Tag Archives: Iron ore

BHP, Vale Samarco JV filed for Brazilian bankruptcy protection | Instant News


FILE PHOTO: Brazilian mining company Vale SA logo seen in Brumadinho, Brazil January 29, 2019. REUTERS / Adriano Machado / File Photo

RIO DE JANEIRO (Reuters) – Samarco Mineracao SA, a joint venture between Brazilian miner Vale SA and BHP Group Ltd, has filed for bankruptcy protection to prevent creditor claims from affecting its operations, Vale said in a securities filing Friday.

The collapse of the dam at the Samarco mining complex in 2015 killed 19 people and severely polluted the Doce River with mining waste, one of Brazil’s worst environmental disasters. The facility, which resumed production in December, was the focus of significant litigation from bondholders with nearly $ 5 billion in debt.

“The filing (judicial reorganization) is needed to prevent ongoing legal action … from affecting Samarco’s ability to produce, send, receive for its exports and to fund normal activities,” the company said.

Vale said the filing for bankruptcy protection would not affect Samarco’s ability to pay compensation to those affected by the 2015 dam explosion. It said negotiations outside the court with creditors had slowly failed over time.

The court reorganization request, filed in the state of Minas Gerais, is roughly similar to the United States’ Chapter 11 bankruptcy filing.

Samarco has $ 4.7 billion in financial debt from unrelated parties, Vale said. In the years following the Samarco disaster, Samarco has negotiated with creditors to reach a restructuring agreement. However, those talks slowed down in 2019 following changes to dam regulations in Brazil, which materially affected operations at Samarco, Vale said.

In 2019, another dam exploded at the Vale mine in Brazil, killing some 270 people and prompting tightening of rules governing mining dams.

Most of the debt is now held by “investors active in distressed asset markets,” rather than original bondholders at the time of the disaster, Vale said.

Reporting by Gram Slattery; Edited by Christian Plumb and Will Dunham

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Column: Resource-rich Australia shows the strangeness of any super commodity cycle | Instant News


LAUNCESTON, Australia (Reuters) – For those looking for evidence of a new commodity supercycle, and for those skeptical of a sustainable resource boom, Australian government forecasters have covered it.

An autonomous truck prepares to load iron ore at Fortescue Metals Group (FMG) Chichester Hub Australia, which includes the Christmas Creek iron ore mine, in the Pilbara region, southeast of the coastal city of Port Hedland in Western Australia, 29 November 2018. REUTERS / Melanie Burton

The government’s latest Quarterly Resources and Energy Report, released on Monday, describes how some commodities surged during last year’s coronavirus pandemic, as well as how the gains were not comprehensive and may not be easily sustained.

The headline that caught the media’s attention was that the country’s resource and energy exports would hit a record A $ 296 billion ($ 226 billion) in the fiscal year to June 30, 2021.

Australia is the world’s largest exporter of iron ore, liquefied natural gas (LNG) and coking coal, which is used to make steel.

Indonesia ranks second behind Indonesia for thermal coal and third in copper ore shipments, and is a major producer of aluminum and alumina, the raw materials used to make refined metals.

Australia is also the third largest gold producer in the world and the largest net exporter of precious metals, and is a major supplier of battery metals such as nickel and lithium.

The outstanding performance for the country’s resource sector this fiscal year was driven largely by the top iron ore exports, which were estimated at A $ 136 billion, or just under half, of the total export value, according to a report compiled by the Office. Chief Economist of the Ministry of Industry, Science, Energy and Resources.

This is up from the A $ 104 billion iron ore exports in fiscal 2019/20, which was achieved at higher volumes (up 4%) and prices (up 41%).

The massive boom in iron ore revenue is largely a story fabricated in China, the world’s largest importer of steel spent on boosting its economy after being hit by the lockdown imposed to stop the spread of COVID-19.

The Chinese impact can be seen in several other Australian commodities, with copper export revenues up 20% to A $ 12 billion despite volumes shipped slightly lower.

However, it should be noted that apart from iron ore and copper, only the export value of gold increased in 2020/21, to A $ 29 billion from A $ 25 billion.

Australia’s other major resource and energy exports have declined, including LNG, crude oil, alumina, aluminum, zinc, lithium and both types of coal.

Lower prices for most of the fiscal year were largely to blame, although these have started to recover over the past few months.

SUPERCYCLE, WHAT SUPERCYCLE?

Much of the commodity super cycle story is built around high demand for resources from China, coupled with a synchronous boost from many other parts of the world as countries act to increase growth through infrastructure spending.

There are also expectations that supply for key commodities will struggle to keep pace, given weak investment spending by producers in response to sharp falls in prices in the early stages of the pandemic.

The Australian government report lends credibility to the demand side of the supercycle vision, but only for the commodities most exposed to China’s industrial strengths, namely iron ore and copper.

While others, including battery metals, are also showing signs of recovery, energy products have been underpinned by temporary factors, such as a reduction in producer production in the case of crude oil and a cold northern winter for LNG.

Where the report becomes more interesting is in its long-term view, which doesn’t see much of a demand-driven super cycle, with Australian energy resources and exports expected to rise to A $ 321.1 billion by 2025/26, a growth rate. a combined annual rate of only 1.7%.

It’s going to be a solid, unspectacular result, albeit far from being a supercycle story.

Digging into the breakdown shows that the commodity reports are expected to be most correlated with the energy transition, with export revenues from lithium expected to surge by about 440% from the current fiscal year to A $ 5.4 billion in 2025/26, while nickel will nearly double fold. to A $ 6.5 billion, and copper up 33% to A $ 16 billion.

In contrast, iron ore, this year’s star to the end of June, is expected to fade by then to A $ 104 billion – the same level as in 2019/20 – while LNG will remain relatively stable and both coal values ​​will decline. .

Overall, the report points out two things, first that the evidence for the emerging commodity supercycle is somewhat mixed, and second that while some commodities are likely to perform well in the coming years, profits will not extend to all.

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Australian stocks were slightly higher as a blockage of the Suez Canal lifted commodities | Instant News


* Shipping rates increased, tankers were diverted due to blockages

* Miners jumped nearly 2%, the biggest gain since March 12

* Tech stocks are down, Afterpay is down almost 3%

March 29 (Reuters) – Australian stocks edged up on Monday as higher commodity prices lifted miners and energy stocks amid concerns that global supplies of crude oil and refined products could be disrupted for weeks as workers try to remove containers blocking the canal Suez.

The S & P / ASX 200 index was up 0.1% at 6,830.40 by 0015 GMT. The benchmark closed 0.5% higher on Friday.

Also raising interest in risk is a report on Monday showing that the country expects to post a record A $ 136 billion ($ 103.85 billion) in iron ore exports this financial year as signs global steelmaking is recovering from its induced decline. pandemic.

Copper prices rose in the previous session as markets worried about the impact of costs for transporting industrial metals after the blockage of the Suez Canal.

The mining sub-index jumped nearly 2% on its biggest intraday percentage gain in more than two weeks. Rio Tinto and BHP Group, which have significant copper mining operations, increased by 2% and 2.3%, respectively.

Energy stocks rose 1.4% as oil prices surged on concerns over the Suez Canal. Heavyweight sector Woodside Petroleum was up nearly 1% while Santos was up 2.3%.

Sentiment was weak across Asia with Nikkei futures down 0.5% to 29,295 points, while S&P 500 E-mini futures were down 0.4%.

Tech stocks held off gains in the index, with top loser Megaport’s percentage dropping 3.4%, followed by buy-now-pay-later giant Afterpay, which slipped 2.8%.

Treasury Wine Estates slumped 3.8% after the company said it would face high anti-dumping tariffs on Australian wine exports to China.

In New Zealand, the benchmark S & P / NZX 50 index was up 0.58% to 12,420.3, with Meridian Energy up 3.5%.

Synlait Milk was the biggest loser, dropping as much as 4.2% after the dairy company posted a 76% drop in first-half profit and marked headwinds for fiscal 2021.

$ 1 = 1.3096 Australian dollars Reporting by Aditya Munjuluru; Editing by Sherry Jacob-Phillips

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A Common (and Overlooked) Foundation of Australian Economics – The Diplomat | Instant News


The prospects for the Australian economy are beyond doubt beat expectations. Despite the ongoing COVID-19 pandemic, a net annual decline in Australian GDP standing at 1.1 percent, the best in the OECD. However, much of the apparent economic gain was due to a surge in prices for Australia’s biggest export, iron ore.

Over the last decade, the volume of Australian iron ore exports has decreased an increase of 200 percent, largely supported by increased demand from China. However, even though the Chinese economy has continued for Australian iron ore, other sectors have not performed well. Indeed, China has imposed tariffs on a number of Australian commodities, including barley, beef, lamb, cotton grapes, lobster, and coal.

Tariff imposition has new call to diversify the Australian economy. This is a mantra that is often chanted stated by politicians, both state and federal and from across political aisles. However, as the saying goes, actions speak louder than words. In Western Australia (WA), the state most dependent on iron ore for economic prosperity, it is clear that local governments are implementing a counterproductive strategy.

Emphasis on Trade

After Labor’s landslide victory in the WA 2021 state election, the next cabinet reshuffle saw the dismissal Asian Engagement Portfolios along with the removal of trade commissioners in Indonesia, South Korea, and India, leaving only staff involved locally to promote economic diversification that WA urgently require.

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The office reshuffle now sees India represented by the Dubai office in the Middle East, creating the India-Gulf commission. South Korea will be represented by the Tokyo office in Japan, and Indonesia will now be represented by an ASEAN-level commission based in Singapore. However, the WA government has stated its intention that the commission will move to Indonesia to affirm WA’s commitment to its northern neighbor.

Nonetheless, WA Prime Minister Mark McGowan has illustrated that the state government remains committed to diversifying the WA economy. That claims from critics that the country’s economy cannot be diversified without the Asian Engagement portfolio indicates a lack of understanding about the economic complexities of WA and the Indo-Pacific region.

The premise of the prime minister raises an interesting point. Much has been said about the need to diversify WA’s resource-intensive economy. What is often overlooked, however, is the expansive nature of WA’s resource sector. Much of the discussion has centered on two main premises: China and trade. While both remain important, they do not cover the bigger picture of the complexity of the WA economy.

Excessive Emphasis in China

When it comes to WA’s trade and investment portfolio, as well as Australia’s trade relations more generally, China often dominates discussions – promoting this misconception. The allure of Chinese influence is clear. Indeed, Australia Top 30 export industries rely on one dominant customer – China. Especially, the Chinese market accounts for 56 percent WA’s export market share.

Despite China’s dominance in the WA export market, it would be a mistake to ignore the importance of WA diversification efforts based on China’s example. Taking an overall economic perspective, the dominant players in WA are still the United States and the United Kingdom.

US and UK undoubtedly are largest foreign investor in Australia, they account for 25.6 percent and 17.8 percent of Australia’s total, respectively. China on the other hand, only accounts for 2 percent of investment in Australia. This stark difference in the importance of trade vs the importance of investment reflects two different ideological frameworks that govern the US-UK and Chinese strategy.

Juxtaposition of Approaches

China’s strategy is dominated by an extraction framework. This means that China’s economic activity with Australia is directed at commodities that Australia offers to the Chinese market. Indeed, the large Chinese population coupled with the rapid development of the Chinese economy have engineered the conditions for large-scale public and private consumption of Australian resources.

At the same time, the importance of the WA resource sector to the Chinese economy cannot be underestimated. The Australian economy continues to be the fourth most leveraged economy for China in the world. What this means is that most of Australia’s exports to China tend to stay in China, more often than not ending up in fixed investment which will continue to drive China’s economy.

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In contrast, the Anglo-American strategy is governed by a long-term framework. This is in large part because WA’s resource sector continues to be resilient and has been the driving force of the Australian economy for more than a century. British and American companies have recognized the opportunities WA has provided Chevron Investments in WA’s domestic gas portfolio at its Wheatstone, Gorgon and North Shelf facilities BP feasibility study into a hydrogen energy production facility in WA.

Reframing the Conversation

The resilience of the WA resource sector remains visible. Throughout the COVID-19 pandemic, the resource industry has provided WA with Australia’s only operational budget surplus. Hence, even in the uncertainty of a global pandemic, the WA resource sector continues to be the engine of driving a large part of the Australian economy. However, when discussing the importance of the resource sector, there appears to be an overemphasis on demand, mostly from China, and little consideration for the supply side, particularly from US and UK companies.

In contrast to China, America and the UK continue to see the opportunities that the WA resource sector has to offer. Thus, instead of engaging in discussion of the end game, i.e. export destinations, perhaps, there should be a shift to the nature of the capital-intensive industry and a renewed focus on investment, which America and Britain seem best to do.

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Brazilian prosecutors will investigate Vale over the Steinmetz complaint | Instant News


RIO DE JANEIRO (Reuters) – Rio de Janeiro police have begun investigating allegations filed by Israeli billionaire Beny Steinmetz that Brazilian miner Vale is illegally hiding from its shareholders the conditions under which the Steinmetz company BSGR is supposed to mine one of the world’s largest iron ore deposits, said state prosecutor on Friday.

Vale and BSG Resources Ltd (BSGR), which signed a joint venture agreement in 2010 to develop the vast Simandou field in Guinea, are caught in a protracted legal dispute over an iron ore project.

The concession was later revoked by the Guinean government after claiming to have evidence that BSGR obtained this right through corruption. BSGR denies these accusations.

In January, a Swiss criminal court found Steinmetz guilty of corruption and forgery to obtain an iron ore exploration permit and sentenced him to five years in prison for a deal that BSGR obtained for the project. Steinmetz said he would appeal the verdict.

In an October filing, Steinmetz accused Vale executives of “fraudulently withholding information from their shareholders about the true risks of billions of dollars in transactions and disclosing false information about the terms under which the deals were signed over the past ten years.”

In a memorandum dated March 18 and confirmed to Reuters on Friday, the prosecutor’s office said police would interview Vale’s executive and former director as part of the investigation.

The prosecutor’s memorandum did not state the specific risks Steinmetz said should be disclosed to shareholders.

However, it refers to previous allegations by BSGR that Vale fraudulently removed relevant information from its shareholders and disclosed false information about the conditions under which the deal was concluded. The memorandum said that if Vale did what BSGR claimed it would be a crime under Brazilian law.

Reuters has no independent evidence to support or refute this.

In a statement to Reuters, Vale said: “Vale … has no knowledge of the aforementioned investigations.”

“Any new attempt by Mr Steinmetz to try to evade his responsibility to compensate Vale will inevitably have the same result of his punishment,” he added.

Steinmetz will also answer in civil and criminal court for his wrongdoing.

Steinmetz was not immediately available for comment.

BSGR is still trying to reopen an arbitration case in London that ordered it to pay $ 1.25 billion to Vale for its investment in Simandou. Vale accused BSGR of fraudulently persuading him to buy a 51% stake in the mine.

BSGR entered into voluntary administration to protect it from legal disputes in 2018.

Reporting by Gram Slattery in Rio de Janeiro and Clara Denina in London; Edited by Howard Goller

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