Category: Mines and Quarry

With the release of the latest Federal Budget there have been fewer changes than expected, with small business and middle income tax payers the big winners, but how will it affect the mining sector?

The outlook, broadly for the industry, isn’t overly favourable with mining investment expected to fall by 27.5 per cent in 2015-16 and 25.5 per cent in 2016-17, as the industry still reels from the downturn.

Mining itself has also dealt a major blow to budget estimates, being directly blamed for a shortfall in expectations.

“The largest contributor to the expected forecast error in 2015-16 is from the shortfall in company tax. In 2015-16, company tax is estimated to be $3.5 billion (5.1 per cent) lower than expected in the 2015-16 Budget. This is primarily driven by the fall in commodity prices in recent years, lowering profitability in the mining sector,” the budget papers stated.

Yet the government is pinning forecasts for the domestic economy using what may be inflated spot prices.

It has forecast a spot price of US$55 per tonne for iron ore, a rise from previous estimates of US$39 per tonne; US$91 per tonne for coking coal compared to US$73 per tonne in the last budget; and US$52 per tonne for thermal coal, which remains unchanged from previous budget estimates.

Despite this negative forecast – or because of it – the government is stepping in to build a new foundation for the next wave of mining.

The resources industry has been supported by the federal Government with one of the largest major national initiatives, a program designed to reinvigorate exploration.

The National Resources Development Strategy – Exploring for the Future, is a $100.5 million program designed to boost productivity and competiveness of the sector.

“The 2016-17 Budget delivers a strong boost to the productivity and competitiveness of this sector with $100 million provided to Geoscience Australia for mapping mineral, energy and groundwater potential in northern Australia and South Australia,” national minister for resources and energy Josh Frydenberg said.

According to the government, “The $100 million Exploring for the Future programme will produce pre-competitive geoscience data, to be released on an annual basis over the next four years. Geoscience Australia estimates that around 80 per cent of Australia remains under-explored, in particular, areas in the Northern Territory, Queensland, Western Australia, and South Australia, which will be the focus of this initiative. This will improve Australia’s long term exploration prospects and help address declining new onshore exploration.”

Frydenebrg added: “The benefits for doing so are clear. In 1996, Geoscience Australia undertook $3 million of analysis in the Browse Basin. This helped identify the Ichthys field, which will produce more than $70 billion in export earnings over the next forty years.”

“Further, data compiled across South Australia in the 1960s, costing around $350,000, helped identify the resource potential of the Olympic Dam and ultimately to the discovery of ore more than 300 metres underground.,” he said.

“At a challenging time for the resources sector, this important initiative will help ensure that Australia’s strength in innovation is furthered, and that we maintain our competitive edge in this world-leading sector.”

The initiative was welcomed by mining lobby groups.

The Minerals Council of Australia called it a “strong pro-growth budget”.

“It balances a careful approach to spending, the maintenance of a strict approach to tax integrity and lays out a medium term plan to promote investment and growth,” Minerals Council chief executive Brendan Pearson said.

“The minerals sector welcomes the Government’s commitment to a $100.5 million initiative over four years to produce mineral, petroleum and groundwater resource data in targeted areas in northern Australia and South Australia to help identify new greenfield exploration sites.

“This is a critical investment to identify the next sources of Australia’s minerals wealth. “

The Queensland Resources Council echoed the Minerals Council, stating “it is pleasing the Turnbull Government has an eye to high-tech jobs of the future in the resources sector”.

“Exploration is the R&D, or building blocks, for the resources sector, getting the sector ready for the inevitable future upswing,” QRC chief Michael Roche said.

However, greener mining initiatives have been scrapped in the new budget, with the Low Emissions Technology Demonstration Fund and the Coal Mining Technology Abatement Support Package closed, while the Carbon Capture and Storage Flagships funding has been reduced.

Anglo American has sold its niobium and phosphates business to China Molybdenum for US$1.5 billion.

The miner was first slated to exit it’s the phosphate and niobium operations in Brazil in February, when the assets were estimated to be worth around US$3 billion.

Anglo American will use the proceeds to pay down debt.

The phosphates business consists of a mine, beneficiation plant, two chemical complexes and two further mineral deposits.

The niobium business consists of one mine and three processing facilities, two non-operating mines, two further mineral deposits and sales and marketing operations in the United Kingdom and Singapore.

Together, the businesses generated EBITDA of US$146 million in the year ended 31 December 2015.

Commenting on the sale, Anglo American CEO Mark Cutifani said, “The sale of our niobium and phosphates businesses is another positive step forward in the strategic reshaping of Anglo American that we set out in February.

“The proceeds from this transaction, together with the ongoing productivity and cost improvements we are driving through the business, will enable us to continue to reduce our net debt towards our targeted level of less than $10 billion at the end of 2016. This transaction confirms our commitment to creating the new Anglo American, positioned to deliver robust profitability and cash flows through the price cycle.”

The sale to China Molybdenum is still conditional upon Chinese government approvals, and that of the company’s shareholders.

Outotec has been awarded a contract by Houndé Gold Operation SA, a subsidiary of Endeavour Mining Corporation, for the delivery of process equipment to the greenfield Houndé gold project in Burkina Faso. Outotec’s contract value is approximately €13 million and the order has been booked in the second quarter 2016 order intake.
Outotec’s scope of work includes the design and delivery of a 6 MW SAG grinding mill, a 6 MW ball mill, a pre-leach thickener, and services including spare parts. The new plant will process annually 3 Mt of ore. The equipment will be delivered during the second quarter of 2017 to ensure the first pour of gold for by the end of 2017. “Outotec has a large portfolio of offerings for treating various gold ores. We are pleased have been the opportunity to deliver our energy efficient grinding mills and advanced thickener technology to Endeavour’s Houndé gold project”, says Kalle Härkki, head of Outotec’s Minerals Processing Business Unit.

Global cement and minerals processing leader FLSmidth has partnered with Wirtgen Group company Kleemann for the supply of cone crushers for mobile applications in the construction industry. Kleemann is the global technology leader within the road and construction machinery segment.

The long-term cooperation agreement between the two industry majors leverages FLSmidth’s technology leadership in cone crushers and Kleemann’s lead position in mobile crushing in the construction and aggregate industry.

Group Executive Vice President of the Minerals Division in FLSmidth Manfred Schaffer described the alliance as a part of FLSmidth’s strategy to develop technology in partnership with leading peers. With FLSmidth being the main provider of productivity within the minerals and cement segment, and Kleemann having a strong foothold in the construction industry, it presented a unique opportunity for FLSmidth to expand into adjacent markets, he added.

Approximately 580, 000 people from 200 countries attended bauma, highlighting continued strength in the global mining industry.

This attendance figure is an increase of more than nine per cent compared to previous years, with a total of 3423 exhibitors from 58 different countries showcasing their developments, innovations, and products. They presented over a record exhibition space size of 605 000m2, while 63 per cent of exhibitors came from outside of Germany, higher than previous fairs.

Chairman and CEO of Messe München, Klaus Dittrich said, “The response from the participants this year was amazing. The visitors at bauma always come looking to invest, but this year the exhibitors’ order books filled up much faster than expected.”

“Many exhibitors are talking about a record level of demand at bauma 2016; that is an extremely positive sign in this current uncertain climate.”

Managing partners in the Wirtgen Group, Jürgen and Stefan Wirtgen, saying, “Bauma as the leading trade fair has always been a kind of barometer for the industry and from the start it had a very special significance for our company. Our presentation at this year’s bauma is the most successful so far in the history of the company.”

The fair is also a major platform for debuting the latest innovations for a worldwide trade audience.

The VDMA Association for Construction Machinery and Building Material Machines chairman Johann Sailer said, “Bauma is the ideal platform for presenting innovative new developments, because it has a big impact in the industry around the world. Again in 2016 the world’s largest show of construction machinery will deliver impetus for further growth in our sector.”

Managing Director and CEO of Komatsu Europe Masatoshi Morishita said, “We make use of the attention bauma attracts to present our innovations. This event is a milestone for the industry. It’s not only Komatsu that tries to get certain machines ready in time for bauma. This trade show really drives the entire industry forward.”

The next bauma will be held in Munich between April 8 and 14 in 2019.

Suppliers to Rio Tinto will be waiting twice as long for accounts to be resolved after the company announced it would extend it’s terms of payment to 90 days.

The West Australian suggested the move would give the company’s balance sheet a boost ahead of the departure of CEO Sam Walsh in July.

It is understood tens of thousands of suppliers and contractors around the world will be affected, who are outraged over the problems the move could introduce to a sector already under significant price pressure.

This is the second change to terms of payment dictated by Rio Tinto in nine months, when Rio Tinto shifted the goalposts from 30 to 45 days for payment of accounts.

In some cases time for payment could be blown out to 120 days, given that Rio Tinto only pays its bills at the end of the month of receipt of invoice.

A spokesman for Rio Tinto said the change was intended to “free up cash and reduce working capital so that we can preserve and maintain jobs and suppliers in tough global environment for commodities”.

BHP changed their terms of payment shortly after Rio’s last change, from 30 days to 60 days, leaving FMG the most prompt paying iron ore major in the Pilbara, keeping their terms at 30 days.

A spokesman for FMG said the company had no plans to change their terms.

Downer’s contract at Fortescue Metals‘ Christmas Creek mine will not be renewed as the miner moves to a an owner-operator model.

The contractor made the announcement yesterday, stating it has been in discussions with FMG about the transition of the mine to Fortescue following the expiry of the current mining contract.

“Over the course of the next six months it is Downer’s intention to provide a safe and orderly handover of the Christmas Creek mine to Fortescue,” Downer said in a company statement.

Fortescue Metals added: “A comprehensive change management plan has been developed. Production from Christmas Creek is not expected to be impacted during the transition.”

FMG CEO Nev Power thanked Downer for its work at the site.

“The Downer team have been involved with mining at Christmas Creek since the outset and have played an important role in Fortescue’s development of our facilities in the Chichester Hub.

“Adoption of an owner operator model will further reduce Fortescue’s costs through ongoing improvement of the efficiency and productivity of our Christmas Creek mining operations.”

It is unknown how the move will affect the approximately 900 workers at the site.

Downer has been working at the mine since 2010, and was handed Macmahon’s former contract last year after FMG merged two service contracts into one, creating a contract worth $500 million for Downer.

Despite the move off Christmas Creek, Downer does not expect the transition to have an effect on its 2016 financial results.

A major international quarry plant supplier has opened a new global parts facility that could have flow-on benefits for Australian quarry customers.
Terex Materials Processing Systems recently invested more than $USD7.2 million ($AUD9.4 million) to establish a state of the art facility in Dungannon, Northern Ireland.

Terex Materials is a global division of the Terex Corporation that encompasses the Powerscreen, Terex Minerals Processing Systems, Terex Finlay, Terex Washing Systems and Terex Environmental Equipment brands.

The new Terex Materials facility includes a 957m2 office space, where a team of parts experts will field technical and sales inquiries.

The facility is expected to be able to house more than 86,000 live inventory parts. In addition to having a warehouse capacity of 5463m2, the facility has a 650m2 external canopy that can provide overhead storage for larger product.

The facility has also been fitted with “leading edge” technology to help the company “expedite all orders efficiently”. This includes three Hanel Lean-Lift automated storage and retrieval systems, which will operate with the facility’s 168 bays of high-bay racking; three dock levellers designed to improve ease of access for deliveries and container shipments of large-scale parts; and a range of Linde electric material handling equipment, including an order picker and aisle masters capable of working at a height of 9m.

Australian distribution
Within Australia, Terex quarry equipment is distributed through four dealers: OPS Screening and Crushing Equipment, Finlay Screening and Crushing, Terex Minerals Processing Systems (MPS) and Lincom Group.

Terex Finlay mobile plant and Terex Washing Systems products are available through OPS in Western Australia and the Northern Territory, and through Finlay on the east coast of Australia, including South Australia and Tasmania. OPS is also the local distributor for Terex Environmental Equipment.

Terex MPS is responsible for the provision of fixed and modular crushing and screening plant to the Australian market and Lincom is the local distributor for Powerscreen.

Terex parts for each of the brands are available through their respective local distributors, and a Terex Materials spokesperson confirmed this would continue to be the case with the introduction of the new global parts facility.

However, the spokesperson noted the new facility would increase the inventory available to Australia’s local dealers, and improve Terex Materials’ response time to those local distributors, which could result in benefits for quarry customers further down the supply chain.

Galaxy Resources has officially begun production at its Mt Cattlin mine.

“Production has commenced, with both mining and processing operations having started up,” Galaxy said in a company statement.

“An initial 5-week program will sequentially recover and stockpile spodumene and tantalum concentrates from the fines circuit ahead of crusher and HMS (coarse circuit) commissioning in the June quarter,” the miner stated.

“Given the quantities of ore already mined and available for processing, the immediate focus at restart through to May 2016, is on the processing circuit. This work shall including progressive commissioning of the primary and secondary feed preparation circuits, thickener, fine and coarse circuit screens, mica removal screens, the tantalum spirals and tables, as well as the fines reflux classifiers and filter belt.”

As part of this restart of production, mining of blasted ore in the Dowling Pit has also begun and will be stockpiled, with feed for the processing circuit sourced from existing stockpiles.

Galaxy is aiming to reach a throughput rate of 800,000 tonnes per annum by the end of June.

First delivery of concentrate is on target for July/August.

Sandvik has unveiled a new business division, Sandvik Mining and Rock Technology.

The division was formed through the merging of the Sandvik Mining and Sandvik Construction divisions.

According to Sandvik, the new division “will be organised in a de-centralised business model with separate product areas based on the product offering”.

“Each product area will have full responsibility and accountability for its respective businesses.”

Bjorn Rosengren, Sandvik’s CEO, explained the reasoning behind the merger.

“Products developed for the customer segments mining and construction are based on common technologies with a similar aftermarket offering,” Rosengren said.

“In addition, manufacturing units are already largely shared with to some extent shared front line resources. By joining the operations into one business area we achieve a leaner and more efficient structure. The decentralised business model enables an even clearer focus and faster response to our customers.”

The new structure will begin operation in July.

Current head of Sandvik Mining, Lars Engstrom, has been appointed president of the new division, while current president of Sandvik Construction, Dinggui Gao, will leave the company on 1 July.