Mark Latham Commodity Equity Intelligence Service

Wednesday 11th November 2015
Background Stories on www.commodityintelligence.com

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    Macro

    Quarterly is not pretty.

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    CRB Lurches to the downside

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    China power output falls for second month in Oct - stats bureau


    China's power output fell for a second month in a row in October, slipping 3.2 percent on a year ago to 445.4 billion kilowatt-hours (kWh), data showed on Wednesday, reflecting a slowdown in industrial demand.

    Slowing economic growth has hurt demand in downstream industries like steel, with power generation in the first 10 months of the year easing 0.1 percent to 4.651 trillion kWh, according to data from the National Bureau of Statistics.

    October's decline followed a 3.1 percent drop in September.

    Stagnant demand has allowed grid firms to reduce the amount of power taken from thermal power plants, which account for about 75 percent of China's generating capacity, as the country tries to ease its dependence on fossil fuels.

    Thermal power production, predominantly fueled by coal, fell 6.6 percent on a year earlier to 310.7 billion kWh in October. Output was down 2.6 percent for the first 10 months to 3.466 trillion kWh.

    Hydropower output rose 2.1 percent in October to 99.5 billion kWh, and was up 3.4 percent over the first 10 months at 847.4 billion kWh.

    Despite a supply glut, China has given environmental approval for the construction of another 155 coal-fired power plants in the first three quarters of this year, according to research from environmental group Greenpeace.

    "With power generation from coal falling, and an already severe overcapacity problem, the coal fired power plants will do nothing but add debt burden and idle capacity," Greenpeace said in a statement.

    Weaker demand growth this year has undermined the efficiency of China's coal-fired plants, with utilisation rates falling by 265 hours or 7.5 percent in the first three quarters, according to National Energy Administration data.


    Read more at Reutershttp://www.reuters.com/article/2015/11/11/china-economy-output-power-idUSL3N13628D20151111#oZGUgVrmCXiuzsiS.99

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    Chinese industrial output hits 6-month low


    Growth in China's industrial production, a measure of output at factories, workshops and mines, fell to a six-month low in October, official data shows, suggesting sustained weakness in the world's second-largest economy.

    Industrial output increased 5.6 per cent last month from a year ago, the National Bureau of Statistics (NBS) said, the lowest reading since March's identical figure and edging down from a 5.7 per cent rise in September.

    It was also below the median forecast of a 5.8 per cent increase in a survey of economists by Bloomberg News.

    The figures come as the world worries about growth in China, a leading driver of the global economy.

    Fixed asset investment, a measure of spending on infrastructure, expanded 10.2 per cent year-on-year in the January-October period, the NBS said.

    But retail sales, a key indicator of consumer spending, held up well for the month, growing 11.0 per cent from a year earlier - the fastest increase since a rise of 11.9 per cent in December last year, according to the NBS.

    It was also slightly better than the median estimate of a 10.9 per cent expansion in the Bloomberg poll.

    "The marginal fall in October's industrial production growth showed support from the rapid development of new industries was still insufficient while traditional industries were having deep corrections," the NBS said in a statement.

    "The industrial economy is still facing downward pressures looking forward," it said.

    http://www.businessspectator.com.au/news/2015/11/11/china/chinese-industrial-output-hits-6-month-low

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    China Shanshui Cement to apply for liquidation as debt default certain


    China Shanshui Cement said it has decided to apply for provisional liquidation after determining that it will default on onshore debt payments due Thursday, a sign that Chinese authorities have become willing to allow weak firms to fail.

    The privately owned company had been struggling to raise funds as its operations have been hit by overcapacity in the sector.

    "It's a sign that bailouts are not for everybody and that the slowing economy is taking its toll on the non-investment grade sector," said Warut Promboon, chief rating officer at Dagong Global Credit Rating.

    Analysts say authorities are keen to see better pricing of credit risk to check surplus industrial capacity and are likely increasingly distinguish between stronger firms and weaker firms.

    "The strong names will get the benefit of cheap funding because the central bank will keep monetary conditions easy while the riskier credits will have a hard time refinancing because of weakening metrics," said Promboon.

    Shanshui Cement said in a stock exchange filing on Wednesday that the petition to wind up the company will constitute an event of default for $500 million in bonds due 2020 and trigger an accelerated repayment clause .

    The bonds, which were trading at around 80 cents on the dollar overnight, plunged to 50 cents on Wednesday after the announcement.

    Its shares have been suspended from trade since April.

    Earlier this year Shanshui reported a 31 percent decline in first-half sales revenue and a net loss, citing declining cement prices in key regions.

    In June, Standard & Poor's cut Shanshui's bond rating to CCC from B-plus and warned of heightened repayment risk to its financial obligations coming due over the next 12 months.


    Read more at Reutershttp://www.reuters.com/article/2015/11/11/shanshui-cement-default-idUSL3N13613020151111#DViHePGk0682PXbm.99

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    Radar shares surge as company changes direction

    Radar shares surge as company changes direction 

    The share price of ASX-listed junior Radar Iron jumped nearly 83% on Wednesday after the company announced a change of pace. Radar on Wednesday said it had entered into a binding heads of agreement to acquire Israel-based technology company Weebit-Nano, which is one of the world’s foremost developers of silicon oxide resistive random access memory technology. 

    Radar Iron would pay A$75 000 for an exclusive 28-day option, and a further A$75 000 on the completion of a due diligence and Weebit’s majority shareholding passing a resolution to approve the transaction. In exchange for the technology company, Radar Iron would issue 750-million of its own shares to Weebit shareholders, subject to ASX escrow provisions. 

    The transaction had a number of conditions, including Radar Iron undertaking a capital raising of at least A$5-million, as well as all necessary shareholder and regulatory approvals. 

    Radar Iron’s foray into the technology sector comes after the company abandoned its Brazilian iron-ore exploration work in April and as the junior worked to minimise costs and retain cash. The company also surrendered four of its tenements in the Johnston Range, in Western Australia. Radar Iron was trading at a high of 11c a share on Wednesday, up from a low of 8c a share.

    http://www.miningweekly.com/article/radar-shares-surge-as-company-changes-direction-2015-11-11
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    Oil and Gas

    Anadarko, Apache shares fall amid takeover report


    Shares of Anadarko Petroleum fell on Tuesday after a report surfaced that the company had approached Apache about a possible takeover deal.

    Apache rejected the initial proposal, according to a Bloomberg report. It is working with Goldman Sachs on other options, according to unnamed sources in the report.

    According to Bloomberg, "the combination would be the largest deal for an independent oil and gas producer in the U.S. this year."

    Shares of Anadarko were down nearly 6 percent after being temporarily halted, while shares of Apache dropped more than 3 percent.

    http://www.cnbc.com/2015/11/10/anadarko-apache-shares-fall-amid-takeover-report.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=103156567
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    More Crude heading for Texas.

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    El Nino Will Keep Energy Stocks Cool This Winter


    The strongest El Nino weather system in almost two decades, combined with the warmest temperatures in four years, will mean a relatively warm winter in the Midwest and on the East Coast, keeping a lid on energy prices and potentially capping stock prices for companies that produce natural gas.

    This year's El Nino, which occurs when Pacific Ocean waters are unusually warm, will be the strongest since the winter of 1997-1998, says Matt Rogers, a meteorologist at Commodity Weather Group in Bethesda, Maryland. Temperatures are expected to be the warmest, on average, since the winter of 2011-2012, he said.

    While those who like outdoor activities should enjoy the warmer weather, it doesn't bode well for companies that provide natural gas, such as Chesapeake Energy Corp. (CHK) and Cabot Oil & Gas Corp. (COG), which already are facing near-record reserves.

    "There's no question the warmer weather is going to effect the energy sector," says Jason Wangler, a managing director at Wunderlich Securities in Houston. "It's another leg down for the space that comes at the worst time possible."

    http://finance.yahoo.com/news/experts-el-nino-keep-energy-142525247.html
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    Colombia Oil Output Seen Slumping Below Target as Drilling Slows


    Colombia’s oil production is set to fall below 1 million barrels a day next year as exploration collapses and major fields age, the head of the country’s oil association said.

    Producers drilled 19 exploratory wells during the first nine months of 2015, down from 80 in the same period last year, said Francisco Lloreda, president of the association. The decline threatens a government target of 1 million barrels a day through 2022.

    “It will start to be below 1 million barrels” next year, Lloreda said in an interview in his Bogota office. “Exactly when, we can’t say.”

    Producers in Colombia including state-controlled Ecopetrol SA and Pacific Exploration & Production Corp. have cut exploratory spending this year amid the slump in global oil prices. The potential implications of reduced exploratory activity in Colombia are significant, given the Andean nation’s reserve life of 6.4 years at the end of 2014.

    “We have a larger challenge than other countries because we have limited reserves,” Lloreda said. “We need to incorporate more barrels and this is done with intelligent exploratory activity.”

    A series of government measures this year has helped companies overcome the initial impact of the fall in oil prices, although more will be needed if Colombia is to attract continued foreign investment, according to the association.

    “We believe that the government take is very high at the moment,” Lloreda said of the portion of oil revenue the government takes from concessions. “It isn’t that competitive compared to other countries. It’s a government take that varies between 70 and 75 percent, and it needs to be reduced.”

    The Colombian government will present a structural tax reform to Congress in March, Finance Minister Mauricio Cardenas said Monday.

    http://www.bloomberg.com/news/articles/2015-11-10/colombia-oil-output-seen-slumping-below-target-as-drilling-slows
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    Argentine Court Orders YPF to Reveal Details of Chevron Pact


    YPF SA will have to fully disclose its pact with Chevron Corp. to develop shale oil in northwestern Patagonia, Argentina’s highest court ruled.

    By a 3-1 vote, court justices ruled Tuesday in favor of a request filed by Senator Ruben Giustiniani, who is seeking information on contractual clauses in the $16 billion joint venture, the largest shale investment outside the U.S. Giustanini, from the Socialist party, unsuccessfully tried to get the information from YPF.

    In July 2013, the world’s third-largest oil company signed an accord with Argentina’s state-controlled producer to invest an initial $1.6 billion in a pilot operation that a year later turned Chevron into the largest foreign producer of shale oil in the country. After drilling 170 wells in the Vaca Muerta formation, the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir, both companies extended the venture under a 35-year concession. It’s producing about 50,000 barrels of oil equivalent a day.

    Details of the pact were never revealed despite requests from environmentalists who sought information on the impact of hydraulic fracturing in the area.

    The three concurring justices said they based their decision on the right to access information and the fact that YPF is majority owned by the government.

    YPF will comply with the ruling, the company said by e-mail. Isabel Ordonez, a Chevron spokeswoman, couldn’t immediately comment.

    "Environmental concerns while the shale play is still in its infancy in Argentina will slow development, preventing it from reaching the scale needed to develop more efficiencies," Gurpal Dosanjh, a Bloomberg Intelligence analyst, said in an e-mailed statement.

    http://www.bloomberg.com/news/articles/2015-11-10/argentine-court-orders-ypf-to-reveal-details-of-chevron-accord
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    Petronas Q3 earnings tumble 87% to RM1.4b


    It's a tough period for the oil and gas sector and Petroliam Nasional Bhd is feeling it for its third quarter results.

    Its president and CEO Datuk Wan Zulkiflee Wan Ariffin said on Wednesday: "Tough times are here to stay."

    "Moving forward, with the outlook on the oil and gas sector still uncertain, we must focus on adapting more prudent approaches to our cash management and materialising internal efficiency measures."

    Due to higher asset impairments and net foreign exchange loss on US dollar borrowing, its net profit plunged 87% to RM1.4bil for the third quarter ended Sept 30, 2015 from RM11.1bil in the previous quarter.

    During the quarter, Brent crude was trading at an average of US$50.26 per barrel, which shed about a-fifth from the previous quarter.

    Meanwhile, revenue slipped 2% to RM60.1bil from the previous quarter.

    Compared to the same quarter last year when Brent crude averaged at US$101.85 per barrel, revenue declined by a quarter from RM80.1bil while net profit loss 91% from RM15.1bil.

    Wan Zulkiflee said the company was going to focus more on its downstream businesses and projects that would provide cash flow in the near-term.

    In line with that, the company could be relocating its human resources to the downstream segment as activities in that area is expected to grow.

    He said the company was not right-sizing the number of its permanent staff despite the 200,000 job cuts announced in the industry globally.

    He added that the company remained committed to its capital expenditure projects including the Refinery and Petrochemical Integrated Development, the Pacific North West LNG project in Canada, the LNG Train 9 in Bintulu and the two Petronas floating LNG projects being constructed in Korea.

    The oil and gas giant allocates RM350bil for its capex in the next five years.

     http://www.thestar.com.my/Business/Business-News/2015/11/11/Petronas-Q3-earnings-tumble/?style=biz

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    Monster Dry Gas Utica Wells Changing the Picture in the NE


    While Marcellus natural gas production will slide again for the third month in a row according to the latest EIA Drilling Productivity Report, Utica natural gas production continues to climb. 

    One important note: Utica production, while climbing month after month, is still just a fraction of Marcellus production (about 20% of Marcellus production). 

    The Utica may challenge the Marcellus as reigning champ of natgas production. Will/can the Utica actually produce as much or more natural gas as the Marcellus some day? It’s not out of the realm of possibility. How can that be? It all has to do with monster dry gas Utica wells…

    http://marcellusdrilling.com/2015/11/monster-dry-gas-utica-wells-changing-the-picture-in-the-ne/?utm_source=dlvr.it&utm_medium=twitter
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    U.S. Lowers 2016 Crude Output Forecast as Drillers Idle Rigs


    The Energy Information Administration cut its U.S. crude production outlook for next year as declining prices are prompting shale drillers to put rigs aside. Cheaper gasoline is expected to stoke demand for the motor fuel.

    The agency decreased its 2016 forecast by 1 percent to 8.77 million barrels a day, according to its monthly Short-Term Energy Outlook. It boosted its estimate for this year to 9.29 million barrels a day from the 9.25 million predicted last month.

    America’s oil drillers have sidelined more than half the country’s rigs since October as prices have tumbled. The number of active oil rigs in the U.S. has fallen by 103 in the past 11 weeks to 572, the least in five years, according to data compiled by Baker Hughes Inc.

    "Total oil production from non-OPEC countries is expected to decline next year for the first time since 2008, because of lower oil output in the United States," EIA Administrator Adam Sieminski said in an e-mailed statement.

    Brent crude, the benchmark for more than half the world’s oil, is projected to average $56.24 next year, down from the prior estimate of $58.57.

    Gasoline at U.S. pumps will average $2.43 a gallon in 2015, up from last month’s estimate of $2.42. Retail prices are projected to drop to $2.33 next year, down from last month’s projection of $2.46.

    Low prices that curb drilling are also bolstering U.S. fuel demand, according to the report. American gasoline use is projected to climb 2.1 percent to 9.11 million barrels a day this year. Consumption is projected to rise an additional 0.1 percent in 2016.

    "U.S. gasoline demand this year is on track to be the highest since record levels were set in 2007, due in large part to low pump prices and more people working," Sieminski said.

    http://www.bloomberg.com/news/articles/2015-11-10/u-s-lowers-2016-crude-output-forecast-in-short-term-outlook

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    Alternative Energy

    Leaked letter reveals UK will miss green target


    The UK will miss a major legally-binding renewable target, Energy Secretary Amber Rudd has admitted in a leaked letter.

    In a candid private message to other cabinet ministers, she reveals the country is predicted to fall short of its EU obligations of generating 15% of its energy from green sources by 2020.

    The letter, which was obtained by the Ecologist magazine, says there will be a “shortfall against the target in 2020 of around 50TWh (with a range of 32-67TWh) or 3.5% points (with a range of 2.1-4.5% points) in our internal central forecasts (which are not public)”,

    However it adds: “Publicly we are clear that the UK continues to make progress to meet the target.”

    If the UK does miss its target, it could be liable to fines from the European Court of Justice. The news comes as the government has cut subsidies for solarand wind power.

    The letter also states some other major Member States “are in a similar position to the UK”.

    “As the Secretary of State has set out clearly in the House, renewables made up almost 20% of our electricity generation in 2014 and there is a strong pipeline to deliver our ambition of reaching 30% by 2020. We continue to make progress to meet our overall renewable energy target.”

    The letter was sent to Foreign Secretary Philip Hammond, Oliver Letwin from the Cabinet Office, Chief Secretary to the Treasury Greg Hands and Transport Secretary Patrick McLoughlin.

    Environmental group Greenpeace said the letter “shows us the dark side of the government’s incoherent energy policy in full technicolour”.

    Head of Energy Daisy Sands added: “For the first time, we learn that the government is expecting to miss the EU’s legally binding renewables target. This is hugely shocking. But more deplorably, it is wilfully hiding this from public scrutiny.

    “The government is planning on cutting support for the solar and wind subsidies in the name of affordability. But perversely, we see that the government believes investing in renewable energy projects involving buying power from abroad is more desirable than supporting home grown renewable energy industries. Even more worryingly, it seems the government is seeking to haggle with the EU to revise down our legal commitments.”

    http://www.energylivenews.com/2015/11/10/leaked-letter-reveals-uk-will-miss-green-target/
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    Trina sets world record of 21.25% efficiency with multicrystalline silicon


    This new world record for a multi c-Si cell beats Trina’s previous record of 20.78%. Trina says that the processes used can be easily integrated into mass production.

    Trina says that the techniques used to make the cell are suitable for high-volume production

    Trina Solar continues to push the abilities of multicrystalline silicon, today announcing the first multi c-Si solar PV cell with an efficiency of over 21%.

    The company’s State Key Laboratory of PV Science and Technology of China has produced a new world record 21.25% efficient PV cell, as verified by Fraunhofer ISE.

    The 156 square millimeter cell was fabricated on a p-type multicrystalline substrate, and integrates Trina’s Honey Plus technologies including back surface passivation and local back surface field.

    This beats the previous record of 20.76%, which Trina set in late 2014. The company says that only low-cost industrial processes which can easily be integrated into high-volume production were used to fabricate the cell.

    http://reneweconomy.com.au/2015/trina-sets-world-record-of-21-25-efficiency-with-multicrystalline-silicon-64922
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    SunEdison to slash asset sale to yieldcos, may scrap buyout plans


    U.S. solar company SunEdison Inc said it would reduce sales of renewable energy assets to its "yieldcos" until market conditions improved.

    The company has been selling some power plants to yieldcos that earn stable income through long-term contracts with utilities. However, the strategy has become less attractive due to weak oil prices.

    SunEdison, facing investor concerns about its liquidity and yieldco model, said on Monday it might renegotiate or terminate existing acquisition deals. (bit.ly/1PmiR3J)

    However, the company said it has "adequate funding or financing commitments in place" to fund its acquisitions.

    SunEdison, which spent more than $6 billion on acquisitions in the past year, said last month it would cut 15 percent of its workforce to reign in costs.

    The company became the first solar company to launch an yieldco in July last year. It operates TerraForm Global Inc and TerraForm Power Inc that manage renewable energy assets.

    SunEdison said it needs about $6.5 billion-$8.8 billion to fund the construction of renewable energy assets through 2016. The company said there were "no assurances" it would raise the money.

    SunEdison said recent market conditions, including falling share prices of the yieldcos along with higher yields on debt financing, have limited the availability and raised the costs of capital available to the yieldcos.

    Shares of TerraForm Global had fallen 50 percent since its IPO on July 31, while the TerraForm Power stock had fallen 27 percent since its IPO in July 2014.

    SunEdison, which expected the yieldco model to lower its dependence on the highly competitive solar panel market, has said it was doing more third-party sales, compared with its base plan of 5-10 percent.

    SunEdison posted a loss of 91 cents per share for the third quarter ended Sept. 30.

    Analysts on average had estimated a loss of 70 cents per share, according to Thomson Reuters I/B/E/S.


    Read more at Reutershttp://www.reuters.com/article/2015/11/10/sunedison-inc-results-idUSL3N13161820151110#uYv1DLAYwR7LADHa.99
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    Agriculture

    Uralkali says may cut Q4 potash sales target by 300,000 T


    Russia's Uralkali, the world's largest potash producer, said it may cut its fourth-quarter sales target by 300,000 tonnes to support demand.

    Global producers of potash, a crop nutrient, have been hit by weak demand this year due to lower grain prices and the weakening of major clients' local currencies.

    Uralkali is currently monitoring the market closely, the company said in an emailed statement on Monday evening, citing Vladislav Lyan, who was appointed the head of Uralkali's export sales from Nov. 1.

    The company, whose sales have been matching output in recent years, narrowed its 2015 production forecast in August to 10.8 million tonnes from a previous estimate of 10.4-10.8 million tonnes.

    It produced 8.7 million tonnes in January-September 2015, but in its statement on Monday it did not disclose its new production and sales forecast for this year.

    Uralkali's former trading partner, Belarus Potash Company, also said in September it would cut exports by 0.5 million tonnes this year from 9 million tonnes a year earlier to support the market.

    Uralkali's decision to quit its trading partnership with Belarus in 2013 boosted global competition in the sector and triggered a price slump.

    Uralkali added that it expected the global potash market to partially recover in 2016, when global demand would reach between 60 million and 61 million tonnes.

    In August, it estimated 2015 global potash demand at 58 million tonnes, down from 63 million tonnes in 2014.


    Read more at Reutershttp://www.reuters.com/article/2015/11/10/russia-uralkali-idUSL8N13510S20151110#hXVAqr5uS6laMZy5.99

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    Precious Metals

    Kinross widens Q3 loss as margins tumble


    Canadian miner Kinross Gold has widened its net loss for the three months ended September 30, as lower prices and higher costs chipped 20% off its profit. 

    The TSX- and NYSE-listed miner, which owned mines and projects in the US, Brazil, Russia, Mauritania, Chile and Ghana, reported a net loss of $52.7-million, or $0.05 a share, compared with a net loss of $4.3-million, or nil per share, in the comparable period a year earlier. The loss was mainly attributable to lower margins as a result of a lower average gold price. 

    Excluding special items, Kinross reported an adjusted net loss of $23.9-million, or $0.02 a share, compared with adjusted net earnings of $70.1-million, or $0.06 a share, in the third quarter of 2014. Revenue fell 14% year-on-year to $809.4-million, owing to a lower average realised gold price and lower gold-equivalent ounces (GEOs) sold. 

    The average realised gold price declined 12% to $1 122/oz, compared with $1 268/oz in the third quarter of 2014. Kinross’s attributable margin per GEO sold was $454, compared with $570 per GEO sold a year earlier. Kinross produced 680 679 attributable GEOs in the third quarter, a slight decrease compared with the third quarter last year, mainly owing to lower output at Maricunga mine, in Chile, as a result of heavy rains in March, which impacted the tonnes of ore placed on the heap leach pads, and at Chirano mine, in Ghana, and Kettle River-Buckhorn mine, in Washington, owing to expected declines in grades.

    The decrease was partially offset by higher output at Fort Knox, in Alaska, and the combined Kupol-Dvoinoye operation, in Russia, owing to higher mill grades, and at Round Mountain, in Nevada, owing to an improved heap leach performance and higher mill recoveries. 

    All-in sustaining costs (AISC) per GEO sold was $941 in the third quarter, compared with $919/oz a year earlier, mainly owing to higher capital expenditures and fewer attributable gold ounces sold, partially offset by lower energy costs and favourable foreign exchange rates. 

    As of September 30, Kinross had cash and cash equivalents of $1.02-billion, excluding restricted cash, an increase of $41.3-million since December 31, 2014. The company had available credit of $1.51-billion. 

    In the quarter, Kinross repaid the remaining $50-million balance on the Kupol loan and as of quarter-end, Kinross’s net debt was $949.2-million, a reduction of $11-million during the quarter and $84.1-million since the end of last year. Other than $250-million in senior notes, which were scheduled to be repaid by September 2016, Kinross had no debt maturities until 2019. 

    As part of the company’s cost reduction efforts, Kinross had reduced its corporate headcount costs by 23% and was closing its Denver office. It had also laid off 222 Tasiast employees in September, for combined savings of about $30-million this year. Kinross expected to be within the full-year guidance range of 2.5-million to 2.6-million GEOs, at an AISC of between $975 to $1 025 per GEO. Kinross’s NYSE-listed stock had lost 37% in value since the start of the year, and on Tuesday closed 3.3% lower at $1.77 apiece.

    http://www.miningweekly.com/article/kinross-widens-q3-loss-as-margins-tumble-2015-11-11
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    Base Metals

    Sumitomo Metal sees Sierra Gorda 2015 copper output at 100 000 t, below target


    Japan's Sumitomo Metal Mining said on Tuesday that it expects copper output of the Sierra Gorda mine in Chile this year to come in at 100,000 tonnes, below a previous target of 123 000 t, due to a delayed ramp-up in production. 

    The Sierra Gorda mine, which it owns jointly with Polish producer KGHM Polska Miedz, began commercial production at the end of June and initial plans called for it to reach full capacity utilisation in December. But the timing of full operation may be delayed until the first quarter of 2016 due to a technical problem that has been found recently, Masahiro Morimoto, director at Sumitomo Metal Mining, told a news conference.

    http://www.miningweekly.com/article/sumitomo-metal-sees-sierra-gorda-2015-copper-output-at-100-000-t-below-target-2015-11-10

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    Sapa says U.S. investigates aluminium product test manipulation


    Norwegian aluminium products maker Sapa said on Tuesday that some employees at its plant in Portland had falsified test records and that the U.S. authorities were investigating the company.

    Sapa a joint venture between Orkla and Norsk Hydro , two of Norway's biggest industrial firms, said it had been temporarily suspended as a U.S. federal government contractor since the end of September.

    A handful of employees had been fired and the misconduct had now stopped, said company spokeswoman Erika Ahlqvist.

    Sapa makes extruded aluminium which is used in a wide range of products, such as car parts, bench seating in sport stadiums and supermarket shelves.

    The tests were used to measure the strength of the aluminium profiles and test how much force it could stand before breaking.

    "Specifically, we have learned that some test results for mechanical properties -- ultimate tensile strength, yield strength, and elongation -- have been altered to change failing test results to passing test results between 1996 and 2015," Sapa said in a statement.

    The firm said the U.S. Department of Justice's (DOJ) civil and criminal divisions were investigating the case.

    Sapa said it was too early to say what the financial impact would be.

    "But the Portland plant is only one out of 22 locations in North America and the share of the total volume from Portland which goes to government customers is less than a half percent," spokeswoman Ahlqvist told Reuters.

    "We are conducting audits now throughout our North American organisation, so all our plants will be audited by external auditors and any findings from those audits will be communicated to our costumers," she said.

    Sapa was originally a Swedish aluminium producer which Orkla bought in 2005. It was merged with a similar unit at Norsk Hydro to create the current joint venture under the name Sapa in 2013.


    Read more at Reutershttp://www.reuters.com/article/2015/11/10/sapa-usa-idUSL8N13526120151110#Q1w6FGQY8ggeQq5X.99

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    Steel, Iron Ore and Coal

    Beijing to phase out coal-fired heating in core areas


    Beijing's central Xicheng District and Dongcheng District will bid farewell to smokey coal-fueled stoves by the end of the year, Beijing Municipal Environmental Protection Bureau said on November 10.

    A total of 23,800 households from the two downtown districts will not use coal as their primary source of heat this winter. The last nine coal sales spots in the two districts will be closed.

    The local residents are encouraged to use clean energy, such as electricity, as a substitute for coal to help improve air quality.

    A project was launched in 2000 to replace household stoves in bungalows with electric radiators in the core areas of the capital, helping the city to reduce its major pollutants over the past 16 years, the bureau said.

    So far, a total of 308,000 households from the Dongcheng District and Xicheng District have changed their heating system to cleaner sources because of the project.

    Environmental monitoring results shows that Beijing's annual average density of sulfur dioxide, a major air pollutant, has been reduced from 120 micrograms per cubic meter in 1998 to 13 micrograms per cubic meter in 2015.

    Beijing has shut down the third of its four major coal-fired power plants – Guohua thermal power plant -- as part of the government’s campaign to cut pollution in the smog-hit city, official media Xinhua news agency reported on March 20.

    In 2013, the municipal government of Beijing rolled out a clean air action plan to bring annual coal consumption down to less than 10 million tonnes by 2017, a reduction of 13 million tonnes in just four years.

    The final coal-fired power plant in the city – Huaneng thermal power plant -- is scheduled to close next year, Xinhua said.

    http://en.sxcoal.com/0/134686/DataShow.html

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    Shanxi Coking Coal to add 5 Mpta coal capacity in Liulin


    Shanxi coking coal Group, the largest coking coal producer in China, is expected to add 5 million tonnes per annum (Mtpa) of coal producing and washing capacity, respectively, in Liulin of Shanxi province, upon gaining official approval on a mine complex and washing plant project.

    The company said on November 9 the project was ready for trial operation and would start it after approved by the Shanxi coal industryAdministration.

    The project helps expanding production capacity of Shanqu No. 1 Mine from 1.8 Mtpa to 5 Mtpa, and Shanqu No. 2 Mine from 1.2 Mtpa to 3 Mtpa, and boosting Shaqu coal washing Plant from 3 Mtpa to 8 Mtpa.

    Shaqu No. 1 and No. 2 mines are the first pair of mines developed in Liuliu mining area by Shanxi Coking Coal, located in Liulin county, Luliang city of Shanxi.

    The mine complex has minable reserves of 1.28 billion tonnes, with the main product being of premium coking coal used for steel production.

    Shanqu Coal Washing Plant mainly produces washed material for domestic users like Baogang, Angang, etc., as well as for overseas customers from Japan and South Korea.

    The project belongs to Huajin Coking Coal, a joint venture of Shanxi Coking Coal and China coal energy that mainly focuses on coal productionin Liliu and Xiangning mining areas in Shanxi’s famous Hedong Coalfield.

    http://en.sxcoal.com/0/134651/DataShow.html

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    Poland may stop producing coal at several mines until at least 2018


    Poland is considering stopping coal production at several of its mines until at least 2018 in an effort to help prices by reducing a global oversupply, while trying to keep state operations afloat and avoid job cuts, Reuters reported.

    Poland's troubled coal mining sector became a focal point, as the government failed to rescue the troubled Kompania Weglowa (KW), the EU's biggest coal miner.

    About 90% of Poland's energy is generated from coal, an industry with a strong local union, which can partly explain why Warsaw has long opposed the EU drive to curb carbon emissions.

    According to Eurostat data, around 83% of energy consumed in Poland is produced from black and brown coal, while in the rest of the EU the average is 28%. With UN climate negotiations in Paris coming up in December and the EU committing to cut greenhouse gas emissions by 40% on 1990 levels by 2030, Warsaw has been under significant pressure to reduce that figure.

    Currently, around 10% of the country’s energy needs are met by renewables (the average in the EU member countries is twice as high, at over 20%) and only 4% comes from natural gas and oil (while in the rest of the EU it is 25%), mostly imported from Russia.

    Due to technological underdevelopment, the productivity of Polish mines is very low, with 648 tonnes of coal produced per worker per year while in the worst US mines it is more then 2,000 tonnes.

    Despite that, Polish producers continue to invest billions in modernizing their coal-fired plants or in building new, more efficient ones. At least four new coal-fired power plants are expected to come on line by 2019, as the country faces a deficit of around 8 GW of capacity starting in 2020, once the EU’s Industrial Emissions Directive kicks in.

    The government would consider merging the country's top power firms — PGE, Tauron, Enea and Energa.

    "Personally I think Poland needs one big power company," said Grzegorz Tobiszowski, responsible for coal issues. He added the move would likely face scrutiny from the European Union over anti-monopoly regulations.

    http://en.sxcoal.com/0/134696/DataShow.html

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    Brazil's Vale says Samarco disaster to cut output at nearby mines


    Brazilian mining company Vale SA said on Monday that a deadly collapse of a tailings dam at Brazil's Samarco, an iron-ore company it owns 50:50 with Australia's BHP Billiton, will cut output from two nearby mines. 

    Iron-ore output from Vale's Fábrica Nova and Timbopeba mines will be cut by three-million tonnes in 2015 and by nine-million tonnes in 2016, the company said in a statement. 

    Vale also said it planned to interrupt the sale of iron ore from its Fazendao mine to Samarco but did not say how much it planned to cut. The disaster on Thursday killed at least two and left 25 missing, and forced the cut-off of drinking water to cities more than 300 km away.

    http://www.miningweekly.com/article/brazils-vale-says-samarco-disaster-to-cut-output-at-nearby-mines-2015-11-10
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    Brazil to look at mandatory dry processing of iron ore after disaster -lawmaker


    A new mining code being proposed in Brazil will include stricter regulations for tailings pond dams and could make dry processing of iron ore obligatory for miners, the bill's reviewer, Congressman Leonardo Quintão, told Reuters on Tuesday.

    At least four people died and 22 are still missing five days after the collapse of two tailings ponds released a torrent of waste water from an iron ore mine operated by Samarco, a joint venture between BHP Billiton Ltd and Vale SA .

    Neither authorities nor Samarco have determined a cause for the rupture of tailings retaining dam.

    But the disaster has led to angry calls for tighter environmental safeguards and speeding up passage of the mining code that has been sitting in Congress for years. Under this pressure, lawmakers are adding the proposals for tailings ponds and dry tailings to an existing bill focuses on raising royalties levied on miners.

    Quintão said dry processing should replace wet processing of ores that requires tailings ponds for the mineral waste and water used in the process.

    "The technology exists and it is not more expensive," the lawmaker said in a telephone interview. He said the code could establish a five-to-ten year transition period for mining companies to move to dry processing.

    The bill stuck is at committee level in the lower house of Congress and, if approved, would still need to be debated and voted in the Senate.

    Senator Delcidio Amaral, an influential politician in the ruling Workers' Party, told Reuters over the weekend that the disaster could accelerate a vote on the mining code and lead lawmakers to include stricter regulations for mines.


    Read more at Reutershttp://www.reuters.com/article/2015/11/10/brazil-damburst-legislation-idUSL1N13516V20151110#0gs2sjAW1YekWzV5.99

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    China's Oct crude steel output falls 3.1 pct on yr


    China's crude steel output fell 3.1 percent to 66.12 million tonnes in October from a year ago, government data showed on Wednesday.

    Production was virtually flat on the previous month, according to data from the National Bureau of Statistics.


    Read more at Reutershttp://www.reuters.com/article/2015/11/11/china-output-steel-idUSENNFB90T120151111#113uk6FdgKAgd8F5.99

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