New Chairman of the Supervisory Board of ASK Chemicals

Following a decision of the supervisory board of ASK Chemicals GmbH, Peter Steiner (53), has been named the new Chairman of the supervisory board. He has been a member of the board since the past year. In this role he follows Dr. Hans Juergen Wernicke. Peter Steiner is a self-employed auditor and tax advisor. During the course of his professional career he has not only worked in senior management positions for well-known investment and consulting companies, but also served as a management board member for industrial companies such as the GEA Group AG and the Dyckerhoff AG. Dr. Hans Juergen Wernicke has resigned his position as Chairman of the supervisory board. As a member of the management board of the Süd-Chemie AG, he was responsible, among other things, for the foundry consumables business. Since the acquisition of the Süd-Chemie AG by Clariant SE, he has served as a consultant for the Clariant management board. “Dr. Hans Juergen Wernicke has been instrumental in shaping the current ASK Chemicals, we are thankful for his long-term service to our company. With Peter Steiner our supervisory board will again be led by an experienced industry manager. We are looking forward to working with him in the future,” comments Stefan Sommer, the company's CEO.

Major zinc deposit discovered near Borroloola

Rox Resources has discovered a major zinc deposit near Borroloola in the Northern Territory. Known as the Teena prospect, the high grade resource is located only 10 kilometers from the existing McArthur River mine. Mr Ian Mulholland MD of Rox Resources said that although the full extent of the deposit remains unclear at this stage, the results of the first drilling program look very promising. It's the first hole but we are following up some other encouraging results. Mr Mulholland said that "The second hole is currently underway now, and even though we don't have assays from that, it is looking similar to the first. We certainly have the indications that there's something very significant here, that will require a pretty significant exploration program over the next few years.”
He said that the discovery was made after the company found previously unreported drilling records for the site. It was following up on a series of historic holes that had been drilled in the late 1970s. The results of those holes had never been reported to the Mines Department, so we did a bit of research and were lucky enough to find those results. And that gave us the guide to drill in this particular place. Mr Mulholland said that any future mining operation at the Teena prospect site would be well placed, given the amount of infrastructure already in place across the region. McArthur River already has extensive infrastructure built for the mine that's already there. He said that "There is a road in from Darwin, and that seems to be able to cope with the traffic it gets. There's a big airport at the mine itself, so a lot of items are flown in and out. A port is on the coast, about 100 kilometers to the north, to export the concentrate, and there's a gas pipeline which comes in from central Australia. So I think, from an infrastructure view, we couldn't be better set up.”

China aluminum production increases by 8pct in H1

According to data released by the China Nonferrous Industry Association, China's aluminum production totaled 10.58 million tonnes in the H1 of 2013 rising by 7.9% YoY. It's expected that China's aluminum production will continue to rise in the second quarter since new capacity will be commissioned, mainly in the northwestern China. In the given period of time, China's net imports of primary aluminum totaled 455,000 tonnes, falling by 81% from 236,000 tonnes in the same period of a year ago.

Shanghai copper may suddenly drop to CNY 49620

Shanghai copper may suddenly drop to CNY 49,620 per tonne as it looks very shaky around a resistance at CNY 50,180. The resistance is provided by the 76.4% Fibonacci retracement on the fall from the July 23 high of CNY 50,690 to CNY 48,540. It still holds firm after three attempts to break this level. That indicates a dissipation of the bullish momentum which has been driving copper from CNY 48,540 an hourly chart low touched on July 31. Wave pattern suggests the completion of a small five wave cycle rising from CNY 48,540. It seems all the signals point to a drop towards CNY 49,620 the 50% retracement.

London copper hits near 2 month high on upbeat China trade data

London copper hit its highest in nearly 2 months after trade data suggested China's economy is stabilizing while stronger than expected copper imports fanned earlier short covering gains spurred by a weak dollar. A rebound in China's exports in July offered hope that the world's second largest economy may be finding its feet after a slowdown that has prompted the government to shore up activity. Ms Natalie Rampono at ANZ in Melbourne said , "Markets are near record shorts in copper so after positive news in China's trade data, we could see copper prices finally break out from the recent trading range, but I don't think it will be sustained.”
She said that "We're in the seasonally slower months for demand, so we're still expecting a bit of near term weakness. Markets may well be preempting the expected seasonal Q4 recovery in demand.” ANZ sees prices averaging USD 7,330 in December, and closing the year around USD 7,500 per tonne. Three month copper on the London Metal Exchange rallied to USD 7,170 per tonne, it's highest since June 17 before edging back to USD 7,163 per tonne as of 0710 GMT up 2.2% on the day
The most traded November copper contract on the Shanghai Futures Exchange climbed 3.1% to close at CNY 51,530 per tonne. The dollar crumbled to 7 week lows, triggering off a volley of short covering in metals. On demand, China's imports of copper rose 8.1% to 410,680 tonnes in July from 379,951 tonnes in the previous month. Mr Matthew Wonnacott a consultant with CRU in Beijing said that "Scrap has been tight and you've got steady demand and quite a bit of surplus material has been locked up in LME warehouses. The market has tightened up quite a bit over the end of July, start of August. As long as the premiums stay high, China is going to be an attractive place to send material but that will depend how much surplus material is around.”

Austria's Amag beats its 2012 core profit guidance

Amag Austria Metall's core profit fell 11 percent to 134 million euros ($175 million) in 2012, beating guidance the aluminium group gave in November. Amag also said it expected flat earnings for 2013 and a positive business trend for the first quarter thanks to a high order backlog. Amag had said in November it expected 2012 earnings before interest, tax, depreciation and amortisation (EBITDA) to fall to 128-133 million euros from nearly 150 million in 2011. Sales were flat at 814 million euros in 2012. The company said it would keep its dividend steady at 0.6 euro. Amag said high demand had led to full capacity utilisation in 2012 and its Rolling division's shipments topped 150,000 tonnes for the first time, allowing the unit to contribute 61 percent to group sales. It declined to give a specific financial forecast for 2013. "Macroeconomic uncertainties, such as volatility concerning raw materials and foreign currencies as well as possible effects of the sovereign debt crisis, make it difficult to give a precise forecast for 2013 at this time," it said. UC Rusal, the world's largest aluminium producer which is set to report earnings, could see a sharp fall in 2012 earnings because of uncertain supply and demand dynamics and cost inflation. Amag, in November, had forecast a challenging 2013 given jittery markets after low aluminium prices helped push its third-quarter core profit down 11 percent.

Sterlite's copper smelter on stream

India's top copper smelter can stay open, an environmental court said, ensuring that over half of the country's output of the metal stays on stream. The Sterlite Industries' plant, which produces 30,000 tonnes of copper per month, was shut for two months from March 30 after complaints from residents over emissions, forcing India to boost imports of copper. The plant re-opened on June 16 after an interim court order. Sterlite, a unit of London-listed Vedanta Resources Plc, says the plant's emissions are not dangerously high. The court said recommendations from an expert committee should be implemented. These included regular maintenance and better air-quality monitoring. An environmental report into India's biggest copper smelter found no major irregularities in its operation or any negative impact on air quality during an inspection, but called for safety audits, regular maintenance and better air quality monitoring. The report, commissioned by the environment court considering whether Sterlite Industries' smelter should remain in operation, will be used by Judge Swatanter Kumar to reach a ruling. India was forced to boost copper imports when the smelter, which accounts for over half of the country's refined copper output, was closed for more than two months from March 30, after residents protested about of air pollution. The Indian smelter has long been the target of protesters and politicians who call it a risk to fisheries in the coastal town of Tuticorin. The court-commissioned environment report, also called for a mechanism to inform residents near the plant in the event of an accident. On the issue of air quality, it said "not much inference can be drawn as regard to the contribution of emissions from the plant to the ambient air quality considering that the wind velocity during the period (of inspection) was very high, which helped in immediate dispersion of the pollutants". It said sulphur dioxide emissions were within allowable limits during the inspection period. The company says the smelter, which has been operating at fully capacity since it restarted, does not have emissions above prescribed limits. Sterlite's parent Vedanta Resources Plc is also exporting 4,000 tonne of refined copper a month from Dubai to India, the company source said. Several cases have been filed against Sterlite since its Indian smelter started in 1996. In a different case, India's top court in April fined the company about $18 million for breaking environmental laws at the smelter. Sterlite, whose parent is controlled by billionaire Anil Agarwal, has been waiting for government clearances to double the capacity of the smelter to 8,00,000 tonne a year.

RTB Bor operating profit rises 34% on improved output

RTB Bor, Serbia's sole copper producer, said operating profit climbed 34.4 percent last year as upgrades led to bigger output. Operating profit for 2012 climbed to 4.99 billion dinars ($58.3 million) as production of copper cathodes increased 28 percent to 32,339 tonnes. Silver output rose to 5.5 tons from 4.5 tonnes a year earlier, the Bor-based miner and smelter said. Production of gold decreased 10.5 percent to 900 kilograms, while sulphuric acid output rose to 90,735 tonnes from 74,000 tonnes.
The state-owned company that returned to profitability in 2011 after more than two decades of losses, said it invested $152 million last year in upgrading flotation and other equipment. More than two-thirds of the spending was for a new smelter, due to be completed in 2014 that will cut production costs per ton of copper to $3,700 from $6,500.
RTB Bor plans to produce 42,230 tonnes of copper cathodes, 917 kilograms of gold and 5.2 tonnes of silver in 2013, the company said.

Hindustan Copper stake sale in April – June quarter

Seeking to avoid bunching of PSU stake sales towards the end of this fiscal, government has decided to kick off disinvestment programme in the April-June quarter of 2013-14 by offloading equity in Hindustan Copper (HCL). Draft CCEA note has been moved for inter-ministerial comments for 10% stake sale. These are small issues and to be pushed for the first quarter itself, said an official source. The government has already identified around 20 companies for stake sale and sources said that 2013-14 budget is likely to fix disinvestment mop-up at Rs 40,000 crore. "Work has already started for disinvestment in next fiscal. Officials of the Disinvestment Department have started meeting the administrative ministries to decide on future course of action," the source said. Also, the second tranche of HCL stake sale is likely in the April-June quarter. The government had divested 5.58 per cent stake in HCL in the first tranche that happened in November last year. The government had fixed Rs 30,000 crore as disinvestment target for the current fiscal. So far it has been able to realise Rs 21,504 crore through stake sale in five companies.

Freeport-McMoRan plans four-part bonds for plains buyout

Freeport-McMoRan Copper & Gold Inc., the mining company purchasing Plains Exploration & Production Co. and McMoRan Exploration Co. for about $9 billion, is planning to sell debt in four parts to help fund the acquisition. The world's largest publicly traded copper producer may sell five-, seven-, 10- and 30-year securities, according to a person familiar with the transaction. The deal announced December 5 will give Freeport oil fields in the Gulf of Mexico, after Houston-based Plains bought assets from BP Plc and Royal Dutch Shell Plc for $6.1 billion in September, as the company returns to its roots in energy. The bonds, with the exception of the five-year notes, will be redeemed at 101 cents on the dollar if the deal is not completed by June 5 or, if extended, by September 5, said the person, who asked not to be identified because terms aren't set. Bank of America Corp. and JPMorgan Chase & Co. are managing the offering. Freeport last sold debt a year ago, issuing $3 billion in a three-part offering.

Balco expansion on card

Vedanta Resources, a London Stock Exchange-listed globally diversified metals and mining company, is planning a major expansion in its subsidiary—Bharat Aluminium Company Limited (Balco). “The group plans to expand the capacity of power plant to 2,000-Mw besides producing 1 million tonne of aluminium in Balco,” Vedanta Resources Chairman Anil Agrawal said. The expansion projects would be taken up once the on-going projects go on stream, he added. Balco, which has major aluminium facility in Korba district of Chhattisgarh, would become the first plant in the world to produce a million tonne of aluminium from a single facility. The company is presently operating a 245,000 tonnes aluminium plant and 810-Mw captive power unit. After the Vedanta Resources acquired 51% stake in Balco, the group went for a major expansion plan in the plant that had 100,000 Tonnes capacity. A new plant with a capacity of 325,000 Tonnes is ready for operation besides a 1200-Mw power plant set up in Balco. Both the plants would generate employment opportunity for about 5000 people. “We are hopeful that we would soon get the consent to operate for the power plant that would power the new aluminium plant,” Agrawal said. He had a wish to even set up a 2-million tonne alumina plant in Chhattisgarh, the Vedanta Chairman said, adding that he had deep sentiment associated with Balco. When he purchased Balco, Agrawal recalled, he was nothing in the metals and mining industry. “Balco gave me a big credibility and the group prospered to become a name in the industry,” he added. Despite pumping in more than Rs 8000 crore in Balco for expansion and upgradation, the group had not taken a single penny from the company. “The money that we earned from Balco is spent on the company here itself,” Agrawal said. Even the power produced in Balco would be used by the facilities located here.

Sterlite copper lines up Rs 3300-cr investment in two years

Vedanta Group company Sterlite Copper has lined up investments of about Rs 3,300 crore over the next two years which includes expansion of copper smelter and power plants at Tuticorin in Tamil Nadu and setting up a new desalination plant in the region. Expansion of our plant is on the cards. It is actually a brownfield expansion activity. We have planned to double our capacity of copper smelters to eight lakh tonnes at our plant (in Tuticorin), Vedanta Group company, Sterlite Copper, Chief Executive Officer, P Ramnath said at a seminar on "Opportunities and Challenges in Manufacturing Sector", organised by CII. With the expansion activity, he said the company would increase the job creation in the locality from the present 3,500 to 5500 people and indirect jobs of 20,000 to 35,000 people over the next two years. Ramnath later told reporters funding for the brownfield expansion would be raised through "internal accruals". The current capacity of our plant at Tuticorin is 400,000 tonnes per annum. Once the zero date is fixed, it will take two years time to complete the project. He said the expansion would happen in its 400 acre facility at Tuticorin. On the 160MW power plant, he said the investment made into it was Rs 600 crore and the first unit with a capacity of 80 MW was already operational. The company has already connected 15 MW to the Grid. The second unit is expected to commence operations 'shortly'. On setting up of a desalination plant, he said it would be of 10 million litres per day (MLD) capacity and would be established at an investment of about Rs 200 crore. It will take two years time (for completion). The funds will be raised through internal accruals. Yes, the contract has already been awarded to Larsen and Toubro. This plant will come in Tuticorin itself, he answered to a query. Asked about the company's revenues, he said Sterlite Copper is expected to complete this financial year with revenues of Rs 19,000 crore compared to last year's Rs 18,000 crore.

China's moves to cut metal capacity just getting started Clyde Russell

China's plans to force more than 1,900 companies to cut excess capacity in bloated industries including aluminium, have met with an underwhelming response from the market. Certainly, the moves to make China's heavy industries more efficient will have little immediate market impact, but what analysts and investors may be shrugging off a little too lightly is that once trends and processes start, they tend to gather momentum. The edict to close some capacity by September will do very little to end surpluses in aluminium production in China, as they will impact less than 1 percent of capacity. In aluminium, about 260,000 tonnes of annual capacity may be shut, a fraction of the existing capacity of about 27 million tonnes, which is already about 28 percent higher than demand of about 21 million tonnes. In copper, some 654,000 tonnes of production may be closed, which is insignificant when compared with the existing idle capacity of more than 7 million tonnes. On these numbers alone, the market is right to be skeptical about the impact of the July 25 announcement. Aluminium output rose to an annualised rate of 22.42 million tonnes in June, and first-half production was almost 11 percent higher than for the same period last year. The market dynamic at work in China appears to be that new, more efficient capacity is coming on line at a faster pace than older, uneconomic capacity is closed. To make matters worse, much of the production that sits higher on the cost curve is being kept active through subsidies on power, largely from provincial governments more focused on keeping jobs. It's much the same story with steel, where mills would rather run at a loss than idle capacity and surrender market share. But the question to ask is whether Beijing's moves to trim excess and inefficient capacity will continue, or whether they will stall? Investors and analysts tend to focus on each announcement in isolation, rather than viewing them as part of a process. It would be unrealistic to expect China to make huge, sweeping changes in what are, after all, industries vital to economic development. Much more likely is a fairly lengthy process in which steps are gradual and aimed at creating minimal upheaval, not so much in the market of various metals, but more in the political and social sphere.

Freeport's Grasberg copper output may fall 20% short of 2013 target

Freeport-McMoRan Copper & Gold Inc.'s production at Grasberg in Indonesia, the world's second-largest copper mine, may be 20 percent below this year's target after a deadly tunnel accident in May suspended work. Daily production at Grasberg, which has open-pit and underground facilities, is close to 80 percent to 90 percent of its normal rate, Rozik B. Soetjipto, president director at unit PT Freeport Indonesia, said.
The underground mine may take some time to reach its capacity, he said. Freeport had targeted output of 1.1 billion pounds of copper and 1.2 million ounces of gold this year, the company said. The deposit, located in Papua province, normally produces 220,000 tons of ore a day. Phoenix-based Freeport halted work for more than a month at Grasberg after a tunnel collapse on May 14 killed 28 workers. Shipments from the mine resumed last month after the Indonesian government allowed operations to restart. The suspension at Grasberg affected production by about 125 million pounds of copper and 125,000 ounces of gold in the second quarter, the company said on July 23. Indonesia's government has been pushing metal mining companies in the country, including Freeport and Vale SA, to raise the royalties they pay to 10 percent, as part of negotiations to extend the companies' mining contracts. Freeport has agreed to raise royalties for copper to 4 percent from 3.5 percent, for gold to 3.75 percent from 1 percent, and for silver to 3.25 percent from 1 percent, Soetjipto said. The government is also seeking higher state revenues from the mining industry by increasing domestic metals processing to lift the value of shipments. It plans to ban all mineral-ore exports starting from 2014. Freeport will still be allowed to export concentrates in 2014 as the company is committed to developing domestic metal processing, Soetjipto said. Freeport exports about 60 percent of its concentrates and the rest of its output is processed at PT Smelting, Indonesia's only copper smelter.

Vedanta Aluminium's Niyamgiri mining objected

The Rayagada district administration has received 129 objections from five out of seven villages in the district identified by the state government for holding of gram sabhas to decide the fate of a bauxite mining project at Niyamgiri. Of these, 40 objections have been filed by individuals. The first gram sabha will be held on July 18 at Serkapadi village in Rayagada district. The state government had decided to organise gram sabhas in 12 villages, including five in Kalahandi district. The month-long gram sabha proceedings would culminate on August 19. Excavation of bauxite from Niyamgiri hills was crucial to run Vedanta Aluminium Ltd's (VAL) alumina refinery plant at Lanjigarh which is shut since December 5, last year due to raw material crisis. "We will send all the objections made by the villages to the village forest committees (VFC) for discussion. After validation in the palli sabhas under the supervision of the district and session's judge, the documents will be sent to the Supreme Court," said an officer in Rayagada administration. "Almost all demands of the villagers including their religious rights will be taken into consideration," he said. In its April 18 order on the Niyamgiri bauxite mining project (BMP), the Supreme Court (SC) held that if the BMP, in any way, affects the religious rights of Dongaria Kondha, Kutia Kondha and others, especially their right to worship their deity, known as Niyam Raja, in the Niyamgiri hill range, that right has to be preserved and protected. Meanwhile, the Niyamagiri Surakhya Samiti (NSS), the tribal organisation spearheading the anti-mining agitation in Niyamagiri hills, is holding meetings in the identified villages to educate the indigenous tribes - Dongaria and Kutia Kondhas, to air their grievances in the proposed palli sabhas. The organisation has demanded for holding of gram sabhas in all 110 villages located on this hill range instead of limiting its scope to only 12 villages.

Antofagasta posts stronger than expected Q2 copper output

Chilean miner Antofagasta beat expectations with a smaller than expected quarter-on-quarter dip in copper production, as scheduled maintenance at its flagship Esperanza mine was more than offset by higher production elsewhere. Costs, however, continued to creep higher, with cash costs before by-product credits coming in almost 5 percent higher than the first quarter, due to higher energy costs at its Los Pelambres mine. Lower gold prices meant net cash costs rose more than 18 percent. The London-listed mining group produced 180,300 tonnes of copper in the second quarter, down from 183,800 on the first three months of the year, but well ahead of expectations closer to 171,000 tonnes. It said gold production in the quarter totalled 76,700 ounces, down 11 percent from the first three months, again due to lower throughput at Esperanza. Antofagasta said it was on track to meet its full-year copper output target of some 700,000 tonnes, broadly in line with 2012 levels.

Mongolia parliament approval not needed for Oyu Tolgoi financing

Rio Tinto does not need to seek Mongolian parliamentary approval for a $4 billion financing package to fund development of an underground mine at the Oyu Tolgoi copper project, Mongolia's prime minister said. "Parliament has already made the decision and signed their agreement," Prime Minister Norov Altankhuyag said at a weekly press briefing. "Cabinet doesn't have to be involved. All issues can be discussed and decided at the board of directors' level," he added. Rio Tinto put all work on the underground expansion of the Oyu Tolgoi mine on hold, saying it had been advised that project financing provisionally secured for the project would need to be approved by parliament. It expected the process would take some months to work through as parliament was on summer recess. Rio Tinto and the Mongolian government have had a bumpy relationship over the politically sensitive project, which started exporting copper earlier in July following two last-minute hiccups in securing government approval. Oyu Tolgoi is 66 percent owned by Rio Tinto's Turquoise Hill unit, and 34 percent owned by the Mongolian government. The Mongolian government has raised concerns about the cost of the expansion project and the potential that rising costs will delay when it starts receiving its share of profit from the mine. The expansion is designed to take production to 425,000 tonnes of copper and 460,000 ounces of gold a year. Altankhuyag told the briefing that any question over costs for the underground expansion, which is expected to cost more than $5 billion, should be resolved at the board level.

AMAG sees lower profit on aluminium prices fall

Austria Metall AG (AMAG) forecast a fall in core profit of up to 13 percent this year as aluminium prices fall and reported a 10 percent drop in the second quarter, though this was not as severe as expected. AMAG, which is 54 percent owned by a consortium of B&C Industrieholding, Oberbank and the AMAG employees' foundation, said its three divisions had run at full capacity in the first half and it expected this to continue in the third quarter. "The management expects a positive year from an operational point of view, although the factors ... like (the) aluminium price and pressure on margins are likely to result in a year-on-year decline in profit," it said in a statement. AMAG said it expected full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of between 116 and 121 million euros ($154 and $160 million), down from 134 million in 2012. The company, which produces primary and liquid aluminium as well as aluminium products for the aircraft and automotive industries, said the average aluminium price had fallen 8 percent in the first half. The company's second-quarter results beat average forecasts in a Reuters poll on all levels, with stable shipments of 93,700 tonnes, sales down 6 percent to 210 million euros and net income after taxes down 8 percent to 19 million euros. Analysts had on average expected 16.7 million euros net profit after tax..

Odisha's large mining project on Cabinet watch

The project monitoring group of the Cabinet secretariat will vet the progress of 22 large projects in Odisha across all mining sectors. A 10-member team led by Anil Swaroop, additional secretary, Cabinet secretariat, will negotiate with the Odisha chief secretary and other concerned officials on problems impeding the progress of these projects. The meet is aimed at fast tracking approvals and clearances in respect of these projects. The projects to be reviewed include the alumina refinery of Vedanta Aluminium Ltd (VAL) and an aluminium smelter of Aditya Aluminium Ltd to name a few. The deliberations will also focus on headway achieved in case of key rail link projects like Paradeep-Haridaspur, Talcher-Bimlagarh and Angul-Sukinda. “The Cabinet secretariat's project monitoring group has identified 22 projects that require deliberation with the state government. The group's mandate is to review large infrastructure and manufacturing projects,” said a senior official with the state planning & coordination department, in a report. Aditya Aluminium Ltd, a unit of Hindalco Industries Ltd, is facing problems with respect to processing of forest clearance for its linked coal block Talabira-II and III, a matter pending at the Odisha government level. The company had lined up Rs 13,195 crore investment for establishment of a one million tonne per annum alumina refinery at Rayagada and 0.36 mtpa aluminium smelter at Lapanga near Sambalpur. The Mahaguj coal mining project proposed at Chhendipada in Angul district has been marred by strong resistance from local residents to public hearing. Moreover, the demand for 33 per cent free power from coal washery rejects from the state government is set to render the project unviable. Mahaguj is a joint venture between Maharashtra State Power Generation Company Ltd and Gujarat State Electricity Corporation. Also, the aluminium smelter of Vedanta Aluminium has been facing intensified resistance from the neighbouring tribal groups. Among the rail projects, the Rs 1,000-crore Paradeep-Haridaspur rail project has been delayed since the application for Stage-I forest clearance is yet to be submitted to the Union ministry of environment & forests (MoEF). Similarly, Stage-I forest clearance is held up for the Talcher-Bimlagarh rail link.

Aurubis Q3 operating pretax loss 8 million euro

German copper smelter Aurubis posted a third quarter loss as a drop in metal prices forced it to write down the value of inventories and derivatives. The operating pretax loss came to 8 million euros ($10.6 million), compared with a year-earlier profit of 74 million euros, Aurubis said as it published key figures ahead of schedule. Between early April and late June, the price of copper slipped by 11 percent, gold prices dropped more than 26 percent, marking their biggest decline since 1920, and silver was down more than 35 percent, Aurubis said. These price declines meant that it had to revalue precious metal inventories and derivatives relating to metal price hedging transactions. It also saw lower availability of copper scrap as traders retained stocks in hopes of rising prices. Processing fees dropped by a quarter compared with the year-earlier quarter, and sulphuric acid prices fell by about a third as demand from fertiliser markets eased, it said. Aurubis said it still expects a good operating performance in its fourth quarter and does not see valuation losses like those incurred in the third quarter. Aurubis is due to publish full third-quarter financial results on August.

FM levies 10% export duty on bauxite

Bauxite starved aluminium smelters are heaving a breather, albeit marginally, with the Finance Minister P Chidambaram's decision to levy 10 per cent of export duty on the raw material. The decision would make bauxite exports uncompetitive and hence, increase domestic availability. An Icra report estimates India's bauxite export at around 0.48 million tonnes in the first half of the current financial year, a rise of 151 percent from the corresponding period last year. Its exports to China was reported at 0.11 million tonnes in September 2012 alone. “India's bauxite output went up by 30 per cent in the first half of the current fiscal as compared to a mere 2 per cent increase in aluminium output. This means, a lot of surplus bauxite remained available for use in domestic smelters. Consequently, miners have been exporting despite the fact that companies like Vedanta Aluminium faced huge supply shortage of the raw material,” said Soumyajyoti Basu, an analyst with Icra. China, a perennial bauxite importer, faced huge supply problem from other origins including Indonesia which forced them to turn towards India for sourcing of the aluminium raw material. Indian suppliers were also lured because of higher realization which according to Icra report went up by 55 per cent during April – September 2012 period as compared to the last year. “The export levy would help reduce its shipment to China, making thereby an additional availability for domestic smelters,” he added. During the third quarter of the current financial year, the domestic primary aluminium manufacturing industry was exposed to a significant shortfall in the availability of bauxite. Issues ranging from protests in tribal areas and non-renewal of government approvals hampered bauxite mining and consequent alumina production of the domestic primary aluminium manufacturers to an extent. For instance, National Aluminium Company Ltd (Nalco) faced a shortfall in bauxite because of temporary suspension of mining at its Panchpatmali bauxite mines due to the expiry of its mining lease. The company, however, subsequently received a temporary work permit and mining of bauxite is expected to normalize soon. In addition, the Vedanta group shut production at its 1 MTPA Lanjigarh refinery because of non-availability of adequate bauxite for the plant. While the company had earlier obtained captive bauxite mining rights at the nearby Niyamgiri hills, the same could not be started because of environmental issues. Prior to the shutdown, the Lanjigarh refinery was run on bauxite sourced from the states of Andhra Pradesh and Gujarat, which increased production costs. Understandably, the availability of additional bauxite would help the domestic aluminium industry to increase its capacity utilization being the industry running into deficit.

Pan Pacific sees copper surplus at 5-year high

World copper supply may outstrip demand in 2014 for the second straight year to a five-year high as mine output increases amid slowing demand from China, the world's biggest user, according to Japan's top producer. Supply will exceed demand by 643,000 metric tons next year, the highest since 2009, compared with 143,000 tons this year, said Yoshihiro Nishiyama, senior executive officer in the marketing department at Tokyo-based Pan Pacific Copper Co.
Copper has lost 12 percent this year while inventories almost doubled as demand dropped amid slowing growth in China and Europe's debt crisis. An increase in supply may further depress prices that entered a bear market this month, cutting costs for manufacturers including Sony Corp. and Honda Motor Co. “The slowdown in China's consumption growth is the key factor for the global surplus next year,” Nishiyama said in an interview.
The country's consumption will decline 2.5 percent next year, he said. China's leaders pledged at a Politburo meeting this week to maintain steady second-half growth while pressing on with economic reforms. Gross domestic product rose 7.5 percent in April-to-June from a year earlier, down from 7.7 percent in the first quarter, extending the longest streak of sub-8 percent expansion in at least two decades. Goldman Sachs Group Inc. projects a surplus of 257,000 tons in 2013 and 392,000 tons in 2014, according to a July 24 report. Morgan Stanley forecast a deficit of 70,000 tons in 2013 and a surplus of 420,000 tons in 2014, according to a July 1 report. New and expanding mine output including Oyu Tolgoi in Mongolia, Kamoto and Kov mines in the Democratic Republic of Congo and Caserones, Collahuasi and Escondida in Chile, will add 742,000 tons in 2013 and 990,000 tons in 2014, Nishiyama said. World production of refined metal will increase 7 percent to 21.9 million tons in 2014 from 2013, while demand will grow 4.5 percent to 21.3 million tons, Nishiyama said.
The output forecast included an estimated loss of 6 percent by supply disruptions, including the Garfield smelter in the U.S., the Tuticorin smelter in India and the Gresik smelter in Indonesia. Output at Indonesia's Gresik smelter is expected to decline by between 30,000 tons to 40,000 tons following an accident at the Grasberg mine in May, Nishiyama said.

TDT Copper to enter into backward integration

TDT Copper, India's third largest primary copper rods producer only after Hindalco Industries and Sterlite Industries, is planning to set up a backward integration project through acquisition of a closed smelter in the South East Asia (SEA). With an earmarked investment of Rs 100 crore, the company plans to produce virgin copper cathode from concentrates in Thailand to take advantage of India's free trade agreement (FTA), the negotiations for which are currently in advanced stage, with it. The company is looking for a closed smelter in Thailand with an operating capacity between 1000-1500 tonnes a month with an estimated investment of around Rs 100-crore. We would revive it similar to the way we did for TDT copper, to feed our Indian wire rods plant. We are in talks with a couple of players. The deal is expected to be closed in three – six months, said Avinash Ladha, managing director of TDT Copper. The company currently procure copper cathode, the key raw material for producing wire rods, from overseas smelters including Codelco, First Quantum and Glencore to name a few. TDT Copper was set up as one of the first 100 per cent foreign direct investments in India by two multinationals – Taihan Electric Wire Co Ltd, South Korea (having large international presence in copper, wires and cables of over five decades) and Tomen Corporation of, Japan (world's 40th largest corporation by sales) based on Southwire Continuous Cast Rod System (USA), a technology adopted by most of leading global producers. After running the unit for a couple of years, it was closed down. Following that we took over the wire rod plant exists currently in Haryana, near Delhi in 2009. We spend around Rs 50 crore on its revival and now, the plant is running smoothly with an annual turnover of Rs 700 crore, said Ladha. Operating with full capacity, TDT Copper has currently the installed capacity of 79200 tonnes per annum. The company's clientele base includes Havells, KEI, Paramount, BHEL (transformer), Orient fans etc. Also, TDT has acquired around 100 acres of land from the Gujarat government to develop an industrial park in Vadodara to help industrial houses – both domestic and global – enter the state with a record of India's fastest growing industrial growth. With an assistance from TDT Copper professional, an investor can acquire even a small piece of land bank to commence manufacturing and service unit in Vadodara.

Rio, Mongolia extend Oyu Tolgoi funding as talks set to continue

Turquoise Hill Resources Ltd., the Rio Tinto Group unit in charge of the Oyu Tolgoi copper and gold project, said construction funding was extended while talks will continue with the Mongolian government to resolve their dispute.
“The Oyu Tolgoi LLC board has approved continued funding to progress the project,” Vancouver-based Turquoise Hill said in a statement, without giving a timeframe. “All parties have agreed to continue discussions during March 2013 with a goal of resolving the issues in the near term.”
Oyu Tolgoi LLC, in which Rio's Turquoise Hill has 66 percent and Mongolia the rest, had its budget approved only to the end of February. Officials from the company and the government held a board meeting to discuss issues including funding for the $6.6 billion project, cost overruns and disputes over tax and other payments.
The dispute escalated this year as President Tsakhia Elbegdorj called for Mongolia to have more control of the project, which will make up 30 percent of Mongolia's economy once it's in full production. The project will begin output as planned by the end of June “subject to the resolution of the issues” with the government, Turquoise Hill said in the statement.

Tajik aluminium smelter cuts H1 output 19 percent

State-owned Tajikistan Aluminium Company (Talco), Central Asia's largest aluminium smelter, cut output by 18.7 percent year-on-year to 117,600 tonnes in the first half as prices dipped, the government said. "The decrease in aluminium output by 27,061 tonnes in January-June 2013 was primarily caused by price volatility on the London Metal Exchange and higher railway transit tariffs charged by Uzbekistan," the Economy Ministry said in a statement. Tajikistan relies on aluminium sales for more than a third of its export revenue. The average price of Tajik aluminium fell to $1,914 per tonne in the first half of this year, or $166 lower than in the same period of 2012, it said. Last year Talco cut output by 1.8 percent to 272,500 tonnes after the smelter was hit by a temporary halt of natural gas supplies from Uzbekistan. All of Tajikistan's railway routes lie across Uzbekistan, which has strained relations with its much poorer neighbour. The Economy Ministry said that, despite the difficult first half, it was confident Talco would achieve its 2013 output target of 287,600 tonnes. Aluminium exports, which comprise 35.4 percent of all Tajik exports, fell by 28.7 percent to $216.7 million in the first half of 2013

Russia's Rostec offers Norilsk copper deposit for shares

Russia's state conglomerate Rostec and mining company Metalloinvest have offered Norilsk Nickel a stake in the vast, untapped Udokan copper deposit in Siberia for 3-4 percent in Norilsk, Sergei Chemezov, Rostec head, said. Metalloinvest won a tender to develop Udokan in 2008, shortly before the global financial crisis, agreeing to pay 15 billion roubles ($500 million). However, a slide in the price of copper, regarded as one of the metals most sensitive to the fluctuations of the global commodities cycle, has undermined the economics of a project in which costs could run to an estimated $8 billion.

KGHM sees Sierra Gorda Chilean copper project cost rising 34%

KGHM Polska Miedz SA, the copper producer with the largest European mine output, said the cost of developing its Sierra Gorda project in Chile will be 34 percent higher than planned. KGHM, which holds 55 percent in Sierra Gorda, forecast the capital expenditure to start the mine will be $3.9 billion, compared with an earlier estimate of $2.9 billion, the Lubin, Poland-based company said in a regulatory statement. Sumitomo Metal Mining Co., Japan's second-largest copper producer, owns the rest of the project. KGHM became the majority holder in the mine, which is set to start production in the second quarter of 2014, after buying Canada's Quadra FNX Mining Ltd. last year. The $3 billion acquisition, which was the biggest foreign takeover by a Polish company, is part of KGHM's plan to raise annual copper output to 700,000 tonnes from 427,000 tons produced in Poland in 2012. Sierra Gorda's goal is to produce 220,000 tonnes of copper a year. Higher investment spending comes from higher labor, materials and energy costs as well as the strengthening Chilean peso, KGHM said in an e-mailed statement. The state-controlled company said in a separate statement its 2012 net income declined 80 percent to 753 million zloty ($237 million) in the fourth quarter from a year earlier, beating its own forecast of 674 million zloty. Earnings fell after KGHM booked a pretax profit of 2.31 billion zloty from the sale of its stake in mobile-phone operator Polkomtel Sp. z o.o. in 2011 and started paying a copper tax in April.

Chile state miner Codelco's projects to lift copper output

Chilean state miner Codelco plans to invest more than $5 billion this year, up from the roughly $4 billion it spent last year, as it seeks to stave off rapidly dwindling ore grades in its tired deposits. The world No. 1 copper producer has launched an ambitious, long-term investment plan of roughly $28 billion to boost output at its aging mines. Codelco is aiming to produce more than 2 million tonnes of the red metal by 2021, a big leap from last year's under 1.7 million tonnes. Century-old Chuqicamata is undergoing a $4.156 billion metamorphosis into a sprawling underground complex. Codelco has already begun early work to turn the massive open-pit mine into an underground operation expected to produce 340,000 tonnes of copper annually. The deposit, which is featured in the biopic of leftist revolutionary Che Guevara, was once one of the world's top copper mines, but ore grades have slipped in recent years. It produced around 249,000 tonnes of copper in the first nine months of 2012, a 23.6 percent tumble from a year earlier. Chuquicamata's underground copper and molybdenum reserves are estimated at about 1.7 billion tonnes. Codelco expects to complete the project at the end of 2018.
The new deposit at Ministro Hales Mine, which Codelco expects to finish by the fourth quarter, is forecast to produce 170,000 tonnes of copper and 300 tonnes of silver per year. The $3.083 billion project is close to Chuquicamata and is currently under construction. At Andina Mine II, Codelco aims to more than double output at its aging Andina mine to about 600,000 tonnes of copper per year, which would make it the company's top deposit. The company has completed its Andina Phase I expansion aimed at taking output to more than 300,000 tonnes per year. The next step of the project is valued at $6.77 billion and could be finished by 2021. It is now in the basic engineering stage. Codelco wants to expand the mine's processing capacity as Andina struggles to lift output that stood at 249,900 tonnes last year, according to the Cochilco state copper commission. With a $3.47 billion price tag, Codelco seeks to dig deeper to expand its El Teniente deposit. The project aims to maintain output at about 430,000 tonnes of copper per year. Exploited for more than a century, El Teniente could even be expanded further for additional production once the project is finished by late 2017. The project is under construction. Codelco is injecting $4.4 billion for development at its Radomiro Tomic open-pit mine after finishing an initial expansion phase in 2010. Output from the Radomiro Tomic mine reached about 313,000 tonnes of copper in first nine months of last year. The Phase II project, currently undergoing a feasibility study, is expected to be finished by 2017.

Rio Tinto Alcan to immediately curtail 50000 tonnes of aluminium production

Rio Tinto Alcan will immediately curtail 50,000 tonnes of production at its Shawinigan smelter in Quebec and will progressively curtail the remaining 50,000 tonnes of capacity by the end of November 2013.
Mr Arnaud Soirat CEO of Rio Tinto Alcan Primary Metal said that "This decision follows a strategic review that explored every option for continuing smelting operations; due to dated technology and continued weakness in aluminium prices, Shawinigan's primary aluminium capacity is not currently sustainable. We will work closely with our valued customers to limit the impact of this decision.”
Mr Étienne Jacques COO of Rio Tinto Alcan Primary Metal North America said that "Rio Tinto Alcan understands that the Shawinigan aluminium smelter is an important part of the Canada's industrial history and we will work with our key stakeholders to ensure that we manage any impact caused by this curtailment has in the most sensitive and respectful way.”

CME fines Glencore for violating COMEX copper trading rules

Glencore Ltd was fined $25,000 and ordered to pay back $66,200 in profits for trading copper contracts in a way that violated COMEX exchange rules, according to a notice posted on the CME Group Inc website. At a panel hearing on July 31, COMEX member Glencore settled with the COMEX Business Conduct Committee while neither admitting nor denying violating the rule. COMEX ruled that at the close of business on November 29, 2012, Glencore held a position of 3,130 short contracts in the December 2012 COMEX copper contracts, 36.1 percent above its approved level of 2,300 short contracts. Glencore subsequently liquidated its overage position to gain profits of $66,200, the notice said.

Delay in Indonesian tin pushes up prices

Tin shipments from Indonesia have been delayed in the past month as producers and their customers clash with the government over an overhaul of Indonesia's tin export rules. Traders said that the shortage in deliveries has pushed up the price of tin for immediate delivery on the London Metal Exchange and traders expect prices could rally further in the coming weeks. A senior source at a consumer, estimating tin shipments had dropped 30% to 50% in the past month said that our tin shipments have been drastically reduced. There is intense discussion between tin producers, their customers and the government involved in setting up the new regulation. This is one of the major reasons for the reduction in exports. Traders said that Indonesia plans to force all its 51 registered tin exporters to trade on a domestic exchange after August 29 as the nation seeks a greater role in commodities pricing. But some producers, reluctant to turn away from direct deals with existing customers, had held back shipments due to a lack of clarity over physical delivery mechanism of the physical tin contract run by the Indonesia Commodity and Derivatives Exchange.