Category: Commodity Markets

Deloitte report outlines top 10 issues facing mining companies

On By Exploration and DevelopmentIn Commodity MarketsLeave a comment

Deloitte publishes main issues and advice to mining companies, which can be summarised as: Cutback, Innovate, Adjust to Markets, Engage with stakeholders, Take whatever money you can get in whatever way it is offered, Spend some money with an accountant sorting out your tax, Buy at the bottom not the top, don’t divest at the bottom (Slap on the wrist BHP, Rio etc.) and spend some more money on Health and Safety.

A sterling effort there from Deloitte and sensible advice, but hardly groundbreaking.  This should be in every CEO’s user manual on how to run a company. However in the good times it is forgotten about and in the bad times it is too late and the first point tends to override all else.

Financial markets and fund managers have to shoulder much of the blame with the CEO’s and boards of companies, for pushing unrealistic expectations of returns and endorsing bad corporate decisions, particularly overpriced and over-hyped mergers.

Source: Deloitte report outlines top 10 issues facing mining companies in 2016 | Deloitte | Press Release

Not all iron ore is created equal

On By Exploration and DevelopmentIn Commodity Markets, Mining NewsLeave a comment

Much has been made of the advantages of direct shipping iron ore  over the past few years, but the fall in iron ore pricing has squeezed margins for many. Iron ore products that pay a premium over fines, such as lump ore and pelletised production trade at bigger premiums to the benchmark pricing and particularly in the case of pellets which aim at more specialised end user markets, the drop in pricing has not been as severe.

So much so, that  Grange Resources in Australia has felt compelled to put out a press release to try and differentiate themselves from the general sell off in iron ore stock. <http://www.grangeresources.com.au/clients/grange/downloads/item226/grange_resources_-_market_update_-_16_march_2015.pdf&gt;

African Minerals to go into administration | Mining News

On By Exploration and DevelopmentIn Commodity Markets, Mining NewsLeave a comment

Another iron ore junior bites the dust under high debt load of +600 M USD in bank debt and convertibles and a mine on care and maintenance due to low prices and disputes with Chinese partner. This project had some of the lowest cash costs in the junior iron sector and had made the hurdle into production, yet even so the scale of capital investment and the associated debt load proved too much in the “return to normal” of iron ore pricing. This raises serious questions about market optimism, business models, reasonable pricing and whether small companies really have the resources to develop and operate capital projects of this scale.

African Minerals to go into administration | Mining News.

Big business names hurting as iron ore slump claims Western Desert

On By Exploration and DevelopmentIn Commodity Markets

Big business names hurting as iron ore slump claims Western Desert.

One of the more high profile Iron Ore junior collapses to date,  look for more as the Iron Ore party finally grinds to a halt. Massive multi-billion dollar infrastructure expansions by the big three + fortescue have bought  a veritable flood of direct shipping iron ore to the market. Lookout the magnetite producers, as they will find it very difficult to compete in this environment.