Mark Latham Commodity Equity Intelligence Service

Friday 8th May 2015
Background Stories on

News and Views:


China's crude oil imports hit record, coal shipments slump

China's crude oil imports hit a record high in April as falling prices encouraged stockpiling, but coal imports plunged and shipments of other commodites generally eased on a year earlier amid a sluggish economy.

China's exports unexpectedly fell 6.4 percent for the month, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown.

China, the world's second-largest crude oil buyer, imported a higher-than-expected 7.4 million barrels per day in April, up 8.6 percent on a year ago, as oil firms built up stocks despite tepid underlying refined fuel demand, especially for diesel.

With oil prices down 40 percent from last June's highs, China has been adding to its strategic reserves, although some analysts say imports may now pull back as the country starts to run out of storage space.

Coal imports by the world's top coal burner fell 26 percent from a year ago, extending a sharp scaleback in the first quarter due to weak demand, ample domestic supplies and tighter environmental controls.

"Demand for thermal coal is terribly weak, while domestic supplies are plentiful," said a Beijing-based coal trader.

Thermal power generation, predominantly fired by coal, fell nearly 4 percent in the first quarter of the year, as the world's second-largest economy shifted away from energy-guzzling sectors and boosted cleaner fuels such as hydro, nuclear and wind.

Copper imports fell 4.4 percent in April from a year earlier. Imports in the in the first four months dropped 14 percent on year earlier to 1.53 million tonnes, customs data showed.

Iron ore imports inched down 0.4 percent to 80.21 million tonnes in April from March, and fell 3.8 percent from a year ago, as the faltering economy pressured demand for the steelmaking ingredient from the world's top consumer.

Steel mills, however, took advantage of lower production cost and healthy orders abroad and exported 10.9 percent more steel products last month versus March, despite the scrapping of an export rebate on boron-added steel products.

April imports of soybeans were down down 18.3 percent from a year ago after a truck strike in early March in Brazil, the world's top exporter, delayed shipments.
Back to Top

Glencore blames rivals for creating metals glut

The head of global mining and trading company Glencore said rivals were to blame for an oversupply of metals which depressed its share price.

Despite a partial recovery in the last few months, Glencore's shares are down about 6 percent from a year ago, under pressure from a rout in prices for most of the commodities it produces and trades.

"Unfortunately our competitors in the world have produced more supply than demand and commodity prices are down for that reason," Glasenberg said at the company's annual meeting.

"I am doing my level best to convince my competitors we should understand the words demand and supply," he added in response to a question from an investor about the share price.

Glasenberg has criticised rivals such as Rio Tinto and BHP Billiton at various times, blaming them for oversupplying the market, particularly in iron ore, a commodity Glencore has little exposure to.

Glasenberg said he was optimistic about the outlook for its key products: copper, nickel and zinc.

Coal, another main commodity for Glencore, also "looks good going forward", Glasenberg said, as Indonesia exports taper off with the country consuming more coal domestically.

Coal prices have been battered by a large supply overhang in the last couple of years.

Glasenberg has said unlike his rivals he would not aim to "cannibalise" his own market by adding to the glut.

The world's largest exporter of thermal coal said in March that its 2015 coal output was expected to fall by around 6 percent on the year after production cuts at some of its coal operations.

But London-listed Glencore's coal output rose by 4 percent in the first quarter this year from the same period a year ago.

In January the company said it could shut down production destined for export from its Optimum Coal Mines in South Africa, which would put 1,070 jobs at risk.

In reply to a shareholder who asked the company to prevent such a blow to the country, South Africa-born Glasenberg said if the company goes ahead with the Optimum closure it would expand capacity at another lower cost South African mine.

"So the net net effect should be the same but (would) just provide more benefit for shareholders, more benefit for the country, larger taxes being paid," he said.
Back to Top

Oil and Gas

Saudis Splurge in Asia to Win Loyal Oil Customers for Decades

Saudia Arabia is spending generously now on Asian refiners to lock in its position as the region’s biggest supplier of oil for decades to come.

The Saudi national oil company is part of a group that’s building a processing plant in China and it teamed with Asia’s biggest refiner on another in Fujian province. Oil Minister Ali al-Naimi traveled to Beijing last month, highlighting the importance of the world’s second-biggest crude consumer to his country’s future. He also visited a South Korean refinery in which his country has a majority interest.

Pressure is rising on Saudi Arabia to hold on to market share in Asia as competitors including Iraq, Mexico and Russia make inroads. The kingdom, the world’s largest crude exporter, has cut price differentials on its crude to Asia 10 times in the past 18 months, while rivals followed with their own reductions.

“Saudi Arabia has been on the lookout for a lot more joint venture projects,” Suresh Sivanandam, a refining and chemical analyst at Wood Mackenzie Ltd. in Singapore, said by phone. “They want to secure demand for their crude and that’s one way of increasing market share.”

Daily consumption of 31.2 million barrels in Asia this year will take the region’s demand above that in the Americas at 31.1 million barrels, according to the Paris-based International Energy Agency. Asia will account for two-thirds of the growth in global oil demand in 2015, the IEA says.

The flexibility of Saudi Arabian Oil Co., the state company known as Aramco, to raise or cut output on short notice along with stakes in refineries run by its customers gives it an advantage over rivals, according to Julian Lee, an oil strategist with Bloomberg. The company has capacity to produce 12 million barrels of oil daily.

A joint venture between PetroChina Co., Aramco and Yunnan Yuntianhua Co. is currently building a 260,000 barrel-a-day refinery in the southwest of the Asian nation. Aramco already manages a 280,000 barrel-a-day refinery and petrochemical complex in China’s Fujian province along with China Petroleum & Chemical Corp., known as Sinopec, and Exxon Mobil Corp.

Aramco is pursuing a “long-term growth strategy” and is seeking to invest more in China to help the Asian nation meet its energy needs, Khalid Al-Falih, then the company’s chief executive officer, said in a speech in Beijing in March. The country is the largest oil consumer after the U.S.
Back to Top

Oil: Rally what rally?

LONDON (Reuters) - While oil futures prices rebound with vigor as analysts cite strong demand, the physical crude market tells a much more cautionary tale.

Tens of millions of barrels are struggling to find buyers in Europe with traders of West African, Azeri and North Sea crude blaming poor demand.

The deep disconnect between the oil futures and physical markets looks similar to the events of June 2014 when the physical market weakness became a precursor for a futures price crash.

Image titleLPG Houston

Image titleLNG Tokyo
Back to Top

Gazprom considering concessions to settle EU antitrust case

Gazprom is considering offering Europe new concessions, including on pricing, to settle its antitrust case and avoid a long legal battle which could result in billions of dollars in fines for the Russian gas producer.

The European Commission has accused Gazprom, which meets a third of EU gas needs and generates more than half its revenues there, of using its dominant position in eastern Europe to overcharge by up to 40 percent.

State-run Gazprom, which contributes about 8 percent of Russian GDP, denies the charges and says it has already made significant concessions. But it would rather avoid a costly court case that could further complicate relations between Moscow and Brussels, already strained by the crisis in Ukraine.

If it can settle the case by offering concessions, it will not be fined or get a finding of wrongdoing from EU regulators.

The EU wants Gazprom to calculate more of its contracts using European spot gas prices, rather than a formula it has historically used for most of its contracts based on the price of oil. Only around 16 percent of its contracts were based on spot gas as of the end of 2014.

European spot gas prices are based on major trading hubs in western Europe so using those prices for all contracts, including for eastern Europe would align prices across the EU. Also, spot gas prices have often been lower than oil and while the gap has narrowed as the oil price has fallen, it could widen again.

A Gazprom official said the company was considering including spot gas prices in more contracts, in what would be a major concession on the main sticking point between the two sides.

"We are working on it," the official, who did not want to be named, told Reuters.

The Commission has given Gazprom 12 weeks to respond to the charges made last month by the EU's new antitrust chief, Margrethe Vestager. The official said it was pouring over hundreds of pages of documents from the EU.

"We will work with the documents and the Commission," Gazprom spokesman Sergei Kupriyanov said.

Another set of charges relates to pressure the EU says Gazprom put on Poland and Bulgaria, which is entirely dependent on Russian gas, to invest in pipelines according to priorities dictated by Gazprom.

Gazprom may ask for an extension before explaining why it does not consider itself to be guilty of the charges. The source said Gazprom will also argue that it does not deserve to be fined as it has already changed its behaviour by introducing more competitive pricing, selling assets to comply with EU regulations and allowing its gas to be resold by consumers.

"We deserve not to be penalised but to be commended because Gazprom, together with its partner BASF, created competition on the European market," Alexander Medvedev, Gazprom's deputy head told a conference call last week.

After Gazprom's response, there may then be some legal back and forth between the two sides before Gazprom is expected to outline the concessions it is prepared to offer.
Back to Top

Indonesia's energy minister seeks to rejoin OPEC

Indonesia's energy minister said on Thursday he would seek President Joko Widodo's approval for the country to rejoin OPEC, seven years after leaving the oil exporters' group.

If it returned, Indonesia would be the fourth-smallest producer in the Organization of the Petroleum Exporting Countries ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.

Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group in 2008 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer.

"I will ask the president to consider rejoining as a member of OPEC, so we are close to the market," Energy Minister Sudirman Said told reporters. "We have been offered (an opportunity) to rejoin."

OPEC termed Indonesia's departure a "suspension" and Ecuador, which rejoined in 2007, set a precedent for a return from suspension. An OPEC source said the door was always open.

"If a country fulfils the criteria for membership, of course there is the possibility to join the organization," the source said.

OPEC's statute stipulates, however, that any "country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members."
Back to Top

Repsol earnings disappoint

Low energy prices, stalling production in Libya, currency adjustments in Brazil and higher exploration costs more than offset the positive impact of rising refining margins in Spain and encouraged investors to take profits after months when Repsol has outperformed the sector.

Repsol is hoping to open a new chapter in 2015 after several years marked by boardroom battles and a corporate transformation which culminated in the purchase of Talisman Energy and the transfer last month of executive powers from Antonio Brufau to Josu Jon Imaz.

While the integration of Talisman was a long-term strategic move for Repsol to grow in exploration and production, it had a first immediate impact on results as the dollar-denominated cash earmarked for the deal appreciated on the quarter and boosted core profits by 462 million euros ($525 million).

With the currency effect stripped out, average recurring net profit, adjusted for inventory effects, came in at 466 million euros, below a market consensus of around 500 million euros and a 532 million euros reading last year.

Shares in Repsol were down 3.7 percent to 17.75 euros at 0905 GMT, underperforming both Spain's blue-chip index Ibex and the pan-European sector index.

"Our initial reaction is to look beyond the large corporate and other beat and focus more on the core Repsol operating units results, which we would consider a little weak in the context of high expectations," said Jefferies analysts in a note.

The main reason for the miss was the exploration and production arm's 190 million euros loss in the quarter compared with a 255 million profit in the first three months of 2014.

This was only partly offset by an 84 percent jump, to 534 million euros, of the domestic refining unit's profit as refining margins hit a record high of 8.7 dollars per barrel.

The contribution of the Gas Natural stake to the results was stable to 122 million euros.
Back to Top

Talisman Energy provides Q1 results and update on Repsol transaction

'Talisman delivered solid operational and financial results in the first quarter of 2015 against a backdrop of significantly lower commodity prices and our strategic decision to cut capital investment,' said Hal Kvisle, President and CEO. 'Production from ongoing operations averaged 360,000 boe/d in the quarter, up slightly from the first quarter of 2014, and cash flow(1) was $605 million for the quarter, supported in large part by hedging settlements.'

First Quarter Highlights:

Production from ongoing operations averaged 360,000 boe/d in the first quarter of 2015, down 1% from the previous quarter, but up 2% from the first quarter of 2014. Liquids production was 137,000 bbl/d, down 2% from the previous quarter.
Cash flow for the quarter was $605 million, up 19% from the previous quarter due in large part to hedging settlements in the first quarter, but down 2% from the first quarter of 2014 due to lower commodity prices year-over-year.
Capital spending for the quarter was $436 million, down 48% from last quarter and 43% from the first quarter of 2014 due to the company's strategic decision to reduce capital investment during this time of lower commodity prices.
Net G&A for the quarter was $86 million, down 18% from the first quarter of 2014. The full impact of recent headcount reductions will be seen from the second quarter onwards.
Operating cost was $439 million, down 17% from the previous quarter and 15% from the first quarter of 2014.

Update on Repsol Transaction

On December 15, 2014, Talisman announced that it had entered into an arrangement agreement with Repsol S.A. under which Repsol will acquire all of the outstanding common shares of Talisman for US $8.00 per share in cash. On February 18, 2015, holders of Talisman's common shares and preferred shares approved the proposed arrangement at the special meeting of shareholders. Of the votes cast, over 99% of the shares of each class of shares were voted in favour of the arrangement.

On April 30, 2015, Talisman announced that the completion of the acquisition of Talisman by Repsol S.A. is scheduled to occur on May 8, 2015.
Back to Top

Argentina's YPF reports higher than expected net Q1 profit

Argentina's state energy company YPF posted better than expected first-quarter profit on Thursday but earnings were still down 24.3 percent on the year due to the global slide in oil prices.

YPF posted profit of 2.109 billion pesos ($239 million) in the January to March period, beating the consensus forecast in a Reuters poll of economists that was for profit of 1.5 billion pesos. However, this was significantly below the 2.787 billion pesos achieved in the same period last year.

"During this period, the price in international crude halved, a situation that directly impacted the results of the major companies in the sector," YPF said in a statement.

Oil output at YPF, which was nationalized in 2012, rose 2.3 percent in the quarter, while natural gas production climbed 18 percent, the company said in its earnings statement.

Shale oil and gas output from 332 wells in the vast but barely tapped Vaca Muerta formation was 41,700 barrels per day equivalent, YPF said.

Argentina nationalized YPF in 2012 after accusing its former parent, Spain's Repsol SA, of under-investing and thereby generating a costly energy deficit for Latin America's No. 3 economy.

The country hopes that by hiking investments in Vaca Muerta, viewed as one of the biggest shale reserves in the Western Hemisphere, it will be able to reduce energy imports that are draining its low foreign reserves.

YPF raised $1.5 billion in a bond sale last month.

"Investments in the first quarter of 2015 reached 12.351 billion pesos, a level that has enabled us to maintain activity and growth in production in a global context that is unfavorable for this industry," YPF said.
Back to Top

US Energy Dept grants Cove Point plant permission to export LNG

The U.S. Energy Department said on Thursday it has issued final authorization for Dominion Resources to export liquefied natural gas (LNG) from its Cove Point, Maryland plant.

The plant hopes to ship LNG starting in late 2017 to countries with which the United States does not have free trade agreements.
Back to Top

Apache Swings to Loss on Revenue Drop, Big Write-Down

Apache Corp. swung to a first-quarter loss on impacts from low crude prices that contributed to a sharp decline in revenue and a big write-down.

The company also has been divesting itself of international assets as part of its effort to refocus on U.S. shale drilling. Last month, Apache agreed to sell its Australian unit for $2.1 billion to a group of private-equity investors. The sale marked Apache's exit from its Australian exploration and production business.

The company also recently completed the sale of its stakes in two liquefied natural gas projects in Canada and Australia to Woodside Petroleum Ltd. for $2.75 billion.

Like many other U.S. energy companies, Apache has cut back on drilling rigs and has been delaying well completions.

Chief Executive John J. Christmann IV said in prepared remarks Thursday that Apache's drilling and completion costs across its key plays in North America onshore are down between 20% and 40% from November.

The company's North American onshore production exceeded Apache's guidance despite the decrease in well completions and adverse impacts of severe winter weather in the Permian and Anadarko basins, Mr. Christmann said. In its international operations, production in both Egypt and the North Sea is tracking ahead of initial expectations, he added.

Overall, Apache reported a loss of $4.65 billion, or $12.34 a share, compared with a year-earlier profit of $236 million, or 60 cents a share, a year earlier. The latest period included a ceiling-test write-down of $4.7 billion related to low commodities prices. Excluding such items, the per-share loss was 37 cents. Revenue slid 50% to $1.82 billion.

Analysts polled by Thomson Reuters expected per-share loss of 57 cents and revenue of $1.81 billion.

For the latest period, Apache noted average selling prices for oil skidded 53% globally.

Apache also affirmed its 2015 onshore North American production and capital-spending forecasts.

Read more:
Back to Top

Sanchez Energy announces first quarter results

Sanchez Energy Corporation, today announced operating and financial results for the first quarter 2015. Highlights from the report include:

Current production of approximately 50,000 BOE/D driven by strong production from recent development and exploration wells brought online at Catarina.

The company recently drilled two extended lateral tests at Western Caterina of 8,250 feet, on average, which are yielding exceptional results that are tracking estimated ultimate recoveries of approximately 1.5 MMBOE per well.

Based on recent operating results, the Company is increasing its full year 2015 production guidance range to 42,000 to 46,000 BOE/D.

Record production of 4,070 MBOE during the first quarter 2015 for average production of 45,217 BOE/D, exceeding the high end of the Company's initial 2015 guidance of 40,000 to 44,000 BOE/D.

Revenues of $110.6 million ($139.9 million inclusive of hedge settlements) and Adjusted EBITDA (a non-GAAP financial measure) of $83.7 million, which represent decreases of 18% and 13%, respectively, over the same period a year ago due to recent declines in commodity prices.

Executed and closed the sale of escalating working interests in 59 producing wellbores in the non-operated Palmetto Field in the Eagle Ford for aggregate consideration of approximately $85 million, subject to normal and customary closing and post-closing adjustments.

The Company's revised guidance of 42,000 to 46,000 BOE/D includes an adjustment for the expected loss of 1,000 BOE/D of production in 2015 resulting from sale.
At Catarina, the Company has already exceeded its July 2014 to June 2015 drilling requirement by drilling 54 wells towards its 50 well annual commitment. As the company executes its 2015 capital plan, it will bank wells in excess of the 50 towards its next annual commitment.

Operational efficiencies continue to drive sustainable cost savings across Sanchez Energy's asset base, with average well costs in all areas approximately 30 to 40% less than fourth quarter 2014.

Liquidity of $645 million as of March 31, 2015, which consisted of $345 million in cash and cash equivalents and an undrawn bank credit facility, which has a $550 million borrowing base and an elected commitment of $300 million.
Back to Top

Rice Energy more than doubles natural gas production

Rice Energy has more than doubled its natural gas production from the Marcellus and Utica shales during the first three months of the year compared with the same period last year, the Canonsburg company reported today.

Rice reported production of 39.6 million cubic feet equivalent during the first quarter. A year ago, the company reported 16.4 MMcfe, which includes natural gas, natural gas liquids and oil.

The company, which went public last year, posted a profit during the first quarter, but a lower one compared to the first quarter of 2014. Rice earned $152,000 in the first quarter, down from $129.4 million last year.

"We are off to a strong start in 2015, building off our successful year in 2014,” said CEO Daniel Rice IV. “We remain committed to diligently executing our plan and delivering top-tier results."

Rice is increasing its 2015 annual production guidance to a range of 470 MMcfe/d to 490 MMcfe/d, “due to accelerated well timing from increased operational efficiencies.” Meanwhile, it’s reaffirming a 2015 capital budget of $890 million, which includes both its drilling and midstream investments.
Back to Top

Canadian Natural Resources Earnings Swing to Loss

Canadian Natural Resources Ltd., one of the country’s largest oil and natural gas producers, posted its first quarterly net loss in four years on Thursday as a drop in energy prices more than offset record production.

The Calgary-based company lost 252 million Canadian dollars ($209 million), or 23 Canadian cents a share, in the first quarter compared with earnings of C$622 million, or 57 Canadian cents, a year earlier. The latest result was its first dip into the red since the fourth quarter of 2010.

The company said quarterly output was a record 898,053 barrels of oil equivalent a day, up from 684,647 barrels a year earlier. However, cash flow fell 36% to C$1.37 billion because of lower commodity prices.

“Canadian Natural is not immune to the impact falling prices have had on our cash flow and earnings,” President Steve Laut told analysts on a conference call.

On an adjusted basis, Canadian Natural earned 2 Canadian cents a share, down sharply from 85 Canadian cents a year earlier, but better than the 5 Canadian-cent loss analysts expected, according to a Thomson Reuters poll.

Mr. Laut said political uncertainty was “at the top of mind for everyone” after aleft-leaning party won control of Alberta’s government in provincial elections on Tuesday. Noting the victorious Alberta New Democratic Party pledged to raise corporate taxes and institute a regular review of oil and gas royalties, he said: “Clearly, this is not good for the industry.”

But the executive said he was encouraged that incoming Alberta PremierRachel Notley said she wants to forge a constructive relationship with the energy industry. “As one of the leading oil and natural gas companies in Alberta, we are committed to working with the new government,” he said.

Operationally, Canadian Natural said crude-oil production rose 23% and natural-gas production increased 51% amid lower operating costs.

The company announced yet another reduction in its 2015 capital program, and now targets spending of about C$5.7 billion this year. It announced spending cuts in January and March.

Canadian Natural said it continues to review its royalty lands and royalty revenue portfolio with a view to maximizing shareholder value. Options for its royalty lands and royalty revenue portfolio include a sale or spinoff, it said.
Back to Top

Alternative Energy

SunEdison's emerging market unit files for IPO

TerraForm Global Inc, formed by solar company SunEdison Inc to own and operate some of its power plants in emerging markets, filed with U.S. regulators for an initial public offering of its class A common shares.

The Bethesda, Maryland-based company's IPO filing had a nominal fundraising target of $700 million.

The amount of money a company says its IPO will raise in its initial filings is used to calculate registration fees. The final size of the IPO could be different.
Back to Top

Molycorp stocks slide following wider Q1 loss, further financing needs

US integrated rare earths producer Molycorp’s NYSE-listed stock on Thursday slid 12.5% after the company reported a wider-than-expected first-quarter loss and confirmed that it would require further financing this year to meet its business plan and obligations as they became due. 

Molycorp, which operates the Mountain Pass rare earths mine and processing facility, in California, explained that in light of the continued softness in the prices for its products, inconsistent or depressed demand for certain of its products and the delayed ramp-up of operations at the Mountain Pass facility, would force it to seek additional financing this year. 

The Greenwood, Colorado-based company's had last year September engaged Oaktree Capital Management to provide up to about $400-million in secured financing through credit facilities and the sale and leaseback of certain equipment at Mountain Pass for corporate, operating and capital expenditures. It had received initial gross proceeds of $250-million from Oaktree, with the remaining $149.8-million available to be drawn until April 30, 2016, $134.8-million of which was available only if the company achieved certain financial and operational performance targets.

In a Securities and Exchange Commission filing on Thursday the company reiterated that if it was unable to execute its business plan and restructure debt, it might not be able to continue as a going concern. Molycorp said its cash balances fell to $133.6-million as of March 31, down from $211.7-million in December, which represented its primary source of liquidity to fund capital expenditures, debt service and net operating cash requirements. 

Molycorp reported negative cash flows from operating activities of $73-million during the first quarter. The average selling prices fell 16% quarter-over-quarter to $30.97/kg. The company's loss attributable to shareholders widened to $102.3-million, or $0.42 a share, up from $86.1-million, or $0.40 a share, a year earlier. An adjusted loss  share of $0.28 in the quarter did not reflect inventory impairment charges at Mountain Pass, out-of-ordinary business expenses and certain other non-cash items. Revenue fell more than 10% to $106.4-million.
Back to Top


Areva says to cut 5,000-6,000 jobs globally

Loss-making French state-controlled nuclear group Areva plans to axe as many as 6,000 jobs, about 14 percent of its headcount, as it seeks to reduce labour costs by about 15 percent in France and 18 percent in total internationally.

"We expect 3,000 to 4,000 job cuts in France and 5,000 to 6,000 globally, but more towards 6,000," Francois Nogue, human resources director for the group, said on Thursday.

The job cuts in France will be part of the global headcount reduction, which the company hopes to complete by the end of 2017.

Areva, whose equity capital has been virtually wiped out by four years of losses, employs 42,000 people worldwide, including 28,000 in France.

Nogue said staff costs - at about 3.4 billion euros ($3.87 billion), including about 2.4 billion in France - were a major part of Areva's cost base.

Areva said it would also cut bonuses and other variable pay items, and negotiate with unions about working hours. Nogue said he expected talks with unions to last a few months.

Staff cuts and wage reduction will account for about two thirds of a 1 billion euro cost reduction plan, Nogue said.

In 2014, Areva booked a loss of 4.8 billion euros on revenue of 8.3 billion. The company aims to present a restructuring plan by the time it publishes first-half results in July.
Back to Top

Precious Metals

Randgold ready to end drought in gold discoveries

Randgold Resources Ltd. is getting ready for the end to a drought in gold discoveries that has dragged on for five years and raised doubts over the miner’s ability to grow.

Randgold will know by the end of this quarter if it has a major find at the Fonondara project in Ivory Coast after starting up its drill rigs, Chief Executive Officer Mark Bristow said in an interview.

“This is the first real exploration target we’ve talked about for five years,” he said in London. “It compares very favorably to other targets that ended up in discoveries.”

Randgold, which built its business making its own finds in Mali, Senegal and Ivory Coast, is currently developing no new mines. Its last major discovery was Gounkoto in Mali in 2009.

Bristow has vowed to shake up exploration and actively look for deals to add projects. Randgold has a $500 million to $700 million war chest to buy assets from struggling rivals, he said in November. An offer to buy Kinross Gold Corp.’s Mauritanian mine was rebuffed, a person familiar with the matter said in March. Randgold, one of the best-performing gold stocks in the past decade, is debt-free and profitable at current prices.

“We’re not short of opportunities to evaluate, but nothing fits our criteria,” Bristow said in the interview Thursday.

Randgold reported first-quarter net income of $48.2 million after $74.3 million a year earlier. The company had sales of $344.6 million and produced 279,531 ounces of gold.
Back to Top

Online platform BitGold to go public in Toronto, seek Asia listing

Canada's BitGold, a startup that runs an online payments and savings platform based on the precious metal, plans to go public in Toronto next week and will seek a listing in Asia in six to 12 months, the company's chief executive said.

"We felt there was this compelling opportunity to build a financial service that had virtually no counterparty risk because it only held gold," Chief Executive Roy Sebag said in an interview on Wednesday.

"It quickly became clear that what we wanted to build was a global internet platform," Sebag said. "We thought the real opportunity was broadening access to gold."

Users registered on Toronto-based BitGold's platform can deposit gold into vaults using a range of payment methods such as a credit cards and bitcoin.

The service acts as a savings account with gold as the currency. BitGold's clients can also spend their gold or earn gold by sending an invoice to someone for services.

The company has arrangements with Brinks Company to have access to vaults in Toronto, London, Zürich, Dubai, Singapore and Hong Kong. Users are also able to redeem gold and have it shipped home.

BitGold expects to list on the Toronto Venture Exchange on May 13, under the ticker symbol "XAU", Sebag said. It would seek to list later in Hong Kong or Singapore.

Sebag, a hedge fund manager who founded the company with former Goldman Sachs metals strategist Josh Crumb, said they hit upon the idea as the financial crisis unfolded and resulted in loose monetary policy.

Before the website went live this week, about 30,000 users had pre-registered and it has users in about 50 countries, he said.

Investors include Soros Brothers Investments, Sprott Inc , PowerOne Capital Markets and Sandstorm Gold. Soros Brothers owns 6 percent of the company, Sebag said.

BitGold's investment banks are Dundee Capital Markets, GMP Securities, Canaccord Genuity and Clarus Securities.

Earlier this year, BitGold raised C$7.5 million in cash, with an additional C$5 million in warrants that could be further exercised, giving the company a valuation of C$50 million, Sebag said.
Back to Top

Steel, Iron Ore and Coal

Andrew Forrest says Fortescue job losses 'nonsensical injury' from iron ore war

Fortescue's Andrew Forrest: "The two multinationals, now one, are continuing a strategy and we, all Australians, are paying the price for." Photo: Erin Jonasson

Fortescue Metals Group chairman Andrew Forrest says a decision to abandon the miner's family friendly fly-in, fly-out roster was "personally devastating", laying the blame on his larger competitors.

Fortescue has begun sacking hundreds of workers as it ditches its boom-time eight days on, six days off roster for 14 days on, one week off to cut costs. It is expected 700 Fortescue workers will lose their jobs by June 30.

It is expected 700 Fortescue workers will lose their jobs by June 30.

Fortescue pioneered the family friendly roster a decade ago as it fought against soaring wage costs across the Pilbara when the mining investment boom exposed severe skill shortages. It was able to lure workers and forced other miners to respond and offer similar rosters at many sites across the Pilbara.

But by July, Fortescue's Pilbara workforce will be on a 14 days on, one week off roster.
Back to Top

Rio Tinto stands by forecast for China steel demand growth

Rio Tinto said on Thursday it still sees Chinese steel demand growing and peaking at close to 1 billion tonnes over the long term, in contrast to some forecasters who have said steel demand has already peaked in China.

“We continue to believe that the long run peak steel demand of China has a long way to go to approximately the billion number that you indicate,” Chairman Jan du Plessis said in response to a question at the group’s Australian annual meeting.

“It’s a serious conclusion we came to after long debate.”

A recent media report quoted economists and others saying that Rio Tinto’s and BHP Billiton’s long-held forecast that Chinese steel demand would peak at 1 billion tonnes around 2025 was outdated and they had stood by it so as not to lose face.
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.

Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

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 guarantee 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.

© 2018 - Commodity Intelligence LLP