Mark Latham Commodity Equity Intelligence Service

Thursday 2nd June 2016
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    The world's economic canary just cheeped again.

    South Korean exports, nicknamed the "world's economic canary in the coal mine," fell by 6.0% in May from a year earlier, according to Korea's latest export data.

    This is the 17th consecutive month that exports have dropped.

    And, although the data was an improvement from the 11.2% drop in April, it was far more than the 0.4% dip economists were expecting.

    Korean exports are often referred to as the "world's economic canary in the coal mine" by economists because 1) of their heavy exposure to the US, China, and Japan — some of the world's biggest economies, and 2) the data comes out on the first day of each month.

    As such, they generally give a good taste of what's been happening in global trade activity in the month prior.

    Notably, a Morgan Stanley team led by Deyi Tan argued that the latest reading on Korean exports actually "saw some signs of stabilization in May at low levels, suggesting similar read-across for global trade activity."

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    French FNME CGT union calls for rolling strike in energy sector

    France's hardline CGT union has asked its members to vote for a rolling nationwide strike in the energy sector during general assembly meetings that will be held later on Wednesday, CGT union at France's mines and energy federation FNME said.

    The strike would start on Wednesday, the statement said, adding that the aim would be to reduce power output at French nuclear, hydro, fuel and coal-fired plants.

    The strike would also stop injection of gas into storages and block unloading of LNG cargoes, the statement said.

    The strike is part of nationwide rolling strikes called by CGT and FO unions aimed at forcing the French government to drop planned labour reform.
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    Brookfield Raises $4 Billion for Latest Private Equity Fund

    Brookfield Asset Management Inc.’s private equity division will have a $4 billion war chest to deploy when it’s spun out next month from the country’s largest alternative asset manager, about $500 million more than expected.

    Brookfield’s latest private equity fund, which closed Wednesday, was raised in about a year, six months quicker than the previous fund which was a fraction of the size at $1 billion, said Cyrus Madon, chief executive officer of the division, Brookfield Business Partners.

    "We’ve made an effort to broaden our investor base and we are attracting capital from different parts of the world," Madon said in a phone interview. The biggest increases in its investor base came from the U.S, the Middle East and Asia, he said.

    The closing of the private equity fund Wednesday is part of arecord $25 billion that Brookfield raised over the past 12 months for its flagship funds, a reflection of global capital seeking a home outside traditional investments such bond markets, where yields remain near record lows.

    The new fund will continue to be focused on opportunities in business services and the industrial sector with equity investments ranging from $200 million into the billions and will focus on regions where Brookfield already operates, including the U.S., Canada, Brazil, Europe and Australia, Madon said.

    About $1.5 billion of the new fund has already been invested in three companies -- facilities manager Global Integrated Solutions Ltd., a group of former Apache Energy Ltd. oil and gas assets, and graphite manufacturer GrafTech International Ltd.

    The private equity arm will expand into other segments over time, he said.

    "We generally try to invest in out of favor sectors and industries, so our strategy is not going to change," Madon said. "But we are seeing some potentially very lucrative opportunities."
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    Oil and Gas

    Iran seeks 14.5% OPEC quota

    Iran oil min Zanganeh says pre-sanctions OPEC mkt share of 14.5% wld be "fair" quota. OPEC at ~32 mil b/d; that'd make 4.64 mil b/d for Iran

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    Exxon's knife at Shell's throat.

    Indian firm Petronet, New Delhi, is reportedly in talks with ExxonMobil Corp. to renegotiate the price of LNG it signed for from the Gorgon-Jansz project on Barrow Island offshore Western Australia.

    The original 20-year contract was signed in 2009 between the two companies for 1.4 million tonnes/year of LNG.

    The talks follow Petronet’s successful renegotiation of the price of an LNG contract with Qatar’s RasGas in December 2015 on the back of low global LNG prices.

    The revised Qatar contract uses a 3-month average figure for Brent crude instead of the original 5-year average of a basket of crude imported by Japan. Petronet sweetened the new deal with an undertaking to buy an additional 1 million tpy of Qatari LNG.

    Petronet’s 2009 Gorgon-Jansz contract with ExxonMobil was also based on a Japanese crude basket.

    Petronet is an Indian government-initiated joint venture of GAIL (India) Ltd., Oil & Natural Gas Corp., Indian Oil Corp. Ltd., and Bharat Petroleum Corp. established to import LNG and build receiving and gasification terminals in the country.

    The first terminal was set up at Dahej, Gujarat; the second at Kochi, Kerala. A third is under construction at Gangawaram, Andhra Pradesh.

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    Niger Delta Avengers 'Blow Up' Chevron Wells in Nigeria

    Chevron’s RMP 23 and RMP 24 wells in Nigeria have been blown up, according to a Twitter statement from the Niger Delta Avengers.

    Niger Delta Avengers ‎@NDAvengers

    With the heavy presence of 100 Gunboats, 4 Warships and Jet Bombers NDA blew up Chevron Oil Well RMP 23 and RMP 24 3:44am this Morning.

    7:12 AM - 1 Jun 2016

     Follow Niger Delta Avengers ‎@NDAvengers

    RMP 24 and RMP 23 are Chevron Swamp Highest producing Wells. 

    7:23 AM - 1 Jun 2016

    Chevron was not immediately available to confirm the attack.

    The Niger Delta Avengers claimed responsibility for an assault on Chevron’s Escravos terminal in Nigeria May 26.

    NDA used explosives to damage the Escravos tank farm main electricity feed pipeline, which resulted in Chevron’s onshore activities in the Niger Delta being shut down.

    The attack followed NDA’s warning to Chevron that no repair works should be carried out to facilities previously targeted by the group, until NDA’s demands are fully met. NDA claimed on its official website May 11 that it suspected Chevron was preparing to carry out repair works at the Okan Valve platform, which was blown up by the group at the start of the month.

    In an emailed response to Rigzone last week, a Chevron spokesperson said that the company will not comment on the safety and security of its personnel and operations as a matter of long-standing policy.

    - See more at:
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    Petrobras CEO Says No More Political Interference in Oil Company

    Petroleo Brasileiro SA’s new Chief Executive Officer Pedro Parente said political interference has ended in the state-run oil producer and that fuel price decisions will now be made according to the company’s best interests.

    A solution to Petrobras’s debt, the largest in the industry, includes selling part of its assets, he told reporters after his swearing-in ceremony in Brasilia, led by Acting President Michel Temer.

    Parente is the best person to lead a recovery at the oil company that is at the center of Brazil’s biggest-ever corruption scandal, Temer said during the event.

    Temer said he supports the two-year graft probe known as Carwash that has led to the arrest of former Petrobras executives, business leaders and politicians. Under a scheme that lasted about a decade, a group of suppliers bribed former officials to win contracts with the oil producer. The acting president reiterated Petrobras’s claim that it was a victim of bad practices.

    "Everyone expects that you, in some time, will make us proud of our Petrobras again," Temer said at the ceremony, where heads of state banks were also sworn in. "No one will interfere in Carwash."

    Parente, who has extensive experience in government and business, was confirmed as CEO by the board of directors on May 30. He will officially assume the post on Thursday in Rio de Janeiro, where Petrobras is based.

    Parente was a member of Petrobras’s board for almost four years starting in 1999, and its chairman for nine months, while he was part of former president Fernando Henrique Cardoso’s cabinet. He was also the head of agribusiness giant Bunge Ltd.’s Brazil unit from 2010 to 2014. He is currently the chairman of BM&FBovespa SA, the operator of Latin America’s biggest securities exchange.
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    Dana Gas CEO Expects ‘Bumpy Road’ for Oil as Shale Sets Floor

    The oil market is heading for a “bumpy road” with prices close to levels that are profitable for U.S. shale producers, according to Patrick Allman-Ward, chief executive officer of Dana Gas PJSC, which produces natural gas in Egypt and Iraq.

    U.S. shale producers can pump crude profitably at prices of about $40 to $45 a barrel, Allman-Ward said in an interview in Dubai Wednesday. Those levels will act as a floor as prices “firm up” in the second half, he said.

    Brent crude has rallied 31 percent this year on signs of a dwindling glut, partly due to high-cost producers cutting back. Demand is rising and production is being disrupted because of outages in Nigeria and Canada, according to Allman-Ward.

    “It will be a bit of a bumpy road going forward,” Allman-Ward said, with prices tending to “firm up” in the second half.

    The drop in prices since then may mean Dana Gas has to wait longer than planned for overdue payments owed by the Egyptian government for past gas sales, Allman-Ward said. The company, which agreed to sell Egypt’s share of condensate to recover the back debt, may be able to collect all the overdue amounts only in 2019, he said. Dana Gas could still meet its target to get paid back by the end of 2018 if prices rise, Allman-Ward said.

    Dana Gas has boosted production since the end of March to about 70,000 barrels of oil equivalent a day after completing a natural gas pipeline in Egypt, he said. The 17-kilometer (11-mile) link from the Balsam field in the Nile River delta to a processing plant in Egypt allowed the company to add about 10,000 barrels of oil equivalent a day of new production capacity since the end of March, Allman-Ward said.

    The company finished the pipeline ahead of schedule, allowing it to beat its own end-of-year target of reaching 70,000 barrels. Additional improvements planned at the Egyptian processing plants will help add daily capacity of 10,000 to 15,000 barrels of oil equivalent by the end of the year or in early 2017, Allman-Ward said.

    Dana Gas, which received part of a nearly $2 billion arbitration award related to its Iraq business last year, will use some of that cash to pay down debt Allman-Ward said. Reducing borrowings will help cut interest costs, he said.

    “The prudent thing to do is delever,” he said. “It makes sense to take out a cost element from our balance sheet.”
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    Anadarko says “strongly committed” to Mozambique LNG project

    Woodlands-based Anadarko said Wednesday the company is “strongly committed” to its multi-billion Mozambique LNG project despite the debt crisis in the African country and the oil price downturn.

    The Mozambican government has admitted in April to the existence of USD1.4bn in undisclosed loans by the Interior Ministry and state-owned security companies Proindicus and Mozambique Asset Management.

    Mozambique is estimated to hold about 100 trillion cubic feet of proved natural gas reserves.

    However, Anadarko and Eni, that are developing LNG export projects in the country have still not made a final investment decision.

    “We continue to be strongly committed to the Mozambique LNG project – to taking it to FID and to building and commissioning a world-class facility,” Anadarko spokesman John Christiansen told LNG World News in an emailed statement on Wednesday.

    “We are aware of Mozambique’s debt issues and as the Government works to address those, we are working hard to put in place a set of agreements with the Government that will provide the foundation for definitive sales agreements with LNG customers. Once those agreements and the financing arrangements are in place, we expect to be in a position to take FID at that time,” said Christiansen.

    Anadarko and partners have discovered more than 75 Tcf of recoverable natural gas resources in Mozambique’s Offshore Area 1, which will be used to feed an onshore LNG terminal on the Afungi peninsula in Cabo Delgado province.

    The reserves are sufficient to support two initial LNG trains, each with capacity of 6 million tonnes per annum, as well as to accommodate expansions, including additional trains capable of producing about 50 million tonnes of LNG per year, according to Anadarko. The Mozambique LNG project has more than 8 MMTPA of non-binding LNG offtake agreements already in place.

    Anadarko also announced in December it had signed a unitization and unit operating agreement to develop natural gas resources straddling the Offshore Area 1 and Offshore Area 4 blocks in Mozambique.

    The deal, which frames the cooperation between the government of Mozambique, Anadarko and Eni, the operator of the Offshore Area 4, enables the advancement of the Prosperidade and Mamba straddling reservoirs.

    According to Anadarko, the Prosperidade and Mamba straddling natural gas reservoirs, which comprise the unit, will be developed in a separate but coordinated manner by the two operators until 24 trillion cubic feet of natural gas reserves (12 Tcf from each area) have been developed.

    Anadarko’s partners in the Offshore Area 1 are National Oil Company Empresa Nacional de Hidrocarbonetos (ENH), Mitsui E&P, Beas Rovuma Energy, BPRL Ventures Mozambique, ONGC Videsh and PTTEP Mozambique.

    Eni owns an indirect stake in the Offshore Area 4 through Eni East Africa. Other partners are Galp Rovuma, Kogas, ENH and CNOOC that also owns an indirect interest through Eni East Africa.
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    With $50 crude, signs of life return to West Texas oilfields

    As crude prices plummeted last summer, Steve Pruett, chief executive of a small west Texas oilfield developer, idled a drilling rig, opting to pay $21,000 a day to store it rather than dig more wells and risk bigger losses.

    Now as oil prices rise again, the third-generation oil man is offering his only rig crew bonuses to drill wells as fast as they can, but says his company, Elevation Resources, will wait until next year to deploy a second rig.

    "We're going to ease back into the activity, not stomp on the accelerator," Pruett said. "We've all sobered up."

    Last year's rollercoaster when crude prices rallied in the first half of the year only to come crashing down in the second half, burned many producers and Pruett and his peers remain cautious.

    But there are signs of guarded optimism that this time the industry has really seen the worst of the nearly two-year downturn that cost hundreds of thousands of jobs, pushed dozens of firms into bankruptcy and led to an investment slump so severe that it weighed on the whole U.S. economy.

    With crude prices now nearly double their February lows near $26 per barrel, new wells in the Permian Basin - North America's richest source of shale oil - are again becoming profitable and producers are taking baby steps to crank up output again.

    The number of rigs in the shale oil basin that spreads across more than 50 counties near the border with New Mexico rose by 17 to 146 on May 31 after bottoming in late April, according to data shared with Reuters by Drillinginfo, a consultancy.

    The number of drilling permits - a leading indicator of future activity - issued for the Permian region in April, the latest month available, was the highest since October 2015. 

    The Permian rig count remains far below its November 2014 peak of 467 rigs recorded by oil services company Baker Hughes, and many areas and new wells less productive than those in "sweet spots" will need prices to climb further to be profitable again. But the stirrings suggest some relief is on its way. Job losses in Midland and Odessa, the region's main cities, have slowed, local oil executives talk about plans to drill and some are already arranging new financing.

    Keith Moore, president and CEO of West Texas National Bank, a local energy lender, says loan applications are starting to arrive again after a year-long pause. "People were sitting on their projects. It looks like we are on the edge of recovery."

    Pruett says with oil near $50, wells on three of Elevation Resources' seven fields are already profitable and he expects prices to climb $60 next year, which would call for a second rig.

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    Halliburton Fracked Eclipse’s 3.5 Mile ‘Purple Hayes’ Utica Well

    There’s an old saying that goes like this: “Success has many fathers, but failure is an orphan.” Not long ago MDN reported that Eclipse Resources had drilled what is believed to be the longest horizontal well (on land) in the world–the 3.5 mile “Purple Hayes” Utica Shale well.

    It wasn’t but a day or two and one of the companies that worked on the well to help drill it, Nine Energy, popped up to say they had a hand in that recording-breaking well.

    Last week MDN told you that “snubbing” company Deep Well Services, from Pennsylvania, also helped with drilling the well.

    Drilling any well is truly a team effort with many companies involved. Yesterday yet another company stepped up to claim they played a major role in drilling the Purple Hayes–Halliburton…
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    Canada's Husky Energy says oil price rally to generate free cash

    Husky Energy Inc, Canada's No. 3 integrated oil company, said it expected to generate free cash flow and may reinstate a cash dividend as crude oil prices have rallied in recent weeks.

    The company said it could generate about C$800 million ($611.48 million) in free cash flow if oil rises to $50 from $40 per barrel on an annualized basis.

    The oil producer said it was on track to complete eight projects by the end of this year, which would contribute 90,000 barrels per day of new production once fully ramped up.

    Husky, controlled by Hong Kong billionaire Li Ka-shing, produces oil and natural gas in Canada and Southeast Asia, and holds numerous exploration licenses offshore of Atlantic Canada.

    The company had cut its budget and production outlook and suspended quarterly dividend in January, a few months after surprising investors by switching to a stock dividend from cash payments.

    Husky Energy, which has reached agreements for asset sales worth about C$2.8 billion this year, said it expected to achieve its target of about two-times net debt-to-cash flow from operations.
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    626 Mmcf/d of Northeast Shale Gas Begins Flowing to Gulf Today

    Fantastic news! More Marcellus and Utica Shale gas will begin flowing to the Gulf Coast, beginning today.

    Some of that gas will go to the Sabine Pass LNG (liquefied natural gas) export facility owned by Cheniere Energy–the first such facility to (recently) begin exporting natural gas to other countries.

    In October 2014 Boardwalk Pipeline Partners filed a request with the Federal Energy Regulatory Commission (FERC) to reverse the flow on a 690-mile segment of their Texas Gas Transmission pipeline to begin carrying Marcellus and Utica Shale gas from the northeast to the south.

    In September 2015 FERC approved the project, called the Ohio-Louisiana Access Project. Today the pipeline reverses and Sabine Pass is the foundation shipper–beginning to accept 300 million cubic feet per day (Mmcf/d) of yummy and wholesome Marcellus and Utica Shale gas…

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    Alternative Energy

    Temperature spiral animation

    Temperature spiral animation created by University of Reading climate scientist Ed Hawkins that went viral on the internet has been updated and pushed into the future by the US Geological Survey.

    The new temperature spiral animation takes the scariest of the emission scenarios used by the Intergovernmental Panel on Climate Change (IPCC) and adds it to the original Hawkins spiral. Hawkins described his animated spiral as presenting “global temperature change in a visually appealing and straightforward way” and it was retweeted thousands of times on Twitter.

    The original animation showed how global temperatures have risen since 1850 and put them in the context of the global target limit of a 2oC rise in global temperatures above those of the pre-industrial era. The data for the Hawkins spiral came from global monthly average temperatures from January 1850 to March 2016 is taken from the UK Meteorological Office’s HadCRUT4.4 temperature analysis. It is displayed as a variance, or anomaly, relative to the mean global temperature between 1850 and 1900.


    Temperature Spiral

    The updated version of the climate temperature spiral animation. Courtesy: US Geological Survey
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    Potash output cuts seen hindering industry's long-term recovery

    North America's big potash miners have doubled down on a production cut strategy they hope will lift the fertilizer's price from a near decade low, even as some investors warn this threatens their long-term profitability and props up weaker rivals.

    Shares of Potash Corp of Saskatchewan and Mosaic Co, major players who have trimmed output when prices weakened, are down nearly 50 percent from a year earlier following their most recent production cuts.

    Some suggest they should take a page from Saudi Arabia's oil strategy, boosting production to drive out higher-cost competitors, with the goal of maximizing profit over time.

    "Lower prices would keep the new capacity out. That's more sustainable than trying to artificially maintain the price by closing (low-cost) facilities," said Bryan Agbabian, head of agricultural equities at Allianz Global Investors, which has avoided potash company shares for three years.

    While this new approach would hurt share values in the near term, it would also begin a healthy industry transition, he added.

    Potash Corp, which confirmed it is sticking with its tighter supply strategy, surprised many in January by closing its eastern Canadian mine about a year after opening it.

    "The reason it works well is the resources in potash are more concentrated than any other commodity," Chief Executive Jochen Tilk said in an interview, noting that a few players in the industry have access to the majority of resources.

    Mosaic CEO Joc O'Rourke told analysts last month that the company will continue to cut production when markets soften. Mosaic spokesman Ben Pratt said there has been no change in strategy since then and executives were unavailable for further comment.

    Canpotex Ltd, the export potash sales agency for Potash, Mosaic and Agrium Inc, earlier this year reduced first-half export plans by 1.5 million tonnes, representing nearly 8 percent of its estimated 2015 sales.

    But industry watchers noted this controlled-supply strategy helps European mines operated by K&S AG and ICL Israel Chemicals continue to produce potash at some of the highest costs in the business.

    ICL is cutting operating costs in Spain, and plans to convert its United Kingdom facility to a specialty form of potash within two years. Those mines serve Europe's niche markets that sometimes yield premiums, said ICL Chief Executive Stefan Borgas.

    "We don't lose any money anywhere," Borgas said.

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    Base Metals

    Two years after Qingdao scandal, LME bets on electronic tracking of metal

    The London Metal Exchange is expanding its new electronic method of tracking metal in warehouses, as the system launched in April gains early traction among some western and Chinese banks, as well as warehousing and metals firms looking to cut risks.

    Global metals markets were rocked two years ago by a $3 billion fraud in the Chinese port of Qingdao. A firm allegedly duplicated warehouse certificates to pledge metal as collateral for multiple bank loans, hitting companies ranging from Citic to Standard Chartered.

    LMEshield, which provides electronic receipts as proof of ownership for metal stored outside the LME's own network of registered warehouses, is adding five jurisdictions where it will operate - Brazil, Chile, India, Japan, South Africa - to a 14-country list and is also extending to coal, iron ore and ferroalloys.

    "We are delighted with the support we have seen for this initiative so far, and we plan to add more than 20 facilities to the network in a range of jurisdictions in the next few days," the LME's head of business development Matt Chamberlain said.

    Members of the working committee behind LMEshield include Goldman Sachs, Louis Dreyfus and fund behemoth Red Kite Capital.

    Warehouses run by Henry Bath and Independent Commodity Logistics are already live, while at least another two warehouse companies are in train, industry sources said.

    Signs of take up will be welcome news for the LME. It has been suffering from falling trade volumes, struggling new products and large withdrawals from its warehousing network, since it was bought by Hong Kong's exchange for $2.2 billion four years ago.

    And with slowing factory growth in China, still by far the world's biggest consumer of metals, counterparty risk remains one of the biggest headaches for business.

    "It gives more transparency, control, it's helping reduce the risk around the financing," said Jeremy East of Standard Chartered in Hong Kong, who heads Asia metals trade.

    The LME saw a 9 percent on-quarter decline in the trading of metals contracts in the first quarter, and rival CME is snapping at its heels with a string of new metals product launches and its own storage expansion plans.


    As well as eventually raising revenue via daily and transaction fees, data gathered by LMEshield could offer the LME and Hong Kong exchange intelligence for new product launches.

    The LME is currently not permitted to register warehouses in China, but if more Chinese firms adopt it for offshore stocks the LME increases its chances of becoming an industry standard.

    "It's the way to get in (to China) without really getting in," said a trader at a Chinese merchant in Singapore.

    A majority stake in Henry Bath, an LME warehousing firm, with a 221 year history and an early adopter of LMEshield, was bought in January by state-owned China National Materials Storage and Transportation Corporation (CMST) to expand its global business.

    For banks, an unwieldy paper trail can be shifted into electronic form, with documentation standardised, soothing concerns of compliance departments.

    But LMEshield could face cost obstacles after years of low commodity prices and since the LME operates under British law there may be jurisdicational issues with extending it into China.

    Traders who count on proprietary knowledge of trade flows are also wary about their private stocks being revealed.

    "What it is, is a better, ordered way for keeping records, and for getting slightly more security," said a London-based banker.
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    China's spot copper concs TC/RCs for clean ore rise further on ample supply

    Chinese spot copper concentrate treatment and refining charges or TC/RCs for clean ore continued to rise with indications heard exceeding $100/mt and 10 cents/lb on ample market supply, industry sources said Wednesday.

    Spot TC/RCs for mixed ore were generally about $20/mt and 2 cents/lb above the clean ones.

    TC/RCs are fees charged to miners by smelters to treat and refine copper concentrate to produce copper metal. They typically rise when concentrate supply is ample and fall when supply is tight.

    "The spot TC/RCs for clean ore are at in excess of $100/mt (and 10 cents/lb) now, compared with around $95/mt (and 9.5 cents/lb) in May and in excess of $80/mt (and 8 cents/lb) in April," said a north China-based analyst.

    An east China-based industry source and a north China-based industry source heard the spot TC/RCs at $95-$100/mt and 9.5-10 cents/lb this week, while a Japanese trader heard at in excess of $100/mt and 10 cents/lb.

    "There is a lot of supply in the market and the spot TC/RCs have gone up from $93-$99/mt and 9.3-9.9 cents/lb last week," this eastern Chinese industry source added.

    The northern Chinese industry source said: "China's copper concentrate imports from Peru saw a hike in April."

    China imported 299,618 mt of copper concentrate from Peru in April, up 13% on the month and up 24.4% on the year, according to latest monthly data from the General Administration of Customs.

    Over January-April, China's imports from Peru were 1.3 million mt, up 77.7% on the year.

    The Japanese trader said: "I heard negotiations around $95/mt (and 9.5 cents/lb) but done at in excess of $100/mt (and 10 cents/lb) and even at $110/mt (and 11 cents/lb). The market is oversupplied. The demand was down in March-April as the dirty ore grade was not that bad and the demand for clean ore to blend with it went down. In addition, several Chinese smelters were conducting maintenance in the second quarter, thereby reducing the consumption."
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    Iran says in talks with Rio, Glencore about copper projects

    Iran is stepping up talks with potential foreign investors with an eye to developing its mining and metals industries according to Mehdi Karbasian, president of Imidro a state-owned group pushing for mine development in the country, Platts News reported on Wednesday.

    The annual value of Iran's mining and metals imports and exports only amount to $11.5 billion at the moment, but following the lifting of sanctions last year the country has ambitious plans saying potential revenues from the sector could be worth more than crude oil.

    Speaking following the opening of a new Europe-Iran trade center in Berlin, Karbasian said Imidro recently held talks with Australia's Rio Tinto about new investments in the Middle Eastern nation's aluminum, steel, copper and gold industries.

    Karbasian has also met with top brass from  European  commodities trading giants Glencore and Trafigura, and Germany's Aurubis, the regions top copper producer and the world's number one recycler of the metal:

    "Glencore and China's NFC already have business agreements to help develop Iran's copper industry, Karbasian said earlier this year. Iran hopes to raise its copper concentrates output to as much as 2 million mt/year by 2025 in conjunction with partners, from some 200,000 mt/year at present, as part of a national development plan, he said."

    According to Imidro, Iran’s copper reserves accounts for 4% of the world’s total or roughly 2.6 billion tonnes and the country's production represent 75% of the total for the Middle-East. National Iranian Copper Industries Company is listed on the Tehran Stock Exchange and is the country's top non-oil exporter.

    The country is also a leading lead and zinc producer and ranks number four in Asia behind China, Kazakhstan and India in terms of production. Iran's zinc reserves are the world's largest. There are only 15 operating gold mines in Iran, but expanding  precious metal mining received a boost in November 2014 with the commissioning of the Middle-East's largest gold processing plant at the Zareh Shuran mine in the West Azerbaijan province to boost production from less than 30,000oz to over 200,000oz per year.

    Iran in March inked deals South Korea and with China's Sinosteel to build a massive aluminum smelter and plans to put out an international tender for a bauxite pipeline in Guinea, West Africa.

    The discovery of two large coal and iron ore deposits in the Lut desert in central Iran was announced by the mines ministry last year.  The country is the number four supplier of iron ore to China, shipping some 15–20 million tonnes annually of domestic production of 45 million tonnes.

    Imidro last month announced 17 development projects inside the country worth $1.2 billion. Mining represents 0.7% of the country's GDP and the goal of the national development plan is to lift that to 4%.

    There are approximately 5,500 mines in operation in Iran, with 90% owned by the state. Iran's mining industry is uncompetitive despite very low labour costs because of a crippling lack of equipment and machinery due the the sanctions regime  Karbasian said in November: "Old and second-hand machineries are being used in many of the mines some of which have been used in other countries for over 50 years."

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    Steel, Iron Ore and Coal

    Glencore to close Australian coal mine due to low price

    Glencore will close its Tahmoor coal mine in Australia by early 2019, the latest example of low coal prices decimating the sector.

    Glencore is one of Australia's largest coal producers running 18 mines and employing some 7,650 workers.

    Glencore said it begun consultation with the 350 employees at the Tahmoor mine, which has been operating since 1979 and last year produced 2.1 million tonnes of metallurgical coal used in steel making.

    "The decision has been made as a result of continued low prices in global coal markets, which has meant the economic return from reserves still available at Tahmoor are not sufficient to warrant the investment required to mine them," Glencore said in a statement.

    Like other miners, Glencore has been hit hard by the collapse in commodity prices linked to slowing demand from China. It has also slashed production of copper and oil as well as cutting investment and costs.

    Global metallurgical coal prices have dropped from more than $300 a tonne in 2011 to around $94 in step with weakening steel prices.

    Leading global coal producer Peabody Energy Corp filed for U.S. bankruptcy protection in April after a sharp drop in coal prices left it unable to service debt of $10.1 billion, much of it incurred for an expansion into Australia.

    Last year, Chinese-controlled coal miner Yancoal Australia cut close to half the jobs at two of its collieries after losses over two years climbed to more than A$1 billion($724.50 million).

    In one of the most glaring examples of exiting coal at any cost, Brazil's Vale, sold a mothballed coal mine in Australia to a local operator for A$1. At peak coal prices, the mine was worth around A$500 million.
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    China’s May coal imports from PWCS terminals surge to 16-month high

    China imported 1.6 million tonnes of coal in May from eastern Australia's Port Waratah Coal Services (PWCS) terminals, up 21.2% month on month, said the Newcastle coal terminals operator in a performance report on Jun 1.

    The offtake was a 16-month high since January 2015 when 2.16 million tonnes of coal was shipped, according to PWCS data.

    Traders said that Chinese buyers were attracted to Newcastle thermal coal over the past month as its price was lower than comparative calorific value domestic thermal coal in China.

    Prices for Newcastle 5,500 kcal/kg NAR thermal coal, the preferred product for Chinese buyers, averaged $43.80/t FOB in May and a similar level in April.

    In comparison, domestic coal prices in China were currently at around $50/t FOB North China ports basis 5,500 kcal/kg NAR, said traders.

    Over January to May, China shipped 5.2 million tonnes of coal through the PWCS terminals, compared with 6.8 million tonnes in the corresponding 2015 year-to-date period, according to port data.
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    Iron ore at risk of losing all of 2016’s gains as rout deepens

    Iron ore is at risk of losing all of this year’s gains.

    Ore with 62 percent content has sunk to $48.40 a ton after posting the biggest monthly loss in about five years in May, according to Metal Bulletin Ltd. The collapse has left prices that topped $70 in April less than $5 above 2015’s close.

    The raw material has been on a tumultuous ride this year as signs of a demand revival in China spurred a speculative rally that lifted prices in the three months to April. The boom turned to bust after a regulatory crackdown and as supply increased, raising volumes at ports in China. With output set to expand, there’s a possibility that 2016 will prove to be another losing year, according to Shenhua Futures Co.

    “It seemed clear at the start of 2016 that iron ore was set to face another challenging year but the outlook has since been muddied by the surprise rally,” said Wu Zhili, a Shenhua analyst. “Demand remains weak and supply is still increasing. There’s a good chance prices will end the year lower.”

    Should that forecast prove prescient, 2016 would become a fourth year of lower prices. Iron ore was routed in the three years to 2015 as surging low-cost mine supply in Australia and Brazil combined with a slowdown in China to pummel prices. They bottomed at $38.30 in December.
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    Vale Tampers With Crucial Data From Deadly Dam Disaster, Say Federal Police

    New evidence reveals Vale, the company responsible for the tragic mining disaster in Mariana, in the state of Minas Gerais, tampered with important data regarding their activity in the area.

    In November 2015 the Fundão dam burst, and a river of slurry swept through the neighbouring village of Bento Rodrigues, killing 19 inhabitants. The mining company responsible for the dam, was Samarco, joint owned by Vale and BHP Billiton. According to the Federal Police's report, Vale tampered with figures in order to deliberately obstruct the investigations.

    The mining company generated two types of waste products in the region of the disaster: slurry, which was stored in Samarco's tailings dam, and other residues that were deposited in a reservoir in Campo Grande.

    One month after the dam burst, causing fatalities and the irreversible pollution of the Rio Doce, Vale modified official documents detailing the chemical composite of the residue and the concentration of mineral waste produced.

    In the modified version of accounts, the volume of slurry deposited in the Fundão was considerably less than the original amounts stated by the company.

    Higher levels of water present in the dumped refuse was considered by police to be one of the causes of the dam's rupture.

    In a statement released by the company, Vale admitted to altering the reports. However, the firm insists these were actually "corrections", and that all its calculations have been executed with perfect transparency.

    Vale's use of the dam was revealed by Folha in November. The data was altered in December.

    Attached Files
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    Hebei Iron & Steel says U.S. probe damaging world steel trade

    China's Hebei Iron & Steel Group, its biggest steelmaker by output, accused the United States of breaching WTO rules and said U.S. protectionism is damaging the world steel trade, in a statement posted on its website on Thursday.

    The U.S. International Trade Commission (ITC) a week ago launched a probe into Chinese steel mills accused by United States Steel Corp of stealing its secrets and conspiring to fix prices.

    "The protectionist behavior taken by the U.S. based on purely groundless accusations by U.S. Steel has seriously broken the WTO rules, distorted the normal world steel trade and damaged the essential interests of Chinese steel mills and U.S. steel users," the statement said.

    The Chinese steelmaker said it strongly opposed the probe and urged the United States to understand the motivation of the complaint, assess the consequences brought by trade protectionism, respect objective facts and be careful when taking measures to cut trade.

    Hebei Iron & Steel said it would appeal the probe, without saying to whom, and called on the Chinese government to take measures in line with WTO rules to maintain the legal interests of Chinese steel mills.

    U.S. Steel filed its original complaint a month ago, alleging it was a victim of a 2011 computer hacking incident that also prompted U.S. federal cyber-espionage indictments against five Chinese military officials in 2014.

    The ITC identified 40 Chinese steelmakers and distribution subsidiaries as respondents in its probe, including Baosteel Group, Hebei Iron and Steel, Wuhan Iron and Steel Co Ltd, Maanshan Iron and Steel Group, Anshan Iron and Steel Group and Jiangsu Shagang Group.

    Baosteel, China's second-largest steelmaker and the world's fourth-largest, said in a statement the United States was acting in breach of World Trade Organization (WTO) rules. It urged the Chinese government to take all necessary measures to ensure the sector receives fair treatment.

    The China Iron & Steel Association (CISA) also said the government should take counter-measures against the United States to support the steel industry.

    Attached Files
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