Olympic dam weighs as BHP Q3 iron ore output jumps 11%, but copper slumps 19% (April 2010)

The numbers, which trail those of Rio Tinto, disappointed some expectations
Author: James Regan (Reuters)

SYDNEY (Reuters) -

Global miner BHP Billiton (BHP.AX: Quote)(BLT.L: Quote) posted an 11 percent annual rise in iron ore production in the March quarter, trailing a much faster expansion by rival Rio Tinto (RIO.AX: Quote)(RIO.L: Quote) and disappointing some expectations.

It said copper production slumped 19 percent, primarily due to disruptions at its Olympic Dam mine, and foreshadowing weak figures for the quarter ahead as operations at the mine will not return to normal until the end of June.

Analysts said the iron ore figures did not alter the long-term picture and BHP was likely to maintain forecasts to lift iron ore output to 200 million tonnes over the next two years as it looks to beef up activity to feed Asia's booming manufacturing.

Rio Tinto, which reported a 39 percent jump in iron ore production for the quarter, is also expanding, looking to lift capacity to 234 million tonnes by the end of this year.

"Quarter-on-quarter all the major units are down except petroleum -- that is iron ore, copper, coal and met coal," said Peter O'Connor a resources analyst for Bank America Merrill Lynch.

"On a year-on-year basis it looks okay, except for copper, but I think most people will be trimming earnings forecast just a bit on these numbers -- perhaps a cent or two (per share) but nothing major".

At 0243 GMT, BHP shares were flat while Rio Tinto was trading 0.5 percent higher, trailing the broader market's 0.7 percent rise.

"There's not a lot of joy in terms of positive surprises," said Tim Schroeders, a portfolio manager at Pengana Capital, adding that copper figures were especially weak.

BHP's difficulties with the Olympic Dam mine, the world's fourth largest copper deposit, are likely to keep pressure on world supplies and also prevent the firm from taking advantage of a 5 percent jump in copper prices CMCU3 in the March quarter.

"Copper production was a bit light and that adds to the whole scenario that the supply side on the copper industry is very tight," said Michael Bentley, portfolio manager for Northward Capital.

Industrial action in Chile and mining of lower grade ores at the Escondida and Cerro Colorado mines in Chile and at Antamina mine in Peru also contributed to the drop in copper output, BHP Billiton said.

At Escondida, BHP Billiton's share of copper concentrate output rose 17 percent to 101,500 tonnes, though cathode production dropped 20 percent to 36,200 tonnes.

Production of iron ore, BHP Billiton's top revenue earner, climbed 2.97 million tonnes on the year to 31.16 million, although was down on the previous quarter, with the firm saying that weather related disruptions held back production.

A new pricing regime started on April 1, with reports that BHP is getting $131 a tonne for its ore under April-June contracts based on the average January-March average spot price -- more than twice last year's fixed price.

The price over the following three months will be determined by the indexed, or averaged, spot price between April and June.

U.S and European steelmakers are in early stages of recovery and China's appetite for imported ore, at least for now, refuses to abate, suggesting even higher prices next quarter.

Metallurgical coal production, another steel making raw material and a key commodity in Asia's economic boom, rose 7 percent but weather difficulties adversely affected output. (Additional reporting by Cecile Lefort and Bruce Hextall in SYDNEY and Victoria Thieberger in MELBOURNE; Editing by Balazs Koranyi and Michael Urquhart)

© Thomson Reuters 2010 All rights reserved
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Saturday, April 24, 2010

New Gold Completes Purchase of El Morro

The El Morro project lies in the centre of a huge legal dispute, but New Gold Inc. went ahead and bought it anyway.

Yesterday, the Vancouverbased miner said it closed a transaction to buy 70% of El Morro, a copper-gold deposit in Chile, from Xstrata PLC for US$463-million. It then transferred that stake to Goldcorp Inc., which plans to team up with New Gold to develop the project.

New Gold and Xstrata went ahead and closed the transaction despite a lawsuit from Barrick Gold Corp., which claims it is the rightful owner of the 70% stake in El Morro and has no plans to give up the fight for it.

Barrick struck a deal to buy the stake from Xstrata last fall, but New Gold took it away by exercising its right of first refusal to purchase the interest. However, Barrick claims that New Gold violated Chilean law by immediately transferring it over to Goldcorp.

In its statement of claim, Barrick said it was seeking an injunction preventing New Gold and Goldcorp from buying the Xstrata interest. However, Xstrata still decided to go ahead and sell it, even with the lawsuit hanging over the transaction.

Randall Oliphant, executive chairman of New Gold, said he is confident that Barrick’s suit will be dismissed. “Our view has been absolutely consistent, that we have a right of first refusal and we’re going to work towards completing our transaction,” he said.

As part of the deal with Goldcorp, New Gold received US$50-million in cash, and Goldcorp agreed to pay for all of the development costs at El Morro.
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Thursday, April 22, 2010

PTC India Plans Joint Ventures for Coal Mining Assets

PTC India Ltd., the country's largest power trader, plans to form joint ventures to purchase shares of mining projects overseas to help secure fuel supplies for Indian power producers are facing shortage of coal, its chairman said Monday.

New-Delhi based PTC plans to buy coal assets overseas and Indian companies in Indonesia and Australia and may sell the imported coal in India is the spot market or through long term contracts with independent power producers, Tantra Narayan Thakur told Dow Jones Newswires in an interview.

"We would prefer a joint venture for large projects like we do not have such funds, and second, logistics, will be difficult for us to manage large projects alone," Mr. Thakur said.

India, which imports 59 million tons of coal in the fiscal year ending March 2009 is expected to import as many as 150 million tonnes in March 2017 as a local output has not been able to keep pace with the addition of a country's capacity for generating electricity.

India is already facing peak power shortages and the request is considered to lag supply for years to come as the world's second fastest growing economy continues to grow more than 7% per year.

Local power producers and coal miners have been scouting for assets in Indonesia, Australia, Mozambique and the United States is committed to ensuring supply and to guard against price fluctuations.

PTC, which raised 17 billion rupees ($ 368 million) over two calendar years, until the end of 2009 by issuing 144.09 million shares to institutional investors, has set aside 3 billion rupees for coal assets.

"In addition to 3 billion rupees, we will look forward to joint venture partners to provide (the capital) and the company may also seek funding from the private sector," said Mr. Thakur said.

PTC is in the process of preparing a UK fund Ashmore Group to acquire assets related to energy. Some of these results can also be used to buy coal assets, Mr. Thakur said.

PTC and Ashmore was in the final stages of discussions for the funds and can be signed a joint venture by March 31.

"We have not decided on the size of funds," he said, adding that a joint venture agreement has been signed, the company will come to the amount of after market testing.

TCM can also get funding from private equity investors to buy coal mines, Mr. Thakur said.
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Canada Stocks Fluctuate as Gold Mining Companies Slips, Energy Producer Rise

Canadian stocks swung between gains and losses as energy producers rose and gold mining companies fell as the precious metal back from the four-week high.

Canadian Natural Resources Ltd., Canada's second largest energy company by market value, advanced 0.8 percent after analyst Brian C. Dutton of Credit Suisse Group AG raised his rating on the stock to "exceed" from "neutral." Barrick Gold Corp., the world's largest gold producer, lost 1.4 percent as bullion falls below $ 1120 per ounce. Copper mining company First Quantum Minerals Ltd. rose 2 percent as producers of metals used in industry rose.

Standard & Poor's / TSX Composite Index slipped 9.17 points, or 0.1 percent, to 11,700.12 at 9:51 am in Toronto for what will be the first loss in nine sessions.

S & P / TSX gain 5.3 percent in the eight days through February 19 as a stronger-than-expected corporate earnings in North America over concerns over rising U.S. dollar impact on commodity prices. Since the time of reporting earnings season began on January 11, 63 percent of the S & P / TSX and 78 percent of the S & P 500 companies that have reported have exceeded analysts' estimates.
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