Mark Latham Commodity Equity Intelligence Service

Tuesday 25th August 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    China and the world

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    BHP Billiton Ltd. said annual profit plunges

    The company, the world’s biggest miner by market value, on Tuesday reported a net profit of $1.91 billion for the year through June, down from $13.83 billion in the 12 months earlier.

    Underlying earnings were down 52% at $6.42 billion.

    Net profit was weighed by higher noncash charges that reduced earnings by $1.3 billion and included write downs against some oil fields.

    Underlying profit was $6.4 billion in the year ended June 30 from $13.3 billion a year earlier, Melbourne-based BHP said Tuesday in a statement. The figure excludes the contribution of a collection of assets into spinoff company South32 Ltd., which began trading in May, BHP said. BHP will increase its dividend by 2.5 percent to $1.24 a share, it said.

    Supply gluts and forecasts for the slowest growth since 1990 in China, the largest buyer of metals and energy, have sent the price of raw materials plunging and punished mining company profits. BHP today lowered its forecast for Chinese peak steel demand.

    “The key commodities to which they are exposed — oil, copper, iron ore, they are all struggling,” Gavin Wendt, Sydney- based senior resource analyst at Mine Life Pty., said before the earnings were released. “That reality is rapidly hitting home in terms of the profits results.”

    BHP rose 2 percent at the close in Sydney trading Tuesday to A$23.34, trimming its decline this year to 15 percent.

    “In the short term we expect ongoing economic reforms in China to contribute to periods of market volatility,” BHP Chief Executive Officer Andrew Mackenzie said in the statement. “While we remain confident in the long-term outlook for commodities demand as emerging economies continue to urbanize and industrialize, we have lowered our forecast of peak Chinese steel demand.”

    The largest mining companies have been wrong-footed on slower growth in China, Glencore Plc Chief Executive Officer Ivan Glasenberg said last week, with demand “getting very tricky to call.” Rio Tinto Group this month reported underlying profit fell 43 percent in the six months through June, while Fortescue Metals Group Ltd. said Monday full year net income slumped 88 percent.

    http://www.mineweb.com/news-fast-news/bhp-full-year-profit-slumps-52-on-iron-ore-to-oil-rout/



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    Obama "60% likely" to approve Oil exports.

    Legislation to repeal a 40-year ban on most domestic oil exports will probably become law in the first quarter of next year, according to analysts at Evercore ISI.

    A move to end the ban would probably include a condition that allows the administration of President Barack Obama to set export levels, Evercore analyst Terry Haines said in a research note Friday. While there is some congressional support to lifting the ban, some analysts said its unlikely to happen before the 2016 elections.

    “Obama and his regulators are likely to have a more positive view of an oil export ban repeal that empowered regulators generally to decide oil export levels,” Haines said in the note. “That sort of repeal also would be attractive to congressional Republicans and Democrats that would see it as a compromise alternative that overturns the ban and is a significant step on the road to full unregulated repeal.”

    Haines said repealing the ban is “60 percent likely” by the end of the first quarter. Earlier this month the U.S. allowed some crude to flow to Mexico in a swap of light oil and condensate for heavy Mexican crude. Canada is the only other nation that is exempt from the prohibition on exports.

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    Power producer Southern Co to buy AGL Resources for $8 bln

    Power producer Southern Co said it would buy AGL Resources Inc for about $8 billion in cash, making it the No. 2 U.S. utility by customers after Exelon Corp.

    The combined company will have generation capacity of about 46 gigawatts and will operate nearly 200,000 miles of electric lines and more than 80,000 miles of gas pipelines.

    The deal will form a company with 11 regulated electric and natural gas distribution companies serving about 9 million customers, Southern Co said.

    AGL shareholders will receive $66 for every share held, a 38 percent premium to the stock's Friday close.

    Including debt, the deal is valued at about $12 billion.

    The deal will add natural gas infrastructure assets to Southern Co's portfolio.

    http://www.reuters.com/article/2015/08/24/agl-resources-ma-southern-co-idUSL4N10Z47Y20150824
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    German Electricity Falls Below 30 Euros for First Time Since ’03

    German electricity for year-ahead delivery, a benchmark European contract, fell below 30 euros ($34) a megawatt-hour for the first time since October 2003 as energy prices slump.

    The contract dropped as low as 29.99 euros on the European Energy Exchange, according to data compiled by Bloomberg. German electricity for 2017 delivery fell 2 percent to 29.35 euros a megawatt-hour in broker trading, a record low for the contract.

    Year-ahead power is set for a record fifth yearly slide as Germany relies on renewable energy rather than fossil fuels for more of its consumption. Electricity contracts also are retreating as coal and oil fall. Until now, the 30-euro level served as a psychological barrier for the German year-ahead price, according to Bruno Brunetti, New York-based senior director of electricity at Pira Energy Group.

    “Major German power generators have already hedged large amounts of power forward, so I think the pain will be felt in the longer term,” he said.

    The year-ahead contract fell 1.1 percent to 30.05 euros a megawatt-hour by 11:53 a.m. Berlin time on EEX. Coal for year-ahead delivery to northwest Europe on Friday touched the lowest price in data going back to November 2005 from Cie. Financiere Tradition SA, and Brent crude plunged 58 percent in the past year in London trading.

    Renewable energy’s share of gross German power consumption increased by 2.4 percentage points last year to 27.8 percent, the Economy and Energy Ministry said March 5. Coal, lignite and nuclear accounted for 59 percent of German generation in 2014, according to AG Energiebilanzen e.V., an association of energy lobbies and economic-research institutes.

    Some coal and nuclear plants will struggle to cover their fixed costs with power prices below 30 euros, Brunetti said.

    Germany is scheduled to shut its eight remaining nuclear reactors by 2022. EON SE’s Grafenrheinfeld plant closed on June 27, before its operating license expired, because of waning profitability amid the increase in renewable generation and a tax on nuclear fuel.

    Power prices below 30 euros in Germany in the long term “would create more incentive for remaining nuclear to retire earlier than the set dates,” Brunetti said.

    http://www.bloomberg.com/news/articles/2015-08-24/german-electricity-falls-below-30-euros-for-first-time-since-03
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    Yurun Group pays Sausages for Steel?

    Yurun Group real estate company intends to suppliers can not deliver votes ham debt ], " Die Zeit " reported that a Shanghai steel suppliers said that from the beginning of August , Jiangsu Yurun to China 's Industrial Group Co., Ltd. will not be commercially votes cashed . More wonderful is that they even forced to use ham to offset each other's attitude is no money , enough to ham intestine . It refuses to offset the ham , you can select the property to arrive .
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    Oil and Gas

    Oil production increases in OPEC nations

    The Platts survey of OPEC nations’ oil production has revealed that Saudi Arabia pumped an additional 100 000 bpd, accounting for almost the entire increase in oil pumped last month. Angola pumped 50 000 bpd, UAE 30 000 bpd and Iran 20 000 bpd. Algeria, Libya and Nigeria collectively pumped 80 000 bpd, revealed Platts’ survey.

    Senior correspondent Margaret McQuaile said, “OPEC is now pumping at its highest level in three years, and that’s before Iran comes back at full throttle. At some point, something will have to give, but that time may be some way off.”

    Since August 2012, July’s total oil volume pumped is now the highest by OPEC. However, despite the decline in oil prices (below US$50 a barrel) coupled with additional inflow from Iran in a few months, there is no sign that OPEC’s Saudi Arabia-drive market share policy is about to change anytime soon, stated McQuaile. OPEC was earlier trying to limit production within the 30mn bpd ceiling, which came into play in January 2012. Though this is OPEC’s official output volume, there is no mechanism to enforce it.

    http://www.energyglobal.com/upstream/drilling-and-production/24082015/OPEC-oil-production-on-the-increase/
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    China’s LNG imports beat piped volumes in July

    China’s LNG demand continued to show signs of improvement in July with imports rising by nearly 5% from a year ago, but this was offset by an 11% fall in piped volumes from Central Asia and Myanmar.

    http://interfaxenergy.com/gasdaily/article/17238/chinas-lng-imports-beat-piped-volumes-in-july
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    Boost in hydro, fall in power demand prompts Brazil LNG re-exports

    A Brazilian Ministry of Mines and Energy decision to authorize the re-export of LNG was prompted by a growing supply of hydropower and an overall reduction in electricity demand, a Brazil-based power market analyst said Monday.

    The ministry August 20 authorized state-led Petrobras to re-export volumes up to 6.6 million cu m of gas, equivalent to about 10,840 cu m of LNG.

    "Reservoir inflows in July were 50% above the historical average for the month," said the analyst, who asked not to be identified. "As a result the MME has cut back on dispatch of the most expensive thermal plants, specifically those running on diesel and fuel oil."

    Despite severe drought conditions in Brazil, a strict water-rationing policy has restored reservoir levels in Brazil's critical Southeast-Midwest region, where 70% of generation capacity is installed, to an average 37.4% in July, according to data from the National Electric System Operator. By comparison, reservoir levels during July 2014 averaged just 34.4%.

    A recent slowdown in Brazil's economic activity has also prompted a reduction in electricity demand.

    "Most of the recent decline has come from a reduction in residential electricity use," the analyst explained. "Most of the slowdown in industrial demand has already occurred."

    During the first trimester of 2015, Brazil's GDP contracted by 0.9%, data from the Brazilian Institute of Geography and Statistics shows.

    "The MME is laying the ground work for a reduction in gas demand that seem imminent," the analyst said. "All of the gas-fired thermal plants are still running at 100% dispatch, but that could change."

    The recent authorization issued by the MME allows LNG volumes to be reloaded onto ocean-going vessels and resold into the spot market from any of Brazil's three regasification terminals in Rio de Janeiro, Bahia or Ceara.

    The authorization requires Petrobras to meet its contractual obligations to supply gas to the domestic market and may be revoked by the Ministry if there is a perceived risk of supply shortage.

    http://www.platts.com/latest-news/natural-gas/london/boost-in-hydro-fall-in-power-demand-prompts-brazil-21015680

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    Construction workers at Chevron LNG project vote to strike

    Construction workers on Chevron’s Gorgon LNG project in Western Australia have voted in favour of taking industrial actions over roster concerns.

    According to reports, more than 1,000 employees – who are employed by contractor Chicago Bridge and Iron – want to change the current rota from 26 days on and nine off.

    Instead, staff are calling for more ‘family-friendly’ shifts with 20 days on, with 10 off.

    The ballot for strike action has been called by the Australian Manufacturing Workers’ Union and the Construction, Forestry Mining and Energy Union.

    The secret vote resulted in94% of members supporting the move with workers able to down their tools after giving seven days notice.

    AMWU state secretary Steve McCartney said: “Workers are prepared to spend two-thirds of their time on Barrow Island. “They just want one third of their lives for their families.”

    The huge $54billion LNG project is almost complete but is currently behind schedule.

    https://www.energyvoice.com/other-news/85874/construction-workers-at-chevron-lng-project-vote-to-strike/
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    Daewoo Shipbuilding & Marine Engineering cancels drillship order

    Daewoo Shipbuilding & Marine Engineering cancels drillship order

    IHS Maritime reported that South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering has cancelled a drillship order after the customer missed a payment.

    In a Korea Exchange filing, DSME said that the KRW 703.4 billion order was placed by an Americas-based customer in July 2013.

    The drillship was to be delivered in November 2015, but DSME decided to terminate the contract as the customer defaulted on a payment instalment.

    The customer was not identified but IHS Maritime's Sea-Web data indicates the customer is Vantage Drilling.

    The drillship, Cobalt Explorer, has been built and launched.

    DSME said it would try to sell the vessel and would consider legal action against its customer to seek compensation.

    The collapse in oil prices has caused drilling companies to either cancel or defer deliveries of drillships that were ordered speculatively, as oil majors cut back on exploration and production work.

    http://steelguru.com/logistic/daewoo-shipbuilding-marine-engineering-cancels-drillship-order/432788#tag

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    Russia’s Novatek to sell 10% in Yamal to Chinese fund

    Russia’s second-biggest gas producer Novatek is close to selling a 9.9 percent stake worth an estimated $900 million in its Yamal liquefied natural gas project to a Chinese investment fund, Kommersant business daily reported on Monday.

    The deal may close in the coming weeks, the daily quoted three sources familiar with the talks as saying. It quoted one of source as saying the buyer was China’s infrastructure fund Silk Road.

    The stake sale may help Novatek to line up project financing from Chinese banks after sanctions shut access for Russian companies to Western capital markets, Kommersant said.

    Novatek was not immediately available for comment.

    China announced last year it would contribute $40 billion to set up the Silk Road fund to boost connectivity across Asia. The fund made its first acquisition in April, investing $125 million in a Chinese company developing energy projects in Pakistan.

    https://www.energyvoice.com/oilandgas/85828/russias-novatek-to-sell-10-in-yamal-to-chinese-fund/
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    Oil Search eyeing acquisitions in PNG

    Oil Search Ltd said on Tuesday it is looking for acquisitions in Papua New Guinea, where it holds the bulk of its assets, but Managing Director Peter Botten said deals may take some time as buyer and seller expectations remain wide apart.

    Botten said Oil Search is better positioned than many of its peers to weather a prolonged period of low oil prices as its oil and gas output in PNG remains very profitable.

    Armed with $1.6 billion in cash and debt facilities, it is looking to snap up cheap assets, but Botten said buyers' and sellers' views on the oil price outlook have yet to converge enough to seal deals.

    "On that basis, I suppose if you're a buyer, time is on your side. If you're a seller that might not be the case," he said.

    He did not comment on whether Oil Search has approached Santos Ltd over any of its its stakes in Papua New Guinea. Santos last week effectively put all its assets up for sale.

    "Clearly, our assets in PNG are where we would like to look and optimise," Botten told reporters.

    Santos owns a 13.5 percent stake in the PNG LNG project, in which Oil Search already owns a 29 percent stake, and is a partner with Oil Search in the South East Gobe oil field. It also has exploration licenses on and offshore in PNG.

    Oil Search reported a record half-year profit of $227.5 million on Tuesday, up 49 percent on a year earlier thanks to a full six-month contribution from PNG LNG.

    The PNG LNG plant is producing at a rate of 7.1 million tonnes a year, above its nameplate capacity of 6.9 mtpa.

    Oil Search is counting on PNG LNG, operated by Exxon Mobil , to go ahead with an expansion using gas from the P'nyang field. It also hopes the Total operated Papua LNG project, in which it has a 22.8 percent stake, will go ahead with gas from the Elk and Antelope fields.

    Botten said the company believes both projects would be economically viable even if oil prices remain "lower for longer" around $50 to $60 a barrel for some time, as he forecasts.

    "We certainly see they remain very attractive - more attractive than most," he said.

    http://www.reuters.com/article/2015/08/25/oil-search-papua-idUSL4N1101ZL20150825

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    Petrofac posts net loss. Hurt by Laggan-Tormore costs

    Oilfield services provider Petrofac swung to $133 million net loss in the first half of the year, compared to a net profit of $136 million in the first half of 2014. Revenue rose to $3.2 billion, up from $2.5 billion a year ago.

    Explaining the loss, the company said it recorded incremental losses on the contract in the first half of 2015 of approximately $263 million after tax as a result of additional completion and pre-commissioning work on the Laggan-Tormore gas plant.

    “The additional costs predominantly relate to additional direct construction man-hours, along with the associated indirect, subcontractor and material costs. The rest of our portfolio remains in good shape and is performing in line with our expectations,” Petrofac said in a statement.

    As for its Offshore Projects & Operations, in the first half, Petrofac secured a number of new wins and extensions, totalling approximately $800 million, including Oranje-Nassau Energie, CNR International and Eni.

    The company said that overall activity levels within the Offshore Projects & Operations in the first half of 2015 were lower than the first half of 2014. This was primarily due to lower levels of activity on capital projects, such as the Laggan-Tormore gas plant on Shetland in the UK and the upgrade and modification of the FPF1 floating production facility (which will subsequently be deployed on the Greater Stella Area).

    As a result of the lower activity, Petrofac laid off 200 workers from its offshore branch in 1H, with final headcount at the end of the first half standing at 5,300.

    http://www.offshoreenergytoday.com/petrofac-posts-net-loss-hurt-by-laggan-tormore-costs/
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    Shale oil production in Bakken, Eagle Ford grew marginally in July: Platts'

    Oil production from key shale formations in North Dakota and Texas increased slightly in July from June, according to Bentek Energy, an analytics and forecasting unit of Platts. Platts is a leading global provider of energy, petrochemicals, metals and agriculture information.

    Oil production from the Eagle Ford Basin in Texas remained relatively strong in July, up 10,000 barrels per day (b/d), ), but less than 1%, from June, the latest analysis showed. This increase followed the growth trend that has been set by the basin since January of this year when oil production showed the first (and so far only) sign of decline when it decreased 14,000 b/d month on month.

    Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin remained flat, increasing less than 500 barrels b/d, or less than 1% in July vs June.

    The average oil production from the Eagle Ford Basin last month was 1.6 million barrels per day. On a year-over-year basis, that is up a little less than than the incremental 250,000 b/d, or about 17% higher than July 2014, according to Sami Yahya, Bentek energy analyst. The average crude oil production from the North Dakota section of the Bakken formation in July was 1.2 million b/d, or up approximately 90,000 b/d from year-ago levels.

    "It is the flight to quality and higher returns that is keeping crude production going in those two key shale basins," said Yahya. "Initial production (IP) rates have been improving, especially in the oily window of the Eagle Ford Basin. As well, producers in the Eagle Ford are currently drilling 2.5 wells per rig per month, which is higher than the national average of 1.5 wells. Drill times have been improved from an average of 15 days per well in 2014 to roughly 11 days per well in 2015."

    The Bakken shale formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return, noted Yahya. Drill times in this basin have dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year, he said.

    "Substantial cost savings protocols alongside reduced drill times have kept internal rates of return (IRR) in the Bakken shale formation among the best in the country," explained Yahya.  "Current rates of return in the Bakken shale formation are around 15%, which is comparable to the 18% found in the Eagle Ford Basin."

    Bentek analysis shows that from July 2014 to July 2015, total U.S. crude oil production has increased by about 550,000 b/d.

    http://www.youroilandgasnews.com/shale+oil+production+in+bakken,+eagle+ford+grew+marginally+in+july:+platts'+bentek+energy_120296.html
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    Energy Transfer bidding for Magnum Hunter stake in pipeline unit

    Pipeline company Energy Transfer Equity LP is bidding for Magnum Hunter Resources Corp's stake in natural gas gathering unit Eureka Hunter Holdings, Bloomberg reported, citing people familiar with the matter.

    Oil and natural gas producer Magnum Hunter, which has been struggling with weak natural gas prices, said in June that it expected to raise $600 million-$700 million by selling its 45.53 percent stake in Eureka Hunter.

    Magnum Hunter began working with the Bank of Montreal to auction its stake in Eureka Hunter after Energy Transfer made an unsolicited bid for the assets earlier this year, Bloomberg reported on Monday.

    Morgan Stanley's infrastructure investing arm, Morgan Stanley Infrastructure, owns a majority stake in Eureka Hunter.

    Energy Transfer has also been pursuing bigger rival Williams Cos Inc.

    http://www.reuters.com/article/2015/08/24/magnum-hunter-stakesale-energy-us-idUSL4N10Z5BR20150824
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    Agriculture

    Monsanto sweetens offer for Syngenta, values firm at $47 bln

    U.S.-based Monsanto Co sweetened its offer to buy Switzerland's Syngenta AG , valuing the company at around $47 billion as it tries to lure the Swiss firm to the negotiating table, a person familiar with the matter said on Monday.

    Monsanto, which wants to combine its world-leading seeds business with Syngenta's own seeds and pesticides, raised its offer to 470 Swiss francs ($501.98) per share from CHF 449 per share, the person said.

    The increased offer, which sent Syngenta's shares jumping, is aimed at ending the stalemate between the two firms. Syngenta rejected a previous proposal in April and has refused to open its books to its rival.

    Monsanto's sweetened offer is primarily comprised of an increase to the cash portion of its cash and stock proposal, the person added.

    Some top investors had been pushing Syngenta to at least sit down with Monsanto and seek a better offer. Cedric Lecamp, senior investment manager at Pictet Asset Management, the 17th-biggest investor in Syngenta, told Reuters earlier this year he thought a deal could get done above 500 Swiss francs.

    A Sanford C. Bernstein survey earlier this month of nearly 100 current and former Syngenta investors found that about 92 percent were in favor of a negotiated deal, and would accept a 5 percent higher offer from Monsanto. The average acceptable offer price among the investors was 473 Swiss francs, according to the report.

    The new offer also includes an increase in the break-up fee to $3 billion from $2 billion if the transaction is blocked by regulators or falls apart for other reasons, the person said.

    The offer is not necessarily Monsanto's best and final bid, and the door could be open to negotiations if Syngenta engages, according to the person familiar with the matter.

    http://www.reuters.com/article/2015/08/24/syngenta-ma-monsanto-idUSL1N10Z1DV20150824
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    Precious Metals

    De Beers cuts diamond prices by up to 9 pct

    Aug 24 De Beers, the world's largest producer of rough diamonds by value, reduced prices for its diamonds by as much as 9 percent, Bloomberg reported, citing people familiar with the matter.

    De Beers, a unit of London-listed mining company Anglo American Plc, lowered prices after cuts to production failed to support demand, Bloomberg reported, citing three people familiar with the situation. (bloom.bg/1KHFnwG)

    A sustained weakness in the diamond market this year has resulted in a softening of diamond prices.

    Russian diamond miner Alrosa, the world's largest miner of rough diamonds by carats produced, said in June it lowered diamond prices by 6 percent since the start of the year.

    De Beers was not immediately available for comment.

    http://www.reuters.com/article/2015/08/24/de-beers-prices-idUSL4N10Z57C20150824
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    Base Metals

    Chinese copper smelters consider deeper production cuts

    China's copper smelters are considering deeper output cuts due to low metal prices and as supply of raw material scrap and concentrates from domestic mines falls, industry sources said on Monday.

    Lower production in the world's top producer and consumer of refined copper could drive up the country's demand for imports of spot metal.

    Jiangxi Copper Company Limited -- the top integrated copper producer in China -- would cut production by about 10 percent in the next 4 months at its main Guixi smelter, said an industry official who is familiar with the company's operations. He declined to be named because he was not authorised to speak to media.

    "If the prices fall further, (they) would continue the cut," the official said.

    He added that the move would reduce refined metal production at the Guixi smelter by about 10,000 tonnes a month.

    A spokesman at Jiangxi Copper did not comment.

    The Guixi smelter produced about 85 percent of Jiangxi Copper's 1.2 million tonnes of refined metal production in 2014.

    Copper prices have hovered around six-year lows this month in China CU-1-CCNMM and the international market.

    Weak prices have prompted suppliers to cut sales of copper concentrates and scrap in the domestic market over the past two months.

    An executive at a state-owned copper smelter said producers that used scrap and concentrates from local mines faced mounting pressure to slow metal production.

    "People at smelters are talking about production cuts. They may extend the time of maintenance or slow the production. But I don't think they are going to close completely," the executive said.

    He added that smelters were still making small profits from refined metal production made from imported concentrates. Some smelters have already slowed production.

    China's refined copper production dropped 4.5 percent in July from June.

    http://www.reuters.com/article/2015/08/24/china-copper-cuts-idUSL4N10Z3XJ20150824

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    Antofagasta interim profit slumps on declining copper prices

    Antofagasta posted a large drop in first-half pre-tax profit as revenue fell on the back of declining copper and by-product prices and shipment delays.

    For the six months ended 30 June, pre-tax profit slid 63.8% to $297.3m as revenue dropped 31.4% to $1.79bn.

    Earnings before interest, tax, depreciation and amortisation were down 48.6% from the first half of 2014 at $561.6m. Analysts had been expecting EBITDA of around $595m.

    Earnings per share, meanwhile, came in at 8.8 cents, which is a 72% drop from the same period last year.

    Antofagasta cut its interim dividend to 3.1 cents per share from 11.7 cents a year earlier.

    The Chilean copper miner said the decline in revenue reflected a 17.8% drop in realised copper prices as well as lower by-product revenues and a 15.5% decrease in sales volumes.

    Chief executive officer Diego Hernandez said: “With our robust balance sheet and cash generative operations we are well positioned for the current low point in the copper price cycle.

    "Our position has recently been improved by the sale in June of our water division and this position of financial strength allows us to view the current trading environment both as a time that presents opportunities, as well as a time of challenge.

    "Throughout this period of lower copper prices Antofagasta has had a rigorous approach to cost control at our operations and we are on-track to make $160 million savings in 2015. Good-quality assets and tight capital discipline means we can weather the current downturn and maintain our competitive position in this challenging environment and when the copper cycle begins to recover, we will enjoy healthy margin growth.

    As far as output is concerned, Antofagasta’s first-half copper production was 303,400 tonnes, 12.9% lower than the same period last year, mainly due to lower grades as expected and lower throughput and recoveries at the Los Pelambres mine. It also reflects the impact of protests at Los Pelambres.

    Gold production was 112,500 ounces, down 11,300 ounces from last year on the back of lower production at Los Pelambres.

    Antofagasta said the average realised copper price fell to $2.54 per pound from $3.08 in the first half of 2014.

    The company reaffirmed its plan to produce 665,000 tons of copper this year, down from an earlier estimate of 695,000 tons.

    - See more at: http://www.digitallook.com/news/news-and-announcements/antofagasta-interim-profit-slumps-on-declining-copper-prices--841879.html#sthash.OBNBzjVi.dpuf
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    Kiberan Resources: ThyssenKrupp signs major Epanco off-take

    Kibaran has executed a 10+5-year off-take agreement with global industrial group ThyssenKrupp Metallurgical Products for 20,000tpa refractory grade natural flake graphite, representing half of planned output from its Epanko project in Tanzania.

    Together with a 10,000tpa pact with a major European graphite trader, Kibaran now has binding agreements for 75% of Epanko’s production.

    ThyssenKrupp is also assisting secure project funding following Epanko’s positive BFS. MD Andrew Spinks says Kibaran is continuing discussions with other sophisticated, targeted customers worldwide.

    http://www.miningbusiness.net/content/kibaran-resources-thyssenkrupp-signs-major-epanko-take
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    Steel, Iron Ore and Coal

    China Coal Energy posts 965 mln yuan loss in H1

    China coal energy Co., Ltd., the country’s second largest coal producer, suffered a net loss of 965 million yuan ($151 million) during the first half of the year, falling within the expected range of 0.8-1.2 billion yuan, said the company on August 21.

    This was the first time China coal swung to the red in the first half since its listing in 2008, compared to a net profit of 686 million yuan in the same period last year, it said.

    The company attributed the deficit mainly to falling prices caused by weak demand against an excess of supply amid slowing Chinese economy.

    By end-June, China Coal offered its self-produced commercial coal at an average of 310 yuan/t, falling 72 yuan/t on year. Specifically, the average sales price of thermal coal slid 76 yuan/t from a year ago to 294 yuan/t, while that of coking coal dropped 96 yuan/t from the previous year to 482 yuan/t.

    China Coal produced 46.27 million tonnes of coal over January-June, down 22.1% year on year. Total commercial coal sales slid 14.6% from the preceding year to 64.12 million tonens during the same period, 72% of which or 46.42 million tonnes were self-produced, a year-on-year drop of 16%.

    On July 30, China Shenhua Energy Co., Ltd. said its net profit tumbled 45.6% on year to 11.73 billion yuan in the first half of the year.

    http://en.sxcoal.com/0/130306/DataShow.html

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    Low-cost Indonesian coal in high demand in India

    Financial Express reported that with Indonesian coal prices falling to USD 59 per tonne (free on board), there is a new trend in fuel consumption. A number of small traders have tied up with miners of Indonesia for high sea sales of coal to fulfil the demand coming up from unconventional corners - small sponge iron units, lime factories, smokeless fuel plants, coke oven units, tea gardens and even brick kilns.

    Mr Pritam Dutta, a Kolkata-based trader, said this time there is an opportunity for coal traders to do business in larger volumes because the demands have been coming up from very unconventional corners.

    Generally small consumers, who have no FSA or linkage with Coal India (CIL) and consumes below 4,200 tonne per annum, try to source coal from state trading corporations, who are allotted a CIL quota. CIL earmarks around 8 million tonne per annum for supplies to small consumers through nominated state agencies.

    Besides consumers try to get CIL’s e-auction coal and also purchase coal from Nagaland and Meghalaya. Petty players sometimes resort to informal means to ensure supplies to their units.

    While the informal means of getting coal, popularly known as DISCO coal, has been fully sealed, there has been no supplies from Meghalaya since rat hole mining has been absolutely banned. There are very little supplies from Nagaland, inadequate to meet the demand of small players.

    Mr Dutta said that “In such a situation, the only domestic option left for small consumers were sourcing from state- nominated agencies and procurement through e-auction. But with prices of Indonesian coal falling and government imposing zero duty on coal, Indonesian coal has become a cheaper option for small consumers.”

    He said that with big consumers already flushed with coal, miners in Indonesia are unable to strike any long-term contract. In such a scenario consignments are mainly coming for small traders, who instead of handling the bulk cargo at the ports, are making high sea purchases.

    Mr Debasish Dutta, chairman of the Federation of Freight Forwarders Association, said high sea purchase is absolutely legitimate with traders lifting coal paying a 2% CENVAT. Buyers tied up with traders, in whose name the consignment comes, make the purchase at a spot price on the high seas. Buyers generally lift the coal in small barges or vessels and directly carry to its consuming point.

    Mr Dutta said that “In the newly emerged scenario many traders both from India and Bangladesh are trying to make an entry into the new space tying up with the miners of Indonesia.”

    http://steelguru.com/coal/low-cost-indonesian-coal-in-high-demand-in-india/432802#tag

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    Iron ore, steel futures slip in rout of risky assets as Chinese demand ebbs

    Domestic iron ore and steel futures fell sharply on Monday, hitting their downside limits as they were caught up in a broad-based selloff of risky assets that was sparked by fears that a cooling Chinese economy could spark a global slowdown.

    The spot price of iron ore, the biggest commodity produced by global miners Vale, Rio Tinto and BHP Billiton, has rebounded by more than one-quarter from a decade low of $44.10 per ton reached in July.

    But a slowing Chinese economy could put the focus back on a global glut that has pulled iron ore prices down for a third year running amid shrinking steel demand in China.

    "In a broad way, it feels like we're back where we started in 2009. Things are shaky to the extent where all the progress we've made in the past years looks to have been erased," said Howie Lee, analyst at Phillip Futures in Singapore, on the rout in risky assets.

    The latest data on China, released on Friday, showed its factory sector contracting this month at its fastest pace in more than six years.

    That number weighed further on sentiment toward the Chinese economy, said Helen Lau, analyst at Argonaut Securities in Hong Kong.

    http://en.chinamining.com.cn/News/2015-08-25/1440465334d73430.html
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    Goa miners to start iron ore extraction in Goa in next months

    PTI reported that Goa's mineral resources companies like Fomento Resources, V M Salgaocar Brothers and Chowgule, etc have confirmed their intent and initiated preparatory acts to begin mining-related activities after the monsoon in September-October this year

    Goa Mineral Ore Exporters Association said in a release that following Vedanta, three more mining companies have expressed their intent to resume iron ore extraction activity in the state

    GMOEA release said “The state's mineral resources companies like Fomento Resources, V M Salgaocar Brothers and Chowgule, etc have confirmed their intent and initiated preparatory acts to begin mining-related activities after the monsoon in September-October this year.”

    GMOEA secretary Glenn Kalavampara said “These activities, as in the past, would gain momentum post the Ganesh Chaturthi celebration.”

    He added “Pursuant to the judgement of Supreme Court in April 2014 and High Court in August 2014, both the Central and state governments have acted and complied with the directions of both the courts.”

    Vedanta's Sesa Goa has already announced resumption of iron ore extraction at their Codli lease, which was Asia's biggest mining site before mining was shut down in 2012.

    Goa government has renewed the mining leases of 88 mines, all which are under scanner of Accountant General of Goa for failing to obtain clearance from the Indian Bureau of Mines.

    http://steelguru.com/mining/goa-miners-to-start-iron-ore-extraction-in-goa-in-next-months-gmoea/432848#tag

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    China's top steel producer Baosteel ekes out first-half profit

    Baoshan Iron & Steel , China's biggest listed steel company, reported a modest increase in first-half profit on Monday, citing easing demand in its domestic market.

    China's steel sector is grappling with chronic overcapacity, tougher environmental measures and an economic slowdown that is hitting demand for industrial metals.

    "The steel sector has entered its usual winter mode as demand for downstream products sees slowing growth, competition intensifies and environmental requirements become more stringent," Baosteel said.

    Net profit in the six months to June 30 rose 0.65 percent year on year to 3.17 billion yuan ($495.1 million), the company said in a filing on the Shanghai stock exchange.

    Chinese crude steel output fell 4.6 percent to 65.84 million tonnes in July from a year ago, government data showed this month, as steel mills in the world's top producer faced tumbling prices and faltering demand.

    With steel prices at 20-year lows, members of the China Iron & Steel Association (CISA) -- consisting of about 100 large and medium-sized mills -- suffered aggregate losses of 21.68 billion yuan from their core steel business in the first half of the year.

    Steel prices have plummeted 25 percent since the start of the year, dampening iron ore prices .IO62-CNI=SI by 21 percent over the period.

    Producers are likely to suffer further losses in the second half of 2015, squeezed by credit restrictions and pressures to repay existing debts while demand is expected to remain subdued.

    China's Hangzhou Iron and Steel said last week that it suffered a net loss of 296.2 million yuan in the first half, compared with an 8.9 million yuan profit in the same period last year.

    http://www.reuters.com/article/2015/08/24/baosteel-results-idUSL3N10T2ZA20150824

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