Category: Mines and Quarry

Arrium is selling its Wire Ropes business in Newcastle to a Danish firm for $90 million.

The business supplies drag line and shovel ropes to miners and has been operating for more than 90 years.

Arrium’s CEO Andrew Roberts said while Wire Ropes is a quality outfit, it lies outside the company’s strategic focus for future growth in mining consumables.

“Our growth in mining consumables is centred on the global mineral processing industry, including capturing at least our share of the expected strong growth in grinding media demand,” Roberts said.

“Today’s announcement is consistent with our focus on recuding debt, and builds on our good progress with asset divestments.”

Arrium’s asset divestment proceeds for FY2015 will increase to at least $150 million following the completion of the sale in March.

New owner Bekeart is expected to offer all of Wire Rope’s 100 workers ongoing employment.

Last month, Arrium announced it will be recording an asset impairment charge of $1.3 billion.

The writedown relates to Arrium’s iron ore mining and steel businesses and includes an impairment of $1.7 billion in the company primarily related to the impact of low iron ore prices and the mothballing of Southern Iron mine, and $130 million in steel and recycling.

The company is targeting a $200 million reduction in its capital expenditure as well as a redesign of its mining business in order to deal with the mining downturn.

Sandvik has announced it will close its Wollongong operations and reduce its Kalgoorlie site in the wake of continuing mining uncertainty.

As a result of the shutdown Sandvik will now focus on field service in the Illawarra, while its Kalgoorlie site will now operate as a field service division, warehouse, and rock drill rebuild facility.

“Sandvik Mining in Australia continues to operate under very challenging market conditions, with the continued reduction in commodity prices and subsequent decline in the mining business,” Rowan Melrose, country manager for Sandvik Australia, stated.

“As a result Sandvik Mining has undertaken a further review of the business and adjusted our Australian operations accordingly.”

As a result of these changes 63 roles will be made redundant in the company.

“Unfortunately, these redundancies are necessary as a result of the continuing decline in market conditions,” Melrose said.

“Sandvik is not alone in having to make these difficult decisions, with other suppliers of equipment and services, along with mining companies, announcing employment reductions and facing the same situation.”

The company added that all workers affected will be offered career transitioning services and access to Sandvik’s employee assistance program.

Sandvik will now carry out its customer pre-delivers and machine rebuilds and repairs for the Illawarra and Kalgoorlie regions from Heatherbrae and Perth respectively.

The Nullagine Joint Venture (NJV) is an unincorporated 75:25 joint venture between BC Iron and Fortescue Metals Group (Fortescue), which is located approximately 150km north of Newman in the Pilbara region of Western Australia.

The NJV is a producing iron ore mine with the capacity to export up to 6Mtpa of product. BC Iron is the operator and manager of the joint venture and Fortescue facilitates the export of iron ore via both its rail and port infrastructure, and the provision of marketing services.

Nullagine Joint Venture location
Iron mineralisation occurs in channel iron deposits, which present as flat-top hills or ‘mesas’. The NJV contains an extensive number of mesas, shown in orange above. The current NJV mine plan includes 12 mesas across four mining areas; Outcamp (1-5), Warrigal (1-4), Bonnie East (1) and Coongan (1 and 2).

Ore is mined using surface miners and then processed via a simple dry crushing and screening method to produce Bonnie Fines, a direct shipping ore (DSO) fines product. The Bonnie Fines product is transported approximately 60km from the NJV mine site to Fortescue’s Christmas Creek rail loadout facility via a private bitumen haul road, utilising 400 tonne payload Powertrans Pit Hauler rigs. At Christmas Creek, Bonnie Fines is loaded onto trains and transported approximately 300km to Fortescue’s Herb Elliot Port at Port Hedland, where it is loaded onto capesize vessels and exported to customers overseas.

Bonnie Fines has an iron grade of 56-57% Fe, but has a loss on ignition of approximately 12% which produces a high calcined iron grade after sintering. It also has low impurities, particularly phosphorus and silica. These properties make it a highly-sought after sinter feed.

During FY2014, the NJV exported 5.79M wmt1 (BC Iron share 4.30M wmt) at free-on-board (FOB) C1 cash operating costs of $52 per wmt. As at 30 June 2014, the NJV has a remaining mine life of 5-6 years at an average waste to ore ratio of 1.3:1.

BC Iron is assessing mine life extensions at the NJV via the beneficiation of low grade material (50-55% Fe) into a saleable product. The initial phase of this work has been completed, which culminated in BC Iron reporting an Ore Reserve estimate for beneficiated shipping ore (“BSO”) of 3.9Mt at 54.2% Fe (after yield adjustment). This estimate only consider low grade at existing stockpiles and within the current DSO pit designs. Further work is required to evaluate regional mesas which are not in the current mine plan.

BC Iron leans on contractors for cost savings

BC Iron is looking to renegotiate the terms of several of its workforce contracts in order to save money amid the weak price of iron ore.

BC made the announcement as part of its December quarter results.

At Iron Valley, the agreement with Mineral Resources Limited is being varied to ensure the company can implement initiatives aimed at securing the project’s long-term viability.

Meanwhile, the Nullagine mine is also going out to tender in the hope of securing cost savings.

“The next round of material savings will come in our retendering of existing contracts,” CEO Morgan Bell said.

“We’re expecting a reduction in the overall cost of mining and potentially haulage.”

Nullagine mine, a joint venture with FMG, cut jobs in December in order to deal with the falling price of iron ore.

The price of the commodity hit fresh five-year lows last week of $USS63 a tonne.

BC Iron managed to save $2-3 per wet metric tonne during the quarter, with the company revising its full-year cash cost guidance down to $47-51/wmt.

Nullagine mine ramped up production to its 6 million tonnes per annum run-rate in the December quarter following an operational slow-down in the September quarter.

The mine shipped 1.38wmt of Bonnie Fines for an average price of $60 per tonne.

The new Iron Valley mine shipped a total of 0.79M dmt in the quarter.

BC Iron’s cash balance was $110.1 million as at 31 December 2014.

Ball said the miner would continue to focus on operational performance, productivity and costs in order to make it through the iron ore slump.

“In a really tough in environment we’re all doing a really good job and keeping on punching,” Ball said.

Last year, company announced three non-executive directors resigned with the remaining directors taking a 10 per cent pay cut.

报告显示矿产活动驱动着工业投资

市场情报公司 Timetric 建筑情报中心 （Timetric Construction Intelligence Center）近日的一份报告揭示了亚洲工业板块项目超过1万亿美元的投资计划。领头的是印度，该国制定了价值4110亿美元的计划。

该报告同时发现，中国和印度尼西亚也有巨大的投资水平，两国分别有2000亿美元和1240亿美元的开发计划。

其它新兴国家，如越南等，也有正面的结果。越南制定了价值达560亿美元的工业建筑项目。

采矿业是澳大利亚的核心聚焦，因为金属和物料加工工厂带来了价值将近370亿美元的工程，为该板块价值的一半。

该研究小组的结果表明，所研究的15个国家所进行的1.08万亿美元的工业项目，金属和物料生产工厂板块占主导地位，该板块拥有价值4460亿美元的项目，紧随其后的是制造工厂板块，拥有价值3140亿美元的项目。

在该报告的清单上，价值最高的项目是价值500亿美元的越南万安经济区（Vung Ang Economic Zone）。该项目包括重要的河静（ Ha-Tinh）钢铁厂和山阳港（ Son Duong Port）。

Timetric CIC 经理 Neil Martin 称，“发达的亚太经济体倾向于在工业建筑中投资更多，而该地区工业化程度较低的国家在工业建筑方面显示出最大增长，尽管起点较低。

“我们估计到2019年，像越南、印尼、蒙古和土库曼斯坦等国的增长预计将有6%或更高。这已经在采矿、加工或制造业方面的投资中显现出来了。这些领域的投资将推动这些发展中的经济体的发展。”

The Northern Territory’s last operating iron ore mine has ground to a halt, wrapping up what has been a disastrous six months for the sector in the Top End.

After months of speculation, the Frances Creek mine near Pine Creek has now stopped production, joining Sherwin Iron and Western Desert Resources which went into voluntary administration last year.

Terry O’Connor, from the Darwin Port Corporation, said the collapse of the Territory’s iron ore sector was a big blow for the port.

“The iron ore trade was our biggest customer in terms of return to the port and its [collapse, has left] a significant hole in our budget,” he said.

“Our understanding, at this stage, is that the plan is to finish up the operation at Frances Creek, [but] they still believe there’s a chance they may recommence [mining] at some stage in 12 months or so.

“[However] our feeling is, it’ll take a significant amount of time to remobilise and get everything to happen, so we certainly don’t expect to see any new exports of iron ore out of Frances Creek before this time next year or even 18 months at the earliest.

“We’d like to think they’ll come back. But it’s demand driven, we understand that. There’s always peaks and troughs and this is a trough at the moment.”

AUDIO: Terry O’Connor says the collapse of NT iron ore projects will leave a hole in the Darwin Port’s budget (ABC Rural)
Mr O’Connor said the last loads of iron ore from Frances Creek were delivered to the port in late December.

He said there were about 250,000 tonnes stockpiled at the port, to be exported over the coming months.

From a workforce of over 300, it is understood there are now just 20 workers left at the Frances Creek project and that number will be reduced again in the coming weeks.

The plunging iron ore price, which sparked problems for all three Top End iron mines, has dipped below $US65 a tonne, its lowest point since 2009.

Mining town of Pine Creek suffering

Ray Wooldridge has lived in the mining town of Pine Creek since 1991 and has seen plenty of ups and downs.

He said the mothballing of Territory Iron’s Frances Creek project has hit the town hard.

“If you take a workforce of 300 people out of a town of about 600, it has a dramatic effect,” he said.

“Most of the people [who worked at the mine] have gone, there’s been fire sales and those who had housing or were renting have sold up and moved on.

“There’s quite a few empty houses in town now.”

The opening hours of many businesses in Pine Creek have been reduced and one of the licensed premises has decided to close for the wet season because there are so few people in town.

ABC Rural visited one bar at 6 o’clock on a Saturday, which was serving eight patrons.

“It’s getting very, very quiet” said the barmaid.

AUDIO: Ray Wooldridge from Pine Creek says the town is doing it tough (ABC Rural)
The planned shutdown of the Frances Creek iron ore mine was first reported by ABC Rural in July 2014.

The mining company, Territory Iron, has still not offered up anyone for a comment.

Hughes Drilling has won a contract for overburden drilling services at BHP’s Mt Arthur coal mine.

The contract is only a short term agreement.

It will run C-750 REICHdrill rigs on site.

This win comes just a day after Hughes won a similar contract for overburden removal at Glencore’s Collinsville coal mine.

Citic has been forced to writedown the value of its Sino Iron project in the Pilbara by $1.8 billion due the falling price of iron ore.

The Chinese company said it expected its February financial results to include an after-tax asset impairment of between $US1.4 billion to $US1.8 billion.

It said the decision was made after considering the current and predicted price of iron ore.

“A key component for consideration is the current and forecasted price of iron ore,” Citic said.

Citic only has two production lines out of six up and running at the $10 billion mine.

The company said two more units would start work later this year, with the rest set for commissioning in 2016.

The mine has been in production for just over a year, and has exported 2.4 million tonnes of iron ore.

It is the first time a Chinese-owned mining company has shipped iron ore products from WA to China.

The project ran into a spate of delays and cost blow-outs during the commissioning phase.

Legal disputes with billionaire Clive Palmer over royalty payments have also hampered the development and driven up costs.

The value of iron ore has nearly halved since this time last year, and analysts predict there is more pain to come as the three majors – BHP Billiton, Rio Tinto, and Vale- ramp up production that will push more supply into the market.

Last week Macquarie Group joined the list of major banks that have their iron ore price forecasts.

The bank said it expects iron ore prices to average $US68 a tonne in 2015 and $US65 a tonne in 2016.

A joint venture between Australia’s two largest brick suppliers will proceed after getting the green light from the consumer watchdog.

Boral and CSR’s proposal to combine their east coast brick operations in a joint venture was first announced in April 2014. The joint venture will be 60 per cent owned by CSR and 40 per cent owned by Boral and aims to address the “sustained structural downward trend” that the Australian brick manufacturers have been experiencing over the past three decades.

In October, the Australian Competition and Consumer Commission (ACCC) released a statement of issues listing a number of competition concerns that could potentially arise from the creation of the joint venture. However, the consumer watchdog has now announced it will not oppose the transaction.

“Critical to the ACCC’s decision was the assessment that Boral would be unlikely to remain in clay brick manufacturing in eastern Australia if the joint venture does not proceed,” ACCC chairman Rod Sims explained. “Without this conclusion, the proposal raised considerable competition concerns.”

Although initially sceptical, Sims said further extensive inquiries and reviews of the companies’ business records had led the ACCC to conclude that there was “sufficient evidence to support the claims that Boral would exit brick manufacturing on the east coast and that, on balance, the ACCC should not oppose the joint venture”.

Boral CEO and managing director Mike Kane said the decision was good news for customers, employees and shareholders. “With Australian brick manufacturing being challenged as a result of a reduction in brick usage and high input costs, the joint venture will allow us to drive efficiencies across the combined network of operations, creating a more sustainable business,” he stated.

“This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers,” CSR CEO and managing director Rob Sindel added. “It will strengthen opportunities for employees and ensure that customers benefit from a strong supplier in the highly competitive cladding market in Australia.”

The formation of the joint venture is expected to result in a combined revenue of $230 million and initial overhead savings of $7 million to $10 million per annum. The integration of the businesses is expected to reach completion within the first half of 2015.

Boral sells landfill business, relocates quarry operation

In other Boral news, the building materials supplier has entered into an agreement to sell its Western Landfill business in Melbourne to Transpacific Industries for an upfront payment of $150 million as well as an additional $15 million for site preparation work. Boral will also receive earnings from Transpacific in the form of fixed payments and volume-based royalties for the life of the landfill.

The recently sold landfill business is co-located with Boral’s asphalt, concrete and related operations and its Deer Park Quarry at a 1150ha site in Ravenhall, Melbourne. After operating Deer Park Quarry for 50 years in the southern section of the Ravenhall site since the quarry’s inception in 1965, Boral is now preparing to shift the operation into the northern section of the site.

Deer Park Quarry has an expected life of between 40 to 50 years and provides between two and three million tonnes of aggregate per year. According to Boral, moving the quarrying operation into the new section will ensure its ability to continue supplying hard rock aggregate for Melbourne’s building and construction industries into the next decade.

The preparation work will involve the replacement of the existing processing plant, with construction expected to begin in 2016 and operations to commence in the following year.

PowerMax PLUS drag rope

WireCo WorldGroup has launched a new range of dragline ropes designed for increased service life in tough mining operations.
WireCo’s new PowerMax PLUS wire rope can increase service life by up to 110%, helping to minimise interruptions and downtime, which can otherwise be costly to any mining operation. The increased service life of the drag ropes translates into a lower overall cost of ownership.
The new PowerMax PLUS increases time intervals between resockets and end-for-ends, which are typical preventative maintenance procedures for draglines.
Designed by WireCo’s research and development engineers, PowerMax PLUS features new wire technology for increased wire toughness that improves abrasion resistance as well as plastic enhancement that protects the rope core from material intrusion and fatigue.
The PowerMax PLUS has been tested extensively in field trials at coal mines in Wyoming, Texas and South Africa, with results showing the drag rope has lasted more than twice as long as previous drag ropes, helping to increase the time between rope replacements.
PowerMax PLUS is part of Union’s PowerMax PLUS family of drag ropes, which also includes PowerMax PFV PLUS, and PowerMax MD PLUS.

In a two-part retrospective, we look back the mining sector in 2014. First we start with the fate of the top 100 miners – some ugly stuff here – but then turn to some more positive and perhaps underappreciated developments.

It wasn’t a good year to be a big miner. Ranking the top 100 mining companies by market cap near year end and tabulating their 52-week share price performance tells the ugly tale (see below). BHP Billiton, still the world’s largest company, shed an astounding $31 billion or 27% of its market cap.

The next seven names at the top were all losers. Rio Tinto and Glencore’s share prices were off by about eight percent; Vale’s dropped 41%; Anglo American’s was down 10%; Norilsk’s was down seven percent; Freeport’s shareprice slumped 37%; and Southern Copper ended close to, but not quite, the even mark.

In looking back on 2014, it’s not hard to account for the share price pain of the top miners. Last year was abysmal for iron ore, oil and coal prices – chief commodities for many of the diversifieds. Meantime, investor sentiment toward the miners and their prospects seemed to reach new lows. In the past couple years, there was a great deal of shuffling in mining management reflecting shareholder unhappiness with business plans, share price returns, thin cash flow and capital expenditure blow outs.

The cratering iron ore price, especially, caught many in the market off guard. Though a decline in iron ore was bound to come, BMO mining analyst Tony Robson notes in an email, “most of us were thinking late 2014 or 2015, not early/mid 2014.”

And he, as others, expected a “steady decline not a savage collapse”. An unprecedented gulf between supply (growing) and demand (slowing) emerged in 2014, one that is by many accounts here to stay.

Some analysts and mining management lambaste the diversifieds for angling to maintain market share through mine expansion. Ivan Glasenberg – chief executive of Glencore – has cut into BHP Billiton and Rio Tinto for their strategy to grow amid an iron ore glut as being ill conceived and bad for business. Likewise, analyst John Tumazos, of John Tumazos Very Independent Research, derides the business strategy.“The iron ore companies are uniquely delusional,” Tumazos says.

He points to clear signs that Chinese steel demand, which dominates iron ore use, is set to be lacklustre relative to supply growth for years to come. But “the guys that own 400 tonne trucks just don’t want to admit it”.Looking beyond iron ore, it was equally tough for some other mining sectors. The major gold miners are well off over the year, especially Barrick. The top gold miner, by production, shed some 30% over the year. Goldcorp, the top gold miner by market cap, was also in negative territory – just. And it was a similar fate for many of the other large gold miners. Newmont was down near 15%. Polyus lost five percent. And so on. If the price of gold wasn’t obliterated in 2014 as in 2013, it muddled along for much of the year. This, combined with investors sceptical of growth plans by the major gold miners, undercut the gold miners.

In uranium – where prices were weak until a recent bump up – it was much the same. Cameco, the leading uranium miner was down 15%.

The legacy of the Fukushima disaster in Japan lingers. As David Talbot, a Dundee Capital Markets analyst, notes, it will likely take a return of Japan reactors to turn the market around. “Japanese restarts will likely be largest issue,” he says.

“Getting Japan back into operation is likely to be a strongly psychological driver – if not necessarily about real demand.”