Mark Latham Commodity Equity Intelligence Service

Tuesday 7th July 2015
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files








    Macro

    New South Wales state could change mining approval rules, impact Rio Tinto project

    New South Wales state could change mining approval rules, impact Rio Tinto project

    New South Wales has proposed changing its mining approval process to give greater consideration to environmental concerns, potentially threatening a colliery expansion planned by mining giant Rio Tinto Ltd.

    New South Wales Planning Minister Rob Stokes said in a statement on Tuesday that he wanted to alter the mining approval policy in the country's biggest state to reflect "careful deliberation of environmental, economic and social issues", shifting away from prioritising the extraction of resources.

    The proposed change could affect Rio's planned expansion of its Mount Thorley Warkworth coal mine about 120 miles north of Sydney, which is awaiting final clearance after an approval process that has taken several years.

    The NSW Minerals Council said in a statement that the government had chosen "what it believes is the easy political option rather than the sound policy option".

    Alan Leslie, spokesperson for the Bulga Milbrodale Progress Association, a resident group that has opposed the mine expansion, said he hoped the proposed changes would enable the state to "reject Rio Tinto's latest tilt at getting its project through".

    New South Wales is already typically viewed as the toughest state to get mining approvals, as it outsources the process to an independent commission.

    The country's No. 2 energy retailer AGL Energy Ltd on Monday said it was pulling out of three coal-seam gas projects in the state due to environmental hurdles.

    http://www.reuters.com/article/2015/07/07/australia-environment-rio-tinto-idUSL3N0ZN1XY20150707
    Back to Top

    Oil and Gas

    'Coup!' - the scream from Brazil's left.

    A constellation of Brazilian organizations issued a statement Monday denouncing what they described as the right’s attempts to topple President Dilma Rousseff.

    The statement was signed by 28 groups including the MST Landless Movement and the Catholic Church’s Pastoral Land Commission.

    It is also signed by 10 lawmakers from Rousseff’s Workers Party, or PT, as well as by dozens of individuals who signed on a personal basis.

    The statement accuses certain sectors of the opposition and the press of repeated attempts to create artificial pretexts for a “breakdown of democratic rule of law.”

    Some sectors of the opposition demand the opening of an impeachment process to oust Rousseff for her alleged role in the corruption scandal surrounding state oil company Petrobras, for which former directors of the firm and businessmen from the private sector have been arrested, and for which some 50 politicians are being investigated.

    Attached Files
    Back to Top

    Petrobras May Sell Braskem Stake, Build Tax Provisions, Valor Says

    Petrobras May Sell Braskem Stake, Build Tax Provisions, Valor Says

    State-controlled oil producer Petróleo Brasileiro SA could sell a stake in Brazil's Braskem SA and build provisions against tax debts nearing 40 billion reais ($12.7 billion) to reduce costs and make finances sustainable, Valor Econômico newspaper said on Monday.

    The company, known as Petrobras, could dispose of the 36.1 percent it owns in Braskem if bidders show up, Valor said, without saying how it obtained the information. By exiting Braskem, Petrobras could resolve the problem of selling naphtha to a client in which the company has a significant financial interest, the newspaper added.

    According to Valor, other divestitures could include selling exploration units in Africa, which are owned jointly with Grupo BTG Pactual SA's merchant banking unit, and refining and distribution businesses in Argentina.

    Braskem, which is the largest Latin American producer of resins, is controlled by engineering conglomerate Odebrecht SA. Petrobras declined to comment on the Valor report.

    Petrobras wants to improve corporate governance practices, including revamping the way tax liabilities are accounted, Valor said. As per request of Chief Executive Officer Aldemir Bendine and his team, such liabilities will have to be provisioned against the balance sheet, the newspaper added.

    The report comes as Petrobras trimmed capital spending for the next five years by about 41 percent, a move that investors said was an admission that expansion plans imposed on it by more than 12 years of Workers' Party governments were unrealistic. The company is increasingly relying on cost reductions to improve operational performance.

    - See more at: http://www.rigzone.com/news/oil_gas/a/139466/Petrobras_May_Sell_Braskem_Stake_Build_Tax_Provisions_Valor_Says?rss=true#sthash.6i0q86qg.dpuf
    Back to Top

    Billionaire Founders Said to Be Close to Delisting Essar Oil

    Billionaire Founders Said to Be Close to Delisting Essar Oil

    Essar Oil Ltd., India’s second-biggest non-state oil refiner, received National Stock Exchange of India Ltd. consent to delist its shares and is awaiting approval from BSE Ltd., people familiar with the matter said.

    The company, founded by billionaire brothers Shashikant and Ravikant Ruia, is expecting BSE permission this week, said the people, who asked not to be identified as the matter is private.

    Delisting the company would allow the Ruia brothers greater flexibility and less regulatory scrutiny while selling a stake in the refiner. Russia’s OAO Rosneft was reported as a suitor by The Economic Times in March.

    “We will make an announcement as and when we have something to share,” Essar Oil Chief Executive Officer Lalit Kumar Gupta said.

    Yatin Padia, a spokesman for BSE, and NSE’s Arindam Saha couldn’t immediately comment when reached by phone.

    The shares rose 18 percent to 174.10 rupees at the close in Mumbai. The stock has surged 63 percent this year.

    Essar Oil’s board approved the delisting plan more than a year ago. The proposal was put on hold in November after the Securities and Exchange Board of India, the stock market regulator, asked for a halt.

    http://www.bloomberg.com/news/articles/2015-07-06/billionaire-founders-said-to-be-close-to-delisting-essar-oil
    Back to Top

    China to return VAT to CBM-fired power generation

    China has decided to return partial or total value-added tax (VAT) to power plants fueled by coalbed methane (CBM) or coal mine gas, effective July1, in a bid to promote comprehensive use of resources, according to an official document released on June 26.

    Those power plants that use CBM or coal mine gas to produce electricity at a share of above 95% could enjoy a return of 100 % VAT, said the document jointly released by the Ministry of Finance and the State Administration of Taxation.

    For power plants generating electricity or heat with coal gangue, coal slime or stone coal, with coal gangue takes over 30%, 50% VAT will be returned, it said.

    And also a 100% VAT return policy will be applied to marsh gas power and heat generating plants with over 80% share of biogas in the fuel mix.

    If a power plant uses 100% waste heat produced in industrial process as fuel, it also would be returned the full VAT.

    http://en.sxcoal.com/0/125647/DataShow.html
    Back to Top

    Giant Perla field flows gas off Venezuela

    Giant Perla field flows gas off Venezuela

    A 50-50 joint venture of Eni SPA and Repsol SA has started production from giant Perla natural gas field in shallow water offshore Venezuela.

    Production is to reach 450 MMscfd by yearend in the first of three development phases. In a second phase, production will climb to 800 MMscfd in 2017. A third phase will increase output to 1.2 bscfd in 2020, a rate the partners say is sustainable through the end of their contract in 2036.

    Perla, discovered in 2009, holds an estimated 17 tcf of gas in place in Miocene-Oligocene carbonates occurring at about 3,000 m below sea level.

    The Cardon IV SA joint venture, named for the Gulf of Venezuela block, has drilled seven wells. It plans to a total of 26 wells, 21 of them producers, in a development scheme involving four light platforms installed 50 km offshore in 60 m of water. The platforms will be linked by a 30-in. pipeline to a central processing facilityonshore at Punto Fijo on the Paraguana Peninsula. Two treatment trains have capacities of 150 MMscfd and 300 MMscfd.

    State-owned Petroleos de Venezuela SA is buying the gas (OGJ Online, Jan. 5, 2012).
    Back to Top

    Ensco says found no evidence of wrongdoing in Brazil

    Offshore oil driller Ensco Plc said in a statement on Monday it has found no evidence of wrongdoing by its employees or other representatives in a regular compliance review of operations in Brazil.

    The statement was in response to comments from Brazilian prosecutor Carlos Fernando dos Santos Lima on Thursday alleging that Jorge Zelada, former director of Petrobras' international division, appeared to have received bribes on a rig operated by Pride International, a company acquired by Ensco in 2011.

    The sprawling investigation into a price fixing and political kickback scandal in Brazil had turned up evidence of corruption by more than a dozen foreign firms that had contracts with Petrobras, according to Lima.

    Ensco said it had recently shared information from its compliance reviews to assist Petroleo Brasileiro SA, as the Brazilian oil major is formally known, with internal audits.

    http://www.reuters.com/article/2015/07/06/brazil-petrobras-ensco-idUSL1N0ZM2FQ20150706
    Back to Top

    Technip to cut 6,000 jobs as low oil price hits sector

    Technip to cut 6,000 jobs as low oil price hits sector

    French oil industry engineering and construction group Technip will cut 6,000 jobs and book a 650 million euro ($719 million) restructuring charge as it steps up cost-cutting.

    With clients cutting projects due to low oil and gas prices, the company said it targeted cost cuts of 830 million euros ($919.31 million) with 700 million to be delivered in 2016 and the rest in 2017.

    "The slowdown in the oil and gas industry is prolonged and harsh," Chief Executive Thierry Pilenko said in a statement.

    "Therefore we have decided to accelerate our cost reduction and efficiency measures - which I know will have tough consequences for employees across the Group," he added.

    CFO Julian Waldron said on a conference call that the restructuring would focus on its underperforming Onshore/Offshore engineering and construction business.

    The company would reduce the division's activities, close offices in unprofitable countries and sell non-essential assets. Its fleet of vessels would also be trimmed back by early next year.

    The company cut its profit estimates for the Onshore/Offshore business, which builds oil rigs, refineries and liquefied natural gas (LNG) plants and accounts for more than half its revenue.

    It said it now expected adjusted operating profit from the division this year in a range of 210-230 million euros, whereas in April it had expected a result towards the bottom of a range from 250 to 290 million euros.

    It said it now expected adjusted operating profit in its subsea division to be around 840 million euros this year whereas previously it had said it expected at the top of a range from 810 to 840 million euros.

    The charge would cover all of the costs related to the restructuring, such as severance and asset writedowns, with 80-90 percent to be booked in the second quarter, Waldron said.

    http://www.reuters.com/article/2015/07/06/technip-restructuring-idUSL8N0ZM3N720150706

    Attached Files
    Back to Top

    India eyes Canadian crude oil contracts as it looks to diversify supply sources

    Indian state-owned oil companies are pursuing opportunities to lift additional cargoes of Canadian crude and also enter into long-term offtake contracts, in line with efforts to reduce their dependence on the Middle East, senior government officials from New Delhi said.

    "OPEC is an important club for our crude oil procurement, but simultaneously we would like to diversify our strategy and go by our economic interests and long-term relations," Indian oil minister Dharmendra Pradhan said over the weekend in Calgary, on the sidelines of an energy partnership forum hosted by ONGC Videsh Ltd.

    India is expanding its import base by procuring increasing volumes of crude from Latin America and West Africa and would like to include Canada too, he said.

    "[State-owned refiner] Indian Oil Corp.'s 300,000 b/d new refinery at Paradip in the East Coast, which is now in the final stages of full commissioning, could process Canadian heavy crude," Pradhan said, noting that previously Indian refineries were limited in the grades of crude they could process.

    "Our capability and capacity has now changed and we can process heavy, sour and lighter grades. Compared with our 2013 import of 3 million b/d, we see that figure doubling to 6 million b/d by 2030, based on current forecasts. Our appetite as an energy consumer will grow substantially and we are keen on engaging the Canadians in a bigger way," Pradhan said.

    IOC last year bought about 1 million barrels of White Rose light crude produced by Husky Energy from its offshore acreage in Canada's Newfoundland and Labrador.

    The two determining factors for lifting additional volumes of Canadian crude would be "economics" and "finding a way to deliver the crude to Indian shores," IOC Chairman B. Ashok said on the sidelines of the event.

    http://www.platts.com/latest-news/oil/calgary/india-eyes-canadian-crude-oil-contracts-as-it-26140488
    Back to Top

    The Octofrac?

    The Octofrac

    Mike Vincent, a well-completion engineer who teaches the technique to industry workers, said he’s been overwhelmed by the sudden interest in the class. He even had to abandon plans he had been making to spend a week fly-fishing in the Rocky Mountains over the summer. “I’m booked every week teaching refrack classes out to November,” said Vincent, who runs a Denver-based firm called Insight Consulting. “It’s amazing how much passion there is.”

    Years of working on traditional wells have shown that they can be restimulated multiple times, Vincent said. In the industry’s lingo, a well that has been blasted five times is a “Cinco de Fraco.” Eight times gets you an “Octofrac.” When done right, the procedure not only boosts the flow of crude, but can also increase the estimate of reserves held in the well. Vincent said it’s common to see oil recovery climb 60 percent or more.

    “I’ve seen a well get 10 fracs through the same perfs, and it appears that we’re adding reserves every time,” he said.Image title

    Back to Top

    US shale gas represents more than 50% of total

    Back to Top

    O’Hara May Consider Pacific Rubiales Bid Above $7.11 a Share

    Pacific Rubiales Energy Corp.’s largest shareholder said Alfa SAB and Harbour Energy Ltd. must increase their takeover offer to more than C$9 a share ($7.11) before it would consider the bid.

    The current C$6.50 offer, which Alfa-Harbour has said is fair and final, undervalues Latin America’s biggest independent oil producer and places too much concern on its debt, said Orlando Alvarado, a spokesman for O’Hara Administration Co., which leads a group that owns almost 20 percent of Pacific Rubiales.

    O’Hara is “very confident” that Pacific Rubiales shareholders will vote to block the current offer at a July 28 meeting. The event was initially set for July 7 until Alfa and Harbour requested more time to win over shareholders with the current offer that values the company at $1.7 billion.

    “A buck or two isn’t going to make a difference,” Alvarado said in an interview in New York Sunday. “It needs to be above C$9. They will probably raise their offer to C$7.50. It will be a reputational killer.”

    While O’Hara wants to retain its stake, on the assumption that the Toronto- and Bogota-listed oil company will be worth more in three years after board and management changes, Alvarado said the Panama City-based group would consider an offer above C$9.

    Alfa, a Mexican conglomerate, and Harbour said last month that their joint bid was fair given the difficulties Pacific Rubiales would face surviving as an independent company amid a drop in output. They also highlighted the company’s high debt and the expiration of a contract to operate in its biggest oil field. Pacific Rubiales has $4.5 billion net debt and a market value of $1.3 billion, according to data compiled by Bloomberg.

    “Saying ‘sell’ or the company will go bankrupt is unethical,” Alvarado said.

    http://www.bloomberg.com/news/articles/2015-07-06/o-hara-says-higher-alfa-offer-for-pacific-rubiales-must-top-c-9
    Back to Top

    Legacy Reserves to Acquire East Texas Nat Gas Assets for $440M

    Legacy Reserves announced it has entered into separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners, LP to purchase natural gas properties and gathering and processing assets in East Texas for a combined $440 million. These properties represent Legacy's entry into a new basin in East Texas and into meaningful gathering and processing operations supporting the natural gas properties. The closings of these transactions are expected to occur in the third quarter, and the purchase prices remain subject to customary adjustments. Legacy anticipates funding these transactions with borrowings under its revolver. Highlights of this acquisition are as follows:

    Estimated proved reserves of approximately 420 Bcfe of which 100% are natural gas, 95% are classified as proved developed producing, and 95% are operated
    Estimated Q3 2015 production of approximately 70 Mmcfe/d, yielding a proved reserves-to-production ratio of 16.4 years
    Multi-year development plan centered on recompletions and workovers to further flatten production declines and extend the productive life of the fields
    Significant additional drilling inventory in a higher gas price environment
    567 miles of high-pressure pipeline and low-pressure gathering lines and a 502 Mmcfe/d processing plant with access to 5 major gas markets
    Expected NTM cash flow of approximately $60 million

    Paul Horne, Legacy's President and Chief Executive Officer, commented on the purchases. "Today we are pleased to announce the signing of two meaningful acquisitions and the ability to use our ample liquidity to position ourselves for success in 2016 and beyond. This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions. These high-quality assets combined with the upside optionality of recompletions and a contango gas-curve make this a very attractive acquisition for us.

    http://www.upstreamonline.com/live/1405301/legacy-inks-texas-deals?utm_source=dlvr.it&utm_medium=twitter
    Back to Top

    Linn Energy has exited out of its remaining acreage in the Permian Basin’s Wolfcamp play after signing a $281million deal.

    Linn Energy has exited out of its remaining acreage in the Permian Basin’s Wolfcamp play after signing a $281million deal.

    The move comes after the company revealed earlier this year that it had agreed a $1billion strategic acquisition alliance agreement with Quantam Energy Partners.

    Linn Energy also previously sold off other assets in the Texas Panhandle and Oklahoma last year to privately held institutional affiliates of EnerVest.

    A spokesman said the sale included 6,400 net acres in Howard County, with 133 gross wells currently producing at the site.

    The transaction is expected to be subject to the certain closing conditions and is expected to close in the third quarter of 2015.

    https://www.energyvoice.com/marketinfo/81449/linn-energy-exits-permian-basin-acreage-in-281million-deal/
    Back to Top

    Alternative Energy

    TerraForm to buy wind farms in North America for $2 bln

    TerraForm Power Inc, a unit of SunEdison Inc, said it would buy 930 megawatt of wind farms in the United States and Canada from Invenergy Wind LLC for $2 billion.

    The deal involves seven contracted wind farms and Invenergy will retain a 9.9 percent stake in the U.S. assets, TerraForm said on Monday.

    TerraForm's shares rose 3.5 percent to $38.86 in extended trading, while SunEdison's shares rose 3.2 percent to $29.90.

    TerraForm plans to buy 460 MW of plants directly from Invenergy, the largest independent wind power generation company in the United States.

    The remaining 470 MW will be acquired by a new warehouse facility sponsored by SunEdison and third-party equity investors, with the assets dropping down to TerraForm in the future.

    TerraForm also raised its 2016 dividend target to $1.70 per share from $1.53. The raised target represents a 26 percent increase from TerraForm's 2015 annual guidance, the company said.

    TerraForm, which went public in July last year, said it expected to fund the acquisition of the 460 MW of plants through a combination of cash on hand and new bond financing.

    The transaction, which is expected to be immediately accretive, is expected to close in the fourth quarter, TerraForm said.

    SunEdison and TerraForm entered the U.S. wind power market in November when they agreed to buy First Wind for $2.4 billion.

    http://www.reuters.com/article/2015/07/06/terraform-power-deal-idUSL3N0ZM5F420150706
    Back to Top

    Where do you put a solar array in Japan? Why on a golf course!

    Image title

    In Japan, country club memberships famously went for millions of dollars in the late 1980s. Then, too many courses were built in 1990s and 2000s during a real estate boom. Now the nation faces the question of what to do with its abandoned golf courses.

    Meanwhile, Japan’s energy strategy in the aftermath of Fukushima calls for roughly doubling the amount of renewable power sources in the country by 2030. It is already building solar power plants that float on water. Perhaps inevitably, then, the nation has turned to building solar plants on old golf courses.

    Last week, Kyocera and its partners announced they had started construction on a 23-megawatt solar plant project located on an old golf course in the Kyoto prefecture. Scheduled to go operational in September 2017, it will generate a little over 26,000 megawatt hours per year, or enough electricity to power approximately 8,100 typical local households. The electricity will be sold to a local utility.

    Back to Top

    Uranium

    Denison to buy uranium explorer Fission for about C$483m

    Canadian uranium exploration and development company Denison Mines has agreed to buy rival Fission Uranium for about C$483-million, creating a new diversified Canadian uranium company with a portfolio of projects in the prolific Northern Saskatchewan mining region. 

    Denison advised on Monday that, under the terms of the deal, Fission shareholders would receive 1.26 Denison shares for each Fission share held plus C$0.0001 a share in cash. The offer implied a price of C$1.25 a Fission share, an 18% premium to the average volume-weighted price of Fission's shares over the past 30 days. With some 386.23-million shares outstanding, the offer translates into a price of about C$483-million for Fission. 

    Following the merger, the new entity would be named Denison Energy, have a market value of about C$900-million and be equally owned by Denison's and Fission's shareholders. "This merger will create the uranium industry's leading exploration and development company at a time when the sector is poised for growth," Fission chairperson and CEO Dev Randhawa said in a statement. He would become CEO of the combined company. 

    Headlining the asset portfolio of the combined company would be two world class uranium exploration and development projects, including Fission's Patterson Lake South project,and Denison's 60%-owned Wheeler River project, both located in the prolific Athabasca basin. 

    An emerging 15% supply gap could signal a prolonged upturn in the uranium price through to 2024, Canadian uranium major Cameco said recently. A decline in secondary sources of yellowcake was forcing the market to increasingly rely on primary suppliers, which, when coupled with unprecedented growth in the nuclear reactor industry, foretold improved market conditions over the medium and long term.

    http://www.miningweekly.com/article/denison-to-buy-uranium-explorer-fission-for-about-c483m-2015-07-07
    Back to Top

    Agriculture

    Winter Wheat suffers rain damage.

    Image titleImage title
    Back to Top

    Precious Metals

    Silver Wheaton gets CRA proposal to reassess income tax

    Silver streaming company Silver Wheaton Corp said it received a proposal from the Canada Revenue Agency (CRA) on Monday to reassess the company under various income tax rules.

    The CRA is seeking to tax streaming income earned by the company's foreign units and said that Silver Wheaton's taxable income should be increased by about C$715 million (about $565 million) for the years 2005 to 2010.

    "Generally a company is taxable in Canada on its income earned in Canada, while non-Canadian income earned by foreign subsidiaries is not subject to Canadian income tax," Chief Executive Randy Smallwood said in a statement.

    Silver Wheaton, which makes upfront payments for the rights to buy future precious metal production, said it is not required to make any payment to the CRA at this time and that it intends to vigorously defend its tax filing positions.

    Silver Wheaton said the CRA may issue notices of reassessment for one or more of the taxation years if it fails to reach a resolution at the proposal stage.

    The company estimates it would be subject to federal and provincial tax of about $150 million for the relevant taxation years if Silver Wheaton would be assessed taxes on the foreign subsidiaries' income on the same basis as its Canadian income.

    The CRA is also seeking to apply transfer pricing penalties of about C$72 million.

    Taxation years after 2010 remain open to audit by the CRA, Silver Wheaton said.

    A proposal letter is not a reassessment but sets out the possible adjustments to the taxpayer's income and the CRA's reasons for a proposed reassessment, the company said.

    http://www.reuters.com/article/2015/07/07/silver-wheaton-taxation-idUSL3N0ZN28220150707
    Back to Top

    Texas wants its Gold back

    AUSTIN, Texas (AP) — Forget Fort Knox or the Federal Reserve. Texas has decided to start keeping its gold holdings within in its own borders. But what makes sense politically in such a sovereignty-loving place is creating a logistical conundrum.

    Texas is the only state that owns an actual stockpile of gold, according to public sector and financial industry experts — not just gold futures or investment positions, but approximately 5,600 gold bars worth around $650 million. The holdings, stored at a New York bank, for some harken back to century-old fears about the security of currency not backed by shiny bullion.


    Back to Top

    Base Metals

    Japanese aluminium industry looks to bridges to spur demand

    Japan's aluminium industry will step up efforts to have the light metal used more in bridges and other infrastructure, taking advantage of new design standards to boost stagnant demand, the head of the metal's industry association said on Monday.

    Aluminium costs more than traditional steel and concrete but using the lighter metal makes repair work easier, cheaper and faster as it requires less reinforcement in foundations, leading to lower maintenance cost, according to the association.

    Japan's Society of Civil Engineers issued new design and production standards for aluminium structures in March, which should make it easier for the metal to be adopted as a construction material for bridges and floodgates, for example.

    "We've had a major breakthrough in the infrastructure field as we've got de facto recognition by the civil engineers' society that aluminium can be used for structures," Akira Kaneko, the new chairman of the Japan Aluminium Association, told a small group of reporters.

    "What we want now is to win at least one or two bridge projects this year and start building new demand," he said.

    The industry is aiming to push up annual aluminium shipments including exports to 6.5 million tonnes by 2035 from 4 million now.

    Japan has some 700,000 bridges across the country and more than 40 percent of them will be over 50 years old in 2023.

    These bridges, built of steel and concrete, will need to be reinforced or rebuilt, and potentially that could increase annual aluminium demand by as much as 800,000 to 1 million tonnes, according to Motohiro Nabae, director at the association.

    In the first instance, the industry is pushing the idea of using aluminium for separate pedestrian walkways to be added to existing bridges to increase safety, or for bridges for inspection and maintenance, as well as emergency bridges to be used at a time of natural disaster.

    The industry body plans to hold talks with the transport ministry's regional offices, which set specifications for infrastructure, to spread understanding of the new standard.

    Japan is Asia's top importer of aluminium and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange cash price set the benchmark for the region.

    Japanese premiums for July-September shipments were mostly set at a six-year low of $100 as swelling Chinese exports piled pressure on an already swamped market. Stocks held at three major Japanese ports rose for the fourteenth month in May to hit a record high of 502,200 tonnes.

    http://www.reuters.com/article/2015/07/06/japan-aluminium-idUSL3N0ZH3OF20150706
    Back to Top

    U.S. Antimony Reports Record Sales

    U.S. Antimony Reports Record Sales

    United States Antimony Corporation reported record antimony sales for Q2 of 2015 of 637,825 pounds, which is up 92% from Q2 2014 sales of 332,106 pounds, and is an increase of 22% from Q1 2015 sales of 521,956 pounds.

    The Company is in the final stages of completing 5 more small furnaces and one long furnace, which has the capacity of 20 small furnaces, for smelting Australian production. When the large furnace is completed, USAC will resume its own Mexican production from Wadley, Soyatal, and Guadalupe. These properties have been producing on a limited basis, and USAC has more than 400 tons of furnace feed in inventory.

    At Los Juarez, there are more than 30,000 tons of mill feed in inventory. Permits are being applied for to increase silver and gold recovery at the Puerto Blanco mill and at Madero to complete the recovery of silver, gold, and antimony from flotation concentrates from the Puerto Blanco mill.

    At the Bear River Zeolite operation in southern Idaho, the Company reports sales of 3,280 tons for Q2 2015, up 36% from the 2,415 tons sold for Q2 of 2014, and an increase of 8% over the Q1 2015’s sales of 3,032 tons. The Company has seen an increase in sales for animal feed, water filtration media, composting material, air filtration, and soil amendment.

    http://www.businesswire.com/news/home/20150706005185/en/U.S.-Antimony-Reports-Record-Sales#.VZp2UxtVhBc
    Back to Top

    Steel, Iron Ore and Coal

    Shandong 90pct coal firms suffer losses

    Nearly 90% of the coal firms in eastern China’s coal-rich Shandong province suffered losses during the first quarter of the year, with total losses at 887 million yuan ($144.9 million), local media reported.

    Some 90% of the coal firms even started to pay employees by borrowing from banks; some small miners have declared bankruptcy, according to the report.

    Shandong is facing severe coal resource depletion, with only 4.1 billion tonnes of available reserves. Among all the 185 mines in this province, 21 mines have a mining life of no more than 5 years and 61 mines less than 10 years of mining life.

    Impacted by low price and premium quality of imported coal, the market share of Shandong’s coal producers have been declining in the recent year, reaching 33% in 2014 from 63% of ten year ago.

    Qiao Naichen, president of the provincial Coal Industry Bureau has vowed in a recently meeting to clean up all coal-related unreasonable taxes and fees, in an effort to save its ailing coal sector.

    In 2014, Yanzhou Coal Mining Co., a leading coal producer based in eastern Shandong, posted total taxes and dues expenses of 6.73 billion yuan, accounting for 41.09% of its total income.

    In 2014, taxes and dues expenses from coal enterprises of Shandong accounted for more than 30% of their incomes and more than 45% of their total production cost, higher than a 35% share of the national level.

    Shandong also planned to shut 35 small outdated mines with annual capacity below 300,000 tonnes in 2015, said the provincial government on May 19.

    http://en.sxcoal.com/0/125644/DataShow.html
    Back to Top

    Mongolia to sell stake in its giant Tavan Tolgoi coal mine

    Mongolia to sell stake in its giant Tavan Tolgoi coal mine

    Mongolia is considering the sale of stakes in 10 state-owned companies over this year and next, including part of its $4 billion Tavan Tolgoi (TT) mine —its biggest coal operation—, as the country tries to shore up investor support for its flagging economy.

    The government will mainly focus on divesting holdings in power plants and other businesses,Bloomberg reports.

    Tavan Tolgoi is home to the world’s largest high-quality coking coal deposit used in steelmaking, with reserves estimated in 7.4 billion tonnes.

    Located in the South Gobi desert, Tavan Tolgoi is home to the world’s largest high-quality coking coal deposit used in steelmaking, with reserves estimated in 7.4 billion tonnes.However management of the operation has been characterized by bureaucratic bungling.

    The latest impasse came in April, when the parliament cancelled a deal with a consortium of foreign firms, including China's Shenhua Energy and Japan's Sumitomo Corp., interested in developing Tavan Tolgoi.

    The lawmakers continue to raise objections to financial and legal aspects of the TT investor agreement, hinting at the possibility that the mine could suffer a similar fate to that of Rio Tinto’s Oyu Tolgoi. An expansion at the global miner’s $5 billion copper operation was only unblocked in May, after two years of wrangling.

    In 2011 Mongolia's National Security Council rejected a deal struck with US giant Peabody Energy, China's Shenhua and a Russian-Mongolian consortium mid-September, just two months after they were announced as winners. At the time losing bidders from Brazil, India and South Korea raised serious concerns and Japan went so far as to call the bidding process “extremely regrettable.”

    http://www.mining.com/mongolia-to-sell-stake-in-its-giant-tavan-tolgoi-coal-mine/?utm_source=twitterfeed&utm_medium=twitter
    Back to Top

    Iron ore price now in free fall

    The price of iron ore gapped down again on Monday as declines in fixed investment and steel prices in top consumer China cloud the outlook for the steelmaking raw material.

    The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin lost $2.10 or 3.9% to $52.00 a tonne according to data provided by The SteelIndex, the lowest since April 21.

    Benchmark spot prices are now barely more than $5 above record lows hit the beginning of April and down 14% in one short week.

    The rally in iron ore was fuelled by declining stockpiles in China where steelmakers consume more than 70% of the 1.3 billion tonne seaborne trade.

    But after falling for 10 weeks in a row, port stocks climbed again last week to just below 82 million tonnes.

    http://www.mining.com/iron-ore-price-getting-crushed-again/?utm_source=twitterfeed&utm_medium=twitter
    Back to Top

    Britain's Stemcor agrees deal with buyout firm Apollo, other creditors

    Debt-laden steel trader Stemcor, one of Britain's largest private companies, has agreed a deal with U.S. distressed investment fund Apollo and with its other creditors which "secures its future", it said on Monday.

    According to an industry source, Apollo has an 'agreement in principal' to swap its debt for equity in Stemcor, giving it a majority stake. Stemcor's other creditors have also agreed a debt for equity swap and will run the firm alongside Apollo.

    "Stemcor has agreed a deal with Apollo and with its lenders which secures the future of the core global business and provides us with a strong balance sheet with which to grow and develop the group," a Stemcor spokesman said.

    It became Stemcor's largest lender after buying the company's debt in the secondary loan market.

    Stemcor, controlled by the Oppenheimer family, was hard hit by the 2008 financial crisis and accumulated a large debt pile when it bought an iron ore asset in India.

    The company was facing a December maturity on a $1.15 billion syndicated trade finance loan that it signed in March 2014 with lenders - including ABN AMRO Bank, HSBC, ING , Natixis, Societe Generale - as part of a restructuring. It also had a separate $1.3 billion debt, mostly accumulated in buying the India iron ore asset.

    The new deal with Apollo and the other creditors is for Stemcor's core steel trading and distribution business, not for the Indian asset, which has been spun off into a separate entity, according to the industry source.

    Stemcor has been trying to sell its India business since 2013, but the sale has been hampered by changes in Indian legislation, including a Supreme Court order last year to close nearly half of the mines in Odisha state, including Stemcor's.

    http://www.reuters.com/article/2015/07/06/stemcor-apollo-mergers-idUSL8N0ZM2FF20150706
    Back to Top

    Indoa's Heavy Industry minister says PSUs to buy 35% of made in India steel

    The HinduThe Hindu Business Line reported that to protect steel companies from the onslaught of cheap Chinese imports, Indian overnment plans to make it compulsory for all public sector undertakings to procure at least 35 per cent of their steel from local manufacturers.

    Minister for Heavy Industries Mr Anant Geete, in an interview to BusinessLine, said his Ministry was considering making it compulsory for major government companies such as NTPC, ONGC, and BHEL to procure steel from domestic steel manufacturers. He said “These companies have a huge requirement of steel. Therefore, we will make it compulsory for PSUs to buy steel from local companies. It will provide some relief to the local industry.”

    The Minister said “The domestic steel industry is in deep trouble due to heavy imports from China. Other countries have taken protective measures, such as increasing anti-dumping duty on steel. Only the Indian and Gulf markets are open to the Chinese steel makers. In this competitive environment, the Indian steel industry cannot stand up to this (Chinese) challenge. Therefore, I will soon be meeting Finance Minister Arun Jaitley along with a delegation from the steel and seamless pipes industry for increasing the anti-dumping duty and

    The Minister also added that imported steel in huge quantities is dumped without any attention to quality. All PSUs are complaining about the quality of steel.

    http://steelguru.com/steel/heavy-industry-minister-says-psus-to-buy-35-of-made-in-india-steel/428925#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.