cents/lb CIF Japan.

    A consumer in southern Japan awarded a 280 mt tender for early March delivery this week, triggering competition among spot sellers in a market devoid of buyers in the leadup to the Lunar New Year holidays.

    One producer offered at 60 cents/lb CIF Japan for 10-50 mm sized lumps with minimum 60% chrome, maximum 8% carbon, maximum 2.5% silicon, maximum 0.03% phosphorous and maximum 0.05% sulfur for loading in February from Oman.

    Another producer offered at 62 cents/lb CIF Japan for 10-50 mm lump for minimum 58% chrome, maximum 8-9% carbon, maximum 4% silicon, maximum 0.04% phosphorous and maximum 0.05% sulfur for loading in February from India.

    There were offers at 64 cents/lb CIF Japan for similar specifications except chrome content at 56%-60%, maximum 4% silicon and maximum 0.03% phosphorous, sources said.

    The tender in southern Japan was awarded at around 60 cents/lb, basis unknown. Platts has not been able to confirm the details.

    A Japanese trader this week sold to a mill over 1,000 mt of 0-10 mm fines for prompt shipment at 57-60 cents/lb CIF Japan.

    The material contained maximum 48-49% chrome, maximum 8% carbon, maximum 6-7% silicon, maximum 0.03% phosphorous and maximum 0.05% sulfur.

    There is typically a 10 cent/lb gap between 0-10 mm fines and 10-50 mm lumps.

    "You can no longer distinguish fines from lumps," the trader said.

    Falling Chinese steelmaker bids for domestic ferrochrome, producers closing term deals on a China domestic price basis and thin spot demand amid the seasonal lull caused lump prices to plunge, traders said.

    China's largest stainless steelmaker, Taiyuan Iron and Steel Group, bid at around Yuan 4,800/mt ex-plant for domestic high-carbon ferrochrome for January delivery, which equates to 56 cents/lb without local tax.

    Some Japanese and Taiwanese steelmakers have suggested producers set term contracts on the basis of the Taiyuan monthly bid price, producer and mill sources said.

    However some producers were not in the spot market as ferrochrome demand in India remained steady.

    "We have sold out our production this month and we are not selling spot. We have been selling to Indian customers at 67 cents/lb FOB equivalent and I refuse to sell below 66-67 cents/lb CIF Japan," one Indian producer said.

    Platts assessed 58%-60% high-carbon ferrochrome at 59-60 cents/lb CIF China Friday, down from 64-65 cents/lb CIF China a week earlier, and 48%-52% charge chrome at 59-60 cents/lb CIF China, flat week on week.

    http://www.platts.com/latest-news/metals/tokyo/asia-ferrochrome-japan-prices-fall-to-10-year-27196169

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