Author: yinghui

Terex Corp. has received an unsolicited, non-binding acquisition proposal from China’s Zoomlion Heavy Industry Science and Technology Co. to acquire all of the outstanding shares of Terex for $30.00 in cash. The proposal is conditioned on, among other things, receipt of U.S. and Chinese regulatory approval and Zoomlion shareholder approval.

Terex announced last August that it had entered into a Business Combination Agreement with Finland-based Konecranes Plc providing for a combination of Terex and Konecranes. The Terex board of directors has not changed its recommendation of the proposed combination with Konecranes.

Terex acknowledged it has entered into a confidentiality agreement with Zoomlion and is in discussions with Zoomlion regarding the proposal. Consistent with its fiduciary duties, the Terex board of directors, in consultation with its legal and financial advisors, is carefully reviewing the Zoomlion proposal to determine the course of action that it believes is in the best interests of Terex shareholders. Terex will have no further comment until the board has completed its review.

Credit Suisse Securities (USA) LLC and Moelis & Company are serving as financial advisors to Terex and Fried Frank Harris Shriver & Jacobson LLP, Bryan Cave LLP and Avance Attorneys Ltd are acting as legal counsel to Terex.

Zoomlion is believed to be China’s second largest construction equipment manufacturer, valued at about $4.4 billion.

Terex stock, which closed Friday at $15.49, has jumped 37.1 percent to $21.24 as of 2 p.m. EST Jan. 26.

The third Australian manganese operator in two months has closed operations as the commodity price falls.

Shaw River, owner of the Otjozondu manganese project in Namibia, has entered voluntary administration “as a consequence of low manganese ore prices”, which halved in 2015.

It follows fellow Australian companies OM Holdings – which closed its Bootu Creek mine in December – and Consolidated Minerals – which shut down its Woodie Woodie mine last week – in shuttering its operations.

Shaw River is placing “itself in a trading halt and then in voluntary suspension while the company pursued a restructuring of debt as a precondition of a fund raising to be initiated in the New Year,” it said in a company statement.

It explained that while it still has a credit line with its major shareholder available, “beyond an initial loan amount all additional drawdowns were at the discretion of the lender….late in the year, the lender informed the directors that its capacity to advance further funds was limited.”

Shaw River carried out an SPP last month to reduce debt obligations, however it failed to raise enough from its shareholders.

“Unfortunately the company has not received any assurance from a third part that is it possible to raise funds in the short term for a company such as Shaw River that operates in the resources sector or more particularly in the manganese sector, particularly while the stock markets are volatile.”

Shaw stated it has already ‘aggressively’ pared back operating costs “t o levels not previously thought possible”, however the fact that manganese ore has fallen to levels not seen since 2003 negated its efforts.

“These low ore prices are having consequences,” the miner said.

“Within the manganese ore market, production of internationally traded ore has been severely pruned with full and partial closures of mines in many countries including notably South Africa and Australia, and the closures announced continue at least through January.”

However despite the wide scale slaughter manganese operators are facing , Shaw River managing director Peter Cunningham does see a future for the commodity.

“These cutbacks are resulting in shortages of some grades of manganese ore,” he said.

“Spot prices in China are showing early signs of recovery.

“However, demand in China has been constrained in advance of Chinese New Year, and so stocks of ore in China ports have yet to decline significantly. Demand is expected to improve after Chinese New Year, and this improvement should provide opportunity for restructuring of Shaw River and its subsidiaries.”

Approximately 380 workers jobs have been cut as Consolidated Minerals place the Woodie Woodie mine in care and maintenance.

Workers were informed of the decision late last week, which will affect the 330 FTE and 50 contractors on site, according to the ABC.

The miner blamed falling manganese prices as the driver behind the operation’s closure.

“Despite the relentless efforts and substantial achievements of our leadership group, our employees and our suppliers to transform Woodie Woodie into a globally competitive operation which we can all be proud of, the price for manganese ore is now so low that continuing to operate is no longer an option,” Consolidated Minerals managing director Paul Muller said.

Woodie Woodie is the second Australian manganese mine to close in as many months, after OM Holdings placed its Bootu Creek manganese mine – in the Northern Territory – into care and maintenance in December.

That same month South32 announced its plans to lay off more than 400 workers from its manganese operations in South Africa.

Consmin will keep approximately 30 workers on staff, 15 onsite and 15 at its head office in Perth, to restart operations once the commodity picks up again.

BGC Contracting has won a five year contract extension with Cliffs Natural Resources.

The $520 million contract will see BGC Contracting extend their operations at the Koolyanobbing iron ore project past the original end date of 2017 to 2022.

It has been on site since 2004, initially providing off-road haulage, which was expanded to include mining operations in 2007.

Under the contract BGC will continue to provide mining services, in including drilling, blasting, loading, haulage, dumping, crushing, screening, and train load-outs.

Greg Heylen, BGC Contracting’s CEO, explained the extension came on the back of the contractor’s “ability to meet Cliffs’ safety and production targets during a challenging period for iron ore producers”.

“This has been a tough period as the iron ore price has fallen, and I believe that by maintaining strong relationships with Cliffs at all levels of our organisation, we have helped them succeed at Koolyanobbing in what has been a difficult market for all iron ore miners,” Heylen said.

The project is located in WA’s Yilgarn region, 400 kilometres north east of Perth.

China has announced it will shut more than 1000 mines across four provinces in the country’s north and south.

The country currently has approximately 9620 legal coal mines.

It comes after the nation announced it will not approve any new coal mines over the next three years.

The move is part of a bid to dramaticallyreduce existing coal stockpiles.

The latest coal mines to be shut are in the Yunnan, Jiangxi and Guizhou provinces in the south, and the Heilongjian province in the north, according to China Daily.

China’s deputy director for the State Administration of Work Safety, Huang Yuzhi, explained it will reach its production and stockpile target by slashing the number of smaller operating mines.

“More than 1300 coal mines were closed last year, and small coal mines with a scale of annual production of less than 300,000 tons that had major accidents will be gradually closed this year, as well as those mines that are operating illegally,” Huang said.

A new IBISWorld report has highlighted petroleum refining, contract mining, and diamond mining as the country’s fastest declining industries in 2016.

Petroleum refining is slated to shrink 16.7 per cent this year, with industry revenue to decline at compound annual rate of 7.7 per cent over the five years through 2015-16 to sit at $19.1 billion.

In little surprise, as the mining industry declines contractor and support services are predicted to decline in line with the sector and as operators look to in-house production rather than outsourcing services.

The industry is highly dependent on trends in mining activity, particularly black coal and iron ore mining activity, as these are Australia’s largest resources in terms of both volume and value,” according to IBISWorld senior industry analyst Spencer Little.

“As commodity prices have fallen, many mining firms have ceased expansion and exploration projects, and instead shifted their focus to production.

“This has been to the detriment of contract miners in the industry, as many services that were previously contracted out have been brought back in house,” Little said.

IBISWorld forecasts a 6.3 per cent decline in contract mining, engineering, and services companies revenue down to $11.2 billion.

This follows the sharp 14 per cent decline in revenues recorded last year.

Diamond mining is also slated to fall, after a short rally in 2014, when it saw a 24 per cent growth in revenues.

Instead the industry is predicted to experience an annual compound decline of 4 per cent over the five years through 2015-26, to fall to $380.1 million.

“The industry’s performance has been volatile over the past five years, due to fluctuating production volumes and prices; a significant drop in revenue in 2013-14, and another expected fall in revenue in 2015-16 are expected to underpin the industry’s poor performance over the period, “ IBISWorld stated.

This fall, while in line with the general decline in mining, has been precipitated by Australia oversupplying the market.

“As a result, the industry is heavily export-oriented and industry players depend on global demand for diamonds. According to the Department of Industry, Innovation and Science, in 2013-14 export volumes of Australian diamonds dropped from 12.2 million carats to 10.4 million carats,” IBISWorld added.

“Industry operators also face strong competition from imports, which account for a large proportion of total domestic demand,” Little said.

The exit of Kimberley Diamonds, previously a major industry player, is expected to negatively affect the industry’s performance in 2015-16.

In July 2015, Kimberley Diamonds announced that it had ceased its local diamond mining operations at its Ellendale site and entered into voluntary administration.

This exit is expected to cause a major dip in diamond production volumes and contribute to a 13.3% decline in industry revenue in 2015-16.

There has also been additional shakeup in the diamond industry, with the announcement today Rio Tinto’s head of diamonds and minerals, Jean-Marc Lieberherr, has stepped down, to be replaced by the current head of salt and uranium, Simon Trott.

Following our analysis of the super commodity cycle and the conclusion that commodity prices should stay low or continue to fall for the next 15 years, this article looks at the future.

It looks likely that the recent fall in commodity prices may be one of the biggest ever on record. The fall may even match the 66% implosion experienced between 1917 and 1931.

One fact in every supper commodity cycle is that every rise in commodity prices is followed by oversupply. This oversupply continues for years as companies battle it out in a dangerous game of survival to cut production and costs.

Remember the oil crisis in the 1970s? The current oil price is lower than it was in 1981 as there is just too much oil production. Oil producers are still pumping like crazy to maintain “market share” and their biggest enemy is other oil producers, not their customers. Witness the warm feeling Iran has towards the West and Saudi Arabia proxy wars on Iran.

Do you remember the shortages of steel, iron ore and a host of other materials such as lumber and rubber? Neither does the rest of the world. In the case of steel, depressed prices flow from massive overproduction of the magnitude that the world can rebuild its infrastructure over the next decade with the current iron ore supply.

Steel prices have also not hit rock bottom yet as more supply is on the way and iron ore prices have fallen by two thirds.

Consumers, on the other hand, have fat years ahead of them as the prices of wheat, corn, oats and meat are at their lowest levels ever in real terms – the cheapest in real terms. We have more than 750 years of wheat price data and it shows that wheat prices at the end of 2015 were in fact 6% cheaper than at the end of 1973 in nominal dollar terms.

Simply put, the world has too much food such as maize and wheat. Beef and chicken prices are dropping in USD terms too. I guess that by the end of the low commodity cycle consumers in advanced countries will spend less than 5% of income on food and in some cases more on eating out.

The effects on emerging market economies like South Africa will be huge if history repeats itself and the world enters a period of another 15 years of low prices for our commodity exports. That takes us back to when we had to watch the current account balance like hawks.

I will stick my neck out and make the prediction that most of the falls are behind us, but commodity prices have another 30% to fall from in real terms but it could be that prices must fall another 20% before we hit rock bottom.

The world changes in this part of the cycle.

Remember the hyper or high inflation in Germany in the 1920s and ’30s and the depressed prices in places such as the US and the UK at the time?

Something similar is happening today. Brazil and Russia have double-digit inflation and Venezuela may have inflation higher than 100%.

Growth in Europe and the US is picking up but many have deflation such as Switzerland or very low inflation such as the Eurozone and the US. Japan too has very low inflation.

The realignment of currencies is probably the biggest difference between the Great Depression world and current weak growth. Currencies are acting as buffers for commodity exports and as further deflationary anchors for the developed world and China.

Rising unemployment in Brazil, Russia, Saudi Arabia and of course Africa will also have significant political implications. Add the lower growth outlook to the Middle East and Africa and those two continents will again start falling back along with much of Latin America. This in turn will allow increased inequality between rich and poor countries.

Not only will these countries suffer lower income from commodities but their interest rates and inflation will be higher. The impact will also be visible in their current account and government fiscal balances will remain under pressure.

Just like any perfect storm these countries will also see ratings downgrades. Generally these are the parts of the world where population growth is still higher than the average and that also indicates that the richer world will see migration from these countries continue.

This will not be a once off situation but will continue well into the first part of the next commodity upswing so expect Europe and North America to continue to see high numbers of refugees and migrants. Perhaps Japan, China and Thailand will also see migration to their countries.

This will continue well into the 2030s and will have big impacts on housing; religion and social cohesion in the receiving countries. The brain drain of the developing world will unfortunately continue but over time tourism and remittances will grow strongly as well as some exports of local favourites (Mrs Balls Chutney comes to mind.)

The big man syndrome along with Dutch disease will be off the radar for the next two decades and poor countries will get out of mining and other services to mining. We will see privatisation make a very big comeback in most African and Middle Eastern countries as budget holes enforce sales. Africa will become much more of a friendly investment destination as countries implore companies to invest.

The rich world will evolve into the next evolution in economic terms with renewable energy, energy storage and new services. Countries who are dependant on commodity exports will have to find new ways to attract wealth and to create jobs. It will have to change to allow for the delivery of more value-added services such as tourism, call centres and probably even high-end personal services to the richer world.

Commodity companies will change
Importantly however is that another 15 years of low commodity prices would also ensure the metamorphoses of commodity and agriculture companies.

These companies will employ fewer workers and will become much more mechanised and automated.

The companies will grow larger and larger to make use of economies of scale and they will innovate to develop new mining methods and concentrate their effort in countries where barriers to operations are lower. They will become more important for commodity countries to attract and that will be their main strength for the next two decades. The bigger companies will take over state-owned companies and increase productivity and bring modern management methods to play.

Agriculture will also go big and in contrast to the mining sector, there will be room for small niche farms such as the production of organic produce.

The small farmer will be the specialist, the generalist will be massive!

Doosan has developed a new range of severe duty buckets for crawler excavators.

The buckets are designed for operators who need buckets that can work in abrasive materials in heavy digging and loading applications.

The buckets are approved for use with Doosan’s DX140LC-5 through to its DX530LC-5 crawler excavators.

They are available in both pin-on and wedge-lock style.

According to Doosan, its severe duty buckets are available in sizes ranging from 45 centimetres to 1.82 metres for larger Doosan excavators.

The buckets have been built with abrasive resistant materials for increased protection when digging in loose rocks, open pit, or quarry operations, with the side cutters, shell bottoms, side wear plates, and weld-on shroud also built from the similar material.

Reinforcing gussets have been added to increase the strength of machine fitting joint on the bucket.

Front wear pads have been included to provide extra protection from rocks and other materials.

An abrasive wear strap also comes as standard.