Author: yinghui

Gindalbie Metals has hit a roadblock with the withdrawal of funding by joint venture parent Ansteel.

The WA miner announced last week it would voluntarily halt trading after it was informed by Ansteel, owner of the controlling share (52.16 per cent), that it would be “unable to continue providing funding support to Karara due to the impact of economic and industry downturn”.

Gindalbie is a JV owner of the Karara Project, located 200 kilometres east of Geraldton, which employs a workforce of around 1000, jobs that have been thrown into jeopardy by funding withdrawal.

The company is expected to make an announcement prior to commencement of trading on Tuesday 12 January.

The West Australian reported that the subsidiary operator Karara Mining has lobbied the WA government for royalty and tax concessions, in the effort to cut $200 million from operating costs to break even at current iron ore prices.

Last month Karara CEO Zhang Zhao Yuan met with mine and finance minister Bill Marmion and Department of State Development director-general Stephen Wood.

In early December Gindalbie chairman Keith Jones said it would be more costly to close the mine than to operate, which it would continue to do as long as Ansteel was prepared to subsidise losses.

It is understood Karara Mining is locked into high haulage costs due to take-or-pay agreements made with Brookfield rail during the mining boom.

Karara has already benefited from $9.3 million in temporary royalty concessions in the form of a 50 per cent rebate over 12 months to last September.

Last May Karara consolidated $US1.48 worth of loans into a single facility, with the maturity date moved to 2030.

Ansteel’s involvement with Karara originally began as a means to directly source material for its steel making operation at Bayuquan near the port of Yingkou.

Iron ore is trading around $US41.40 per tonne, compared to $US120 in 2011 when the Karara mine began operations.

In FY2014 the Karara mine produced nearly 2.4 million tonnes of concentrate from 5.853 million tonnes of magnetite ore.

Ausenco has been awarded a number of coal processing plant contracts and work in Africa.

It is currently finalising the terms for the upgrade of a CHHP flotation module, at an unnamed NSW coal operation, worth approximately $17 million.

The EPC project includes the design, supply, construction, and commissioning of the flotation module, as well as modifications to parts of the existing CHPP to support the upgrade.

Work is slated to begin this month, and take around 12 months to complete.

Ausenco has also been awarded a $15 million, three year ‘Optimise phase’ contract to provide operation and maintenance services for the CHPP at the Isaac Plains coal mine.

The contract will run for three years.

On top of these Australian wins, Ausenco has also been awarded work in Africa, working on a six month ‘Optimise phase’ extension of works at Vale’s Moatize CHPP in Mozambique.

Kramer Ausneco has also seen strong growth in PNG.

Undersea mining has made a leap forward with the development and testing of a new machine in the UK.

Proactive Investors flagged the announcement from Specialist Machine Developments, a UK company that was acquired last year by a subsidiary of China’s CRRC Zhouzhou Institute.

Land-based testing of the 310 tonne deep sea ore harvester was recently completed in Newcastle.

Details are sketchy, but the new machine was touted as the world’s most powerful to date, boasting two megawatts of power and capacity for underwater oil and gas, trenching and cable laying applications.

The equipment is designed to be used in conjunction with a cutting machine and collecting machine to engage in mining activities.

A new survey is forecasting a growth in equipment related technology by Australian miners in the next two years.

The latest Timetric Mining Intelligence Centre survey predicts a boom in safety, maintenance, and productivity related technology.

“A substantial share of Australian mines have already invested in environmental monitoring, fleet management and predictive maintenance technologies, with tyre monitoring, collision avoidance and remote control/machine automation to be the key areas for future investment,” Timetric stated.

The group surveyed 100 mine managers and other decision makers across operating Australian mines late last year, asking respondents to identify which of 12 different mine site technologies they have invested, and will invest, into.

These technologies included fleet management, environmental monitoring, energy management, and collision avoidance technology, as well as drones and wearable technology.

“The results show the highest share of respondents (88 per cent) have invested in environmental management technologies, followed by an assembly of technologies focused around the vehicles and mobile equipment on a mine site,” Timetric said.

“Five other technologies in which more than 80 per cent of respondents’ have invested are fleet management (85 per cent), predictive maintenance (85 per cent), tyre monitoring (83 per cent), scheduling and shift optimisation (81 per cent) and collision avoidance technologies (80 per cent).”

The respondents also pointed to a greater focus in vehicle technology.

“Over the coming two years, significant shares of those yet to invest are expected to make investments in tyre monitoring (53 per cent of those yet to invest), collision avoidance and proximity detection (50 per cent), and remote control and machine automation technologies with 48 per cent,” Timetric said.

“In total over the next two years, 92 per cent of mines are expected to have tyre monitoring technology implemented, some 90 per cent will have collision avoidance technologies and 77 per cent will have implemented remote control and machine automation on site.”

Commenting on the results, Timetric senior analyst, Nez Guevara, said “the results show the Australian mining industry recognises environmental accountability, social responsibility and commercial success are not inseparable.

“Monitoring the sustainability of a mine operation covers its entire life cycle, from exploration and feasibility, to decommissioning and closure.

“The speed at which companies can adapt to become more efficient is crucial for success in an industry that now maintains a tight grip on capital and operational expenses. This is more of a necessity at present, as low commodity prices affect the industry globally,” he said.

“Improvements in technology can change the way companies view mineral deposits, improve operational safety and manage overall costs.”

Despite the apparent normalisation of low commodity prices, the Federal Government has predicted mining exports earnings to grow by more than 40 per cent by 2019-2020.

The release of the Department of Industry, Innovation and Science Resources and Energy Quarterly report in the December quarter showed the mining sector’s contribution to the GDP over the past decade had increased from six to nine per cent, an upswing of 50 per cent.

The department expects resources and energy earnings of $166 billion in 2015-16, down on the previous year by four per cent due to lower commodity prices.

Chief economist Mark Cully said the low price conditions that characterised 2015 were forecast to persist in the short term, and that any prospect of recovery in that time frame was limited.

“On the home front, Australia’s production of most commodities has continued to increase despite lower prices,” he said.

“The rapid increase in mining output is expected to underpin the production phase of the boom and provide some support to export earnings.

“However, the increase in volumes is unlikely to be sufficient to offset the effect of lower commodity prices across the board.

The completion of LNG projects in Queensland and WA are expected to increase Australian exports by 45 per cent, worth an additional $20 billion this financial year.

Iron ore export volume, contributed to by the newly exporting Roy Hill mine and expanding production at other mines, was forecast to grow by 13 per cent in 2016.

World steel production, despite slowing in 2015 with less demand driving prices lower, is expected to stabilise in 2016 and return to growth, with a projected increase of 0.9 per cent worldwide.

Although China’s demand for steel will continue to slow, this will be offset by increased demand in India (by six per cent), the EU (1.2 per cent) and USA (1.5 per cent).

Australia’s steel consumption in the September quarter was down seven per cent on the previous year, and down 44 per cent of demand ten years earlier, thought to be at the expense of domestic production rather than imports.

The report also identified that Australia exports around 56 per cent of the world trade in iron ore, while projections indicate we will also soon become the world’s largest exporter of coal and LNG.

exploration expenditure faltered in 2015, continuing an ongoing trend of unemployment in the sector, with an overall decline of 32 per cent in the September quarter bringing total expenditure down to $977 million, boding poorly for new greenfields projects in the coming years.

The largest decline in exploration was recorded in South Australia, which was down 57 per cent year-on-year.

In terms of capital expenditure the mining sector slowed spending by 29 per cent in the September quarter year-on-year.

Mining sector employment was estimated at 220,000 people in November 2015, down only two per cent on the previous year.

BHP has marked a new milestone in their coal sector expansion as BMA opened the new third berth at the Hay Point coal export terminal yesterday.

Queensland Premier Annastacia Palaszczuk attended the official opening ceremony with BHP coal president Mike Henry and Mitsubishi Corporation COO for the mineral resources investment division Rick Tanaka.

The premier said coal exports had reached a record 219 million tonnes last financial year thanks to such investments.

“I want to thank BHP Billiton and Mitsubishi for their confidence in the Queensland coal export market and their contribution to the Queensland economy, despite coal prices having declined markedly in recent years,” she said.

Hay Point has been in operation since 1971, and the $US3 billion third berth and ship loader has been under construction since 2011.

At peak construction in 2014 the project employed 1630 people, with more than 12.6 million hours worked.

The new infrastructure has increased the Hay Point Coal Terminal capacity from 44 million to 55 million tonnes per annum.

Mike Henry said the recently completed terminal project reflected BHP Billiton’s confidence in the long-term outlook for metallurgical coal.

“BMA is the world’s largest exporter of seaborne metallurgical coal and employs 9,000 Queenslanders. The opening of the HPX3 project is a significant milestone,” he said.

“Importantly, the increased capacity at HPX3 will enhance our ability to run an even more productive value chain.

“Through its design features, the project has also improved the Port’s ability to withstand significant weather events, improving the resilience of the BMA business and enhancing customer confidence in the reliability of supply from BMA and Queensland.”

Stanmore Coal is edging closer to re-opening the Isaac Plains mine near Moranbah, with 150 job opportunities soon to come for local workers.

With the opening scheduled for February 2016, Stanmore Coal has not specified whether the mine will require FIFO workers.

Isaac Plains was put into care and maintenance by joint owners Vale and Sumitomo in September 2014, when 300 workers lost their jobs.

Isaac Plains will be opened at a reduced capacity of 1.1 million tonnes per annum, compared to the 2014 output of more than 2 million tonnes per annum.

Stanmore bought Isaac Plains for a peppercorn fee of $1 earlier this year, under agreement to take on contractual obligations including $32 million worth of mine rehabilitation.

In 2011 Sumitomo paid $430 million for Aquila’s 50 per cent stake in the mine, in expectation of good returns, however it accepted the loss at the mine’s closure as am $11 million writedown on its other Australian investments.

Isaac Plains will have a three year lifespan, however Stanmore have plans to open a new operation called Isaac Plains East.

Nickel, copper, and zinc have been picked as the metals to watch next year.

A new report by Morgan Stanley analysts have labelled the metals, which saw steady slumps throughout 2015, as the top picks, according to Bloomberg.

We are stubborn nickel bulls in 2016,” the report stated.

They forecast a nickel average of $10,692 per tonne next year, zinc at $1747 a ton and copper at $5236 a ton.

Speaking to ANZ senior commodities strategist, Daniel Hynes, he told Australian Mining the outlook for base metals into next year is positive.

“The outlook is better…the oversupply is not as bad as the bulk markets [such as iron ore],” he said.

“We’ve seen the start of a readjustment in base metal supply, but the market has not been that interested to date.

“They’ve been lost amongst the noise [of coal and iron ore], but the fundamentals are better, and for nickel and zinc we expect a market in deficit next year, but as always the poster price depends on Chinese demand.”

Morgan Stanley stated that it continues “to see only a modest abatement in China-led commodity demand growth, not the capitulation that year-to-date price performances imply”.

“The fact that economic activity everywhere remains buoyant, commodity-trade flows are intact, and that producers are rapidly rebalancing their trades in reply to shock-low prices tells us that downside price risk is limited.”

Credit Suisse has also backed nickel, expecting a dearth of the metal as operators will be cutting supply “given the scale of losses that producers are incurring”.

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