Archive for category: Iron Ore

The world’s biggest iron ore miner has flagged plans to grow production by 18 per cent over the next six months, continuing a year of strong supply and market share growth at the big end of the sector.

Brazilian miner Vale’s vow to build on its record output over the past six months came as Rio Tinto vowed to achieve the higher end of its target range for iron ore exports in 2018, and as BHP prepares to report on Wednesday what many believe will be its strongest-ever quarterly iron ore export statistics.

Vale produced 96.8 million tonnes and sold 86.5 million tonnes during the three months to June 30, and said it would further grow production in order to meet its target of producing 390 million tonnes of iron ore in 2018.

“In [the second half of 2018] Vale’s production profile indicates volumes over 100 million tonnes per quarter, supporting the production guidance for 2018 … of around 390 million tonnes,” said Vale in a statement.

That production target should not be confused with a sales or export target; Vale has not provided guidance on 2018 exports and has vowed to prioritise profit margins rather than production or export volumes. But the target highlights the rapid growth in output from the company’s high-grade S11D mine in the Carajas region of Brazil.

Rio also reported a strong first half of 2018, confirming it exported 9.4 per cent more iron ore from Western Australia than it did in the first half of 2017.

That result represented Rio’s fastest sequential growth rate for a first half since 2014, when iron ore exports were 22.3 per cent higher than the first half of 2013.

Rio has vowed to ship between 330 million and 340 million tonnes of iron ore from Western Australia in 2018, and is on track to achieve that goal at the half way mark, having shipped 168.8 million tonnes since January 1.

The three months to December 31 are traditionally the most productive for Western Australian iron ore exports, meaning Rio could yet beat its export target, but in keeping with its “value over volume” mantra, the company indicated its second half exports would roughly match its first half exports.

“Shipments are expected to be more evenly distributed between the first and second halves compared to prior years when shipments have typically been skewed to the second half,” said Rio in a statement.

“Shipments in 2018 are expected to be at the upper end of the existing guidance range.”

The extra supply from the big miners may explain why iron ore prices have averaged 8.5 per cent lower over the past six months than in the first half of 2017, but UBS analyst Lachlan Shaw said he did not believe the big miners were flooding the market with supply.

“I would characterise the market as one where the big producers are perhaps gaining a bit of share, I don’t think they are pushing the market into oversupply, ” he said.

“You need to balance out the fact there is more production coming from the big guys against the fact there is less tonnes coming out of other producers. The Indian state of Goa is out of the trade, Samarco is out, Anglo American’s Minas Rio in Brazil is also out, Chinese domestic supply has been trending down and there are a bunch of other small producers in the trade that have racheted tonnes back, or left the trade entirely due to economics.”

US miner Cliffs recently announced plans to close its low-grade iron ore operations in WA, while Atlas Iron has also announced plans to suspend or reduce production at two of its low-grade iron mines in WA.

Rio’s Canadian iron ore operations have also underwhelmed, with labour disputes forcing a guidance downgrade to between 9 million and 10 million tonnes; the company had previously expected to ship up to 11.3 million tonnes from the business in 2018.

The world’s fourth-biggest iron ore exporter, Fortescue Metals Group, is scheduled to publish full-year production data on July 26.

Rio sold record amounts of lump iron ore from WA in recent months in a bid to access the price premiums applied to that product. Rio said it received an average of about $US63 per tonne for its iron ore in the first half of 2018.

Rio’s copper division is also on track to achieve the top end of its guidance range after a stronger than expected start to 2018, but the production of aluminium was slightly weaker than expected, putting Rio behind the pace required to achieve full year guidance.

Rio also warned that cost inflation had risen faster in the aluminium sector over the past six months than it did in all of 2017, and was expected to continue rising.

Rio downgraded production guidance for its titanium dioxide business for the second time this year on the back of strikes and operational disruptions in South Africa.

Rio had previously expected to produce up to 1.4 million tonnes of titanium dioxide in 2018, but now expects to produce between 1.1 million to 1.2 million tonnes.

Source: FINANCIAL REVIEW

In a move that could make accounting simple for calculating royalties and auction prices of mines, the ministry of steel has made a case for subsuming both in the goods and services tax (GST).

“Royalty is a big concern (for industry) and we need to rationalise royalty and auction money, which can then become part of input credit,” Union Steel Secretary Aruna Sharma said on Friday at the National Conclave on Mines and Minerals.

Currently, minerals like iron ore and manganese, used to make steel, are taxed at 5 per cent under GST, while finished steel is in the 18 per cent bracket.

There is a need to rationalise auction prices and royalties paid on minerals, and to subsume royalties, auction prices and the district mineral fund to ease the mining business, she said.

The ministry is preparing a draft proposal on this and, once done, will be sent to the Department of Revenue in the Ministry of Finance. Satish Pai, managing director, Hindalco, said: “Many tax and duties are charged (on mining). It is a better idea that all of them are subsumed under one umbrella tax.” Currently, royalty on iron ore in India is levied at 15 per cent ad valorem.

According to Pratik Jain, partner, indirect tax, PwC, India, reduction in the GST rate on steel per se from 18 per cent to 12 per cent is feasible. “Mining royalty comes under the purview of states and they will have to come on board if it is to be subsumed in the GST. They might ask the Centre to compensate them for this loss as well. Therefore, this would need a detailed deliberation and consensus building, which is likely to take time.”

States received Rs 148.95 billion in 2017-18 as royalty revenue. “We have won three limestone blocks in the past two years and are looking for more to meet our cement expansion plan but the government needs to resolve issues of high transfer charges and forest clearances for mines,” said Mahendra Singhi, group chief executive officer, Dalmia Bharat Cement.

In his address, Union Mines Minister Narendra Singh Tomar said 45 mineral blocks auctioned earned Rs 1.55 trillion, and work on 11 of those blocks would commence soon. He added 102 fresh mineral blocks were ready for auction. The mines ministry has asked states to approach potential investors.

Source: BUSINESS STANDARD

Dry Bulk Magazine reported that Tata, India’s largest private sector iron ore producer, meets the entire iron ore requirements for its two steel plants from captive mines. All four mines are in east India’s Odisha and Jharkhand states.

State controlled NMDC and Sail are the other two major Indian iron ore producers. NMDC increased iron ore production by around 4% to 35 million tonne in 2017 2018. Sail has not yet published its production figures for 2017 2018.

Tata is currently expanding the capacity of its steel operations in India. The 3 million tonne per year Kalinganagar steel plant in Odisha is being expanded to 8 million tonne per year of capacity. Tata also acquired the 5 million tonne per year Bhushan Steel this year. Its flagship Indian steel mill is the 9.6 million tonne per year Jamshedpur plant in Jharkhand.

TATA met 29% of its coking coal requirements through its captive mines but imported the rest of its requirements. The company imported 8.3 million tonne of coal in 2017 – 2018 from Australia, New Zealand, Canada and the US, but did not provide any further details or comparative figures.

Source: DRY BULK MAGAZINE