ArcelorMittal Reports Fourth Quarter 2014 and Full Year 2014 Results
Outotec Chosen to Modernize Smelters
Westmoreland Coal Reports Fiscal 2014 Revenues Up 65 percent
Australia’s Carnavale Resources Exercises Option to Acquire Two US Projects
Brazil’s Vale Posts Record Iron-Ore Production in 2014
ArcelorMittal Sells Its Kuzbass Coal Mines
Controversial Los Frailes Mine in Aznalcóllar, Spain is to Re-open
Yara Confirms Potash Mining Potential in Ethiopia, Seeking Equity Partners
AngloGold Using Turbines to Boost Mine Power
Rukwa Feasibility, Financial Studies Map Out Potential 300 MW Power Plant
India's Coal Mine Auction Results
Kingsgate’s Gold Mine Given Clearance to Restart Operations
Rio Tinto to Cut Hundreds of Western Australian Iron Ore Jobs/ Merge Divisions
Glencore Cuts Australian Coal Output On Weak Demand, Supply Glut
ArcelorMittal (MT (New York, Amsterdam, Paris, Luxembourg), MTS (Madrid)),
the world’s leading integrated steel and mining company, recently announced
results for the three and twelve-month periods ended December 31, 2014.
The Company
has made notable progress on its strategic objectives during 2014, including:
Outlook and
guidance:
Outotec
recently announced the award of two mineral processing facility upgrade
contracts—one in Botswana and another in Chile. In November, it reported receipt
of a contract from BCL Ltd. for modernizing the nickel flash smelting furnace in
Selebi Phikwe, Botswana. In addition, the parties have negotiated a service
agreement for a period of 36 months. The total value of the arrangement is more
than €17 million ($21 million).
BCL’s original
nickel smelter was built in the 1970s using Outotec’s flash smelting technology.
The scope of Outotec’s modernization work includes the redesign of the flash
smelting furnace, delivery of new advanced cooling elements and integrating them
into the furnace. The service agreement includes installation and commissioning
supervision services, preventive maintenance planning, equipment maintenance and
spare parts.
In December,
Outotec reported that it had been retained to revamp and upgrade the Potrerillos
copper smelter and sulfuric acid plant at Codelco’s Salvador Division in
northern Chile, allowing the copper producer to comply with new Chilean
environmental regulations that become effective in 2018. The value of the order
is approximately €64 million ($79.5 million).
Outotec’s
scope of delivery includes detailed engineering of the revamp, equipment supply
and technical assistance during the construction, commissioning and startup of
the smelter and acid plant. Equipment additions include hoods for the existing
converters, revamp of the dry electrostatic and wet precipitators and gas ducts,
a catalytic converter and an effluent treatment plant.
• 2014 results include the results of Canadian operations
since the acquisition on April 28, 2014. These results exclude results from
Westmoreland Resource Partners, LP (“WMLP”) and the Buckingham Mine, except for
the WMLP one-time charges outlined in the table below.
• Revenues grew 65.4% in 2014 to a record $1,116.0 million
versus $674.7 million in 2013.
• Adjusted EBITDA for 2014 grew 50.8% to a record $175.4
million, which is in the middle of the $166 to $184 million range that we
announced upon the Canadian acquisition. Adjusted EBITDA for 2013 was $116.3
million.
• Net loss applicable to common shareholders for 2014 was
$173.1 million and included charges of $142.1 million outlined in the table
below, consisting of debt extinguishment losses, derivative based and foreign
exchange losses, acquisition costs and cost of sales related to inventory
written up to fair value in the Canadian acquisition, duplicative and
incremental interest incurred before the close of the Canadian transaction, and
restructuring charges.
• Westmoreland U.S. mines continued their strong safety
performance, achieving reportable and lost time incident rates approximately
75.4% and 73.9%, respectively, of the national averages for surface operations
for the year ended December 31, 2014.
• Westmoreland currently holds 4,512,500 common units of
Westmoreland Resource Partners, LP, whose unit price on February 26, 2015 was
$10.70.
“2014 was a year of extraordinary activity at Westmoreland
Coal Company,” noted Keith E. Alessi, Chief Executive Officer. “In 2014, we
successfully financed, closed and integrated the Canadian acquisition; improved
our balance sheet through an equity offering, monetized our contract at
Westshore Terminal and refinanced our outstanding debt facility; received a
credit upgrade from both Moody’s and S&P; signed significant contract extensions
with both customers and labor unions; and finished the year with the successful
acquisition of Oxford Resources GP, LLC, the general partner of Oxford Resource
Partners, LP, as a platform for entry into the MLP space. We are gratified that
adjusted EBITDA fell in the midpoint of our projected range, particularly in
light of the weaker Canadian dollar and mild weather throughout the year that
impacted our power operations.”
Westmoreland Coal Company is the oldest independent coal
company in the United States. Westmoreland’s coal operations include
sub-bituminous and lignite surface coal mining in the Western United States and
Canada, an underground bituminous coal mine in Ohio, a char production facility,
and a 50% interest in an activated carbon plant. Westmoreland also owns the
general partner of and a majority interest in Westmoreland Resource Partners,
LP, formerly Oxford Resource Partners, LP, a publicly-traded coal master limited
partnership. Its power operations include ownership of the two-unit ROVA
coal-fired power plant in North Carolina.
Australian explorer Carnavale Resources has exercised an
option to acquire private firm Tojo Minerals, which has the rights to the Red
Hills project, in Nevada, and the Little Butte project, in Arizona.
Perth, Australia-based Carnavale said in a statement that
it would move to immediately ramp up exploration activities at both projects.
Carnavale considered the two massive sulphide
gold/silver/zinc/lead/copper targets at Red Hills to have excellent near-term
resource potential, while the four large Carlin-style anomalies and the Little
Butte gold/copper project enhanced exploration upside as they were advanced up
the value curve.
The company planned to submit about 1 200 detailed soils
samples, mapping and sampling of the historic adits and other underground
workings at Red Hills before undertaking a diamond-drilling campaign, with other
geophysical surveys at Little Butte, to target the primary source to the large
gold/copper supergene blanket that had been defined to date.
Under the terms of the deal, Carnavale would issue Tojo
shareholders 21-million shares and 42-million performance shares, which could be
converted to up to 42-million fully paid shares in Carnavale upon the successful
completion of certain resource-based performance milestones.
The majority of Tojo shareholders had agreed to a voluntary
hold period for issued shares until August 28.
The transaction was expected to close on March 16.
Brazilian mining company Vale SA said recently it ramped up
production of iron ore and other key commodities in the fourth quarter, despite
sharply lower prices.
The world’s largest iron-ore producer said its output of
the steelmaking ingredient rose 2.1% in the fourth quarter from a year earlier
to 82.97 million metric tons. That brought Vale’s 2014 iron-ore production to a
record 319.22 million tons, up 6.5% from the previous year and 7.2 million tons
above Vale’s own guidance.
Increasing output of the commodity from mining companies
like Vale, combined with a slowdown in demand from China, have weighed on the
market and brought prices to their lowest level in almost six years.
Iron-ore prices fell roughly 50% during 2014. The drop took
place largely in the final months of the year.
Vale’s nickel output rose 8.4% in the fourth quarter to
73,600 tons, thanks to sharply higher production in New Caledonia and Brazil,
where the company is ramping up new mines. For the full year, Vale’s nickel
output increased 5.7% to 275,000 tons, the highest since 2008 but 14,000 tons
short of guidance due to operational issues at several facilities.
Copper production rose 11% in the fourth quarter to 58,400
tons and finished 2014 up 13% at 208,000.
Vale’s fourth-quarter coal output increased 2.3% to 2.31
million tons and finished 2014 at 8.65 million tons, down 1.4% on the year.
ArcelorMittal recently announces the sale of its interest
in the Kuzbass coal mines in the Kemerovo region of Siberia, Russia, to Russia’s
National Fuel Company (NTK).
The assets include
the coal mines of Berezovskaya and Pervomaskaya, which together produce 700,000
tonnes of coal a year.
ArcelorMittal
acquired the Kuzbass mines in 2008 as part of the company’s strategy to secure
delivery of coal to ArcelorMittal steel operations in Ukraine.
Bill Scotting, CEO
of ArcelorMittal Mining, said: "The decision to dispose of the Kuzbass coal
mines follows a strategic review of the assets. As our Ukraine steel operations
now source coking coal from ArcelorMittal’s mines in Kazakhstan, Kuzbass is no
longer a strategic asset for ArcelorMittal.
We are pleased to have agreed the sale to NTK as Kuzbass is an important
employer in the region and this offers a sustainable solution for employees and
other stakeholders."
Spain's Andalucían regional government is re-opening the
controversial Los Frailes mine in Aznalcóllar, near Seville.
In April 1998, a holding dam at the mine burst releasing
around five million m³ of acidic mine tailings containing dangerous levels of
several heavy metals. Toxic sludge reached the nearby River Agrio and then its
affluent, the River Guadiamar, travelling around 40km along the waterways. Total
tailings spilled was estimated to be between 1.3 million tonnes (Mt) and 1.9Mt.
The spill flooded the banks along the rivers Los Frailes,
Agrio and Guadiamar, from a point 300m upstream of the tailings pond in the
river Los Frailes, down to Entremurosmine. Following the incident, 4,634ha of
land was affected, with 2,600ha being covered by tailings. Remediation work took
three years and reportedly cost about €240m.
Three separate investigations were held to assess the Los
Frailes mine accident, the first commissioned by Boliden Apirsa, the second by
regional authorities and the final one called for by the judge leading the legal
procedures.
The Spanish Government claims that re-opening Los Frailes
mine will create 450 jobs the area, which has the highest unemployment rates in
Spain.
Conservationists are arguing that the mine poses
environmental risks to the Guadiamar river, which is the primary water source
for Doñana national park, a Unesco world heritage site, according to the
Guardian.
Los Frailes mine is owned by Boliden-Apirsa. The mining
contract has been awarded to a consortium led by Grupo México, which was fined
$150m (£98m) to clean-up an accident at its mine in Sonora, Mexico, last August.
Spanish officials insist that Grupo México has guaranteed
its Aznalcóllar mining activities will not affect protected zones.
A feasibility study, carried out on behalf of Yara
International confirms significant potential to extract potash in the Danakil
depression in northeastern Ethiopia.
The independent study identified an annual production of
600,000 metric tons sulfate of potash (SOP) over 23 years from reserves
(Kainite, Carnallite and Sylvinite) at Yara's Danakil concession. The company,
which aims to begin mining activities in 3Q, 2018, is now seeking equity
partners to develop the project.
The reserves will be mined using solution mining
technology. The brine produced at the mining sites will be evaporated utilizing
high solar radiation. The harvested salts will be processed and re-crystalized
to SOP. Both standard and compacted SOP will be produced.
The product will be trucked 790km to Tadjoura, Djibouti,
where the project includes a product storage and handling terminal at the new
port currently under construction by the Djibouti Port Authority.
Capital expenditure of the project is estimated at USD 740
million, while operating expenditure is expected to amount to USD 167/metric ton
FOB Djibouti.
The combination of a unique geological structure and an
extreme climate in the Danakil depression required adjustments in the production
process. Yara developed new technologies to fully utilize the local advantages.
Yara's Danakil mining project has received the backing of
the Ethiopian government, which has committed to providing electric power by
building a 130km long power line. The government will also construct a new
lowland transportation road to support mining operations. Sustainable water
availability has been confirmed through a water exploration campaign, while an
environmental and social impact assessment study confirms that the future
activities comply with Ethiopian environmental legislation and international
guidelines and standards.
Yara delivers solutions for sustainable agriculture and the
environment including fertilizers, crop nutrition programs, industrial products
and solutions to reduce emissions, improve air quality and support safe and
efficient operations.
Gold major
AngloGold Ashanti is installing turbines in underground mines to boost energy
regeneration, as part of a strategy of recovering electricity without spending
significant amounts of capital, miningweekly.com reports.
Largely by
re-engineering mine cooling and refrigeration, the gold-mining company has
managed to cut consumption of electricity from the national power grid by 20% in
the last six years, while also working closely with State electricity utility
Eskom to lower power consumption during peak periods by shifting its pumping and
rock hoisting loads.
In the event
of not having any access to grid electricity at all, it resorts to its own
emergency standby equipment to hoist underground employees to surface.
Building its
own power stations, as Sibanye Gold is planning, is currently being eschewed.
It is,
however, continuing to look at alternative sources of energy, particularly green
energy, including solar and wind farms, to increase its standby generating
capacity, whereas Sibanye may build a R3-billion, 150 MW solar power plant and
is also investigating the feasibility of establishing its own coal-fired power
stations that could contribute an additional 200 MW and 600 MW.
A feasibility study and financial model of Edenville
Energy’s proposed Rukwa coal-to-power project, in western Tanzania, have
suggested a two-phase construction period that could see the development of an
integrated coal mine and power plant boasting generating capacity of over 300
MW.
Under the proposals, the first phase would see the
establishment of two 60 MW generation units, while the second phase would see
the construction of two 120 MW units.
The London-listed group added in a statement that there was
also an opportunity for rapid scale-up to the second phase in parallel with the
increasing energy demand profile in the East African State.
Elaborating on the proposed first phase, Edenville
announced an estimated project cost of $175-million with a modelled plant load
factor of 80% and an estimated project payback of between nine and ten years.
The feasibility study found that there were sufficient
near-surface coal supplies, at a strip ratio of 1:1, to feed the 120 MW plant
for at least 30 years.
If a commercial power offtake agreement with variable
commercial tariffs for 40% of the production was modelled, the project would
return an estimated pre-tax NPV of $322-million, with an IRR of 27.8%.
The average earnings before interest, taxes, depreciation
and amortisation over the life of the project for the base case and offtake
scenario were $58-million a year and $75-million a year respectively.
Based on a review of the available coal resources, the
study revealed the possibility to develop a larger project beyond the first
phase.
It added that Rukwa boasted several “key positives” which
assisted development discussions, including a combined capital expenditure of
$175-million for the power plant and mine, which equated to $1.45-million per
MW.
Edenville noted that key documents had also been submitted
to the Tanzanian authorities to advance the technical and regulatory
requirements to enable the project to be placed on the Tanzanian Power Master
Plan and to advance technical and commercial discussions.
Delivery to the Tanzanian grid system depended, however, on
the construction of the Western Transmission line, which was planned to pass
within 12 km of the Edenville project site.
The company said recent information had indicated that this
would be completed in 2018, broadly in line with the conceptual development
timeframe for the power plant.
On 24 September 2014, India's Supreme Court cancelled 214
of the 218 coal blocks that had been allocated since 1993. The blocks were for
captive use by the cement, steel and power industries, but the allocation
process had been accused of lacking transparency. Of the cancelled blocks, 12
belonged to cement companies. The re-allocation of the cancelled blocks
commenced in December 2014, when 36 of the 98 viable coal blocks were allocated.
A transparent auction process for 21 of the cancelled blocks for end-usage in
power, cement and iron production started on 14 February 2015. In March 2015, a
further 23 blocks will be auctioned. CIL was requested to steer clear of the
bidding by the Indian government. Winning bids ranged from US$22.5/t to
US$45.9/t.:
·
Reliance Cement won the Sial Ghoghri mine in
Madhya Pradesh for US$22.5/t
·
Jaiprakash Associates won the Mandla North mine,
which has 143Mt of extractable coal reserves, for US$40.3/t
·
Jaiprakash Power Ventures won the Amelia North
coal block in Madhya Pradesh for US$11.4/t, while agreeing to forego the mining
cost. The mine has extractable reserves of 2.8Mt/yr and was previously owned by
Madhya Pradesh State Mining Corp.
·
Aditya Birla Group's Hindalco Industries bid
US$45.9/t for the Kathautia mine in Jharkhand. The mine has 26Mt of coal
reserves. The group also won the Gare Palma IV/5 mine in Chhattisgarh with a
winning bid of US$56.4/t. The mine has extractable reserves of 42.4Mt.
·
Sunflag Iron and Steel won Maharashtra for
US$28.7/t
·
B S Ispat won the Marki Mangli III mine in
Maharashtra for US$14.7/t. The mine has 4.2Mt of extractable reserves.
·
Bharat Aluminium Co bid US$48.5/t to win the
Chotia mine in Chhattisgarh. The block has Grade C coal reserves with 1Mt/yr of
production capacity.
·
OCL Iron & Steel won the Ardhagram mine in West
Bengal at a price of US$36.9/t. The mine has extractable reserves of
400,000t/yr.
·
Jindal Power Ltd won the Gare Palma IV-2 and 3
coal mines in Chhattisgarh, which have extractable coal reserves of 156Mt, for
an estimated US$270m.
·
UltraTech Cement wins Bicharpur mine coal block
in Madhya Pradesh which has 29.1Mt of coal reserves, for a bid of US$48.3/t. The
company also won the Bicharpur coal block in Maharashtra for a price of
US$48.2/t. The block contains coal deposits of 29.1Mt.
Thailand's Government has cleared the country's lone gold
mine to restart following its closure in January over contaminations concerns.
Kingsgate and its Thai subsidiary Akara Resources operate
the Chatree gold mine located in central Thailand. Thailand's Department of
Primary Industries and Mines has given approval to resume the gold-mining
operations. Villagers living close to the mine opposed the restart of the mine,
and complained that it was polluting the environment and affecting their health.
Kingsgate Consolidated executive chairman Ross Smyth-Kirk
said in a statement: "Kingsgate has been working closely with the Thai
authorities and the local community and has satisfied all their requests around
the issue of slightly elevated arsenic and manganese levels identified in some
local inhabitants during regular screening.
"This has included health checks and lifestyle education
programs with a commitment to continue to assist with ongoing management of this
community health issue."
The mine was ordered for temporary shut down following
random urine and blood tests that showed above-standard arsenic and manganese
levels in villagers near the mine.
Kingsgate denied the claims saying that the mine was not
responsible for any of them present in the area and said it independent experts
from local universities will be in place to carry out tests on the villagers.
Chatree mine commercial operations in November 2001 and has
produced more than 1.3 million ounces of gold and in excess of 5.8 million oz of
silver as at June 2013.
The Chatree Mining Complex is comprised of the original
Chatree South operation and Chatree North, which began production in November
2008 and its annual ore processing capacity has been increased from a nameplate
capacity of 1mtpa in 2001, to the current capacity of 6.2mtpa.
Rio Tinto is cutting
iron ore jobs, as it races to strip costs from its business and cement its lead
as the world's lowest cost exporter of iron ore to China.
Rio Tinto is poised to cut several hundred jobs from its
iron ore division in Western Australia, and merge its copper and coal divisions
in a move that will see coal chief Harry Kenyon-Slaney leave the company.
The company recently released a statement detailing a
restructure across other parts of the Rio group that will see it streamlined
from five to four product groups.
Mr Keynon-Slaney, Rio's head of its energy group, would
leave the business "as a consequence of the restructuring", which will see
copper chief executive Jean-Sébastien Jacques take control of the merged
coal-copper arm.
Uranium, which Mr
Keynon-Slaney oversaw up along with coal, will be put into the diamonds
and minerals product group, which Alan Davies will stead head up.
Rio's two other divisions, aluminium and iron ore, will not
be restructured.
In iron ore, Rio is putting the heat on high-cost players
around the world by drilling its world-beating production costs even further
down. It exited the December quarter with cash costs just under $US17 a tonne.
Mining and commodities giant Glencore Xstrata recently said
it is reducing its coal production in Australia by 15 million tonnes amid weak
global demand and oversupply. It is understood that up to 120 jobs at Glencore's
13 Australian mines could be affected as a result of the cuts, which will
include scaling back some operations and deferring projects.
"We plan to reduce 2015 production by 15 million tonnes to
more closely align our coal output with current customer demand," Glencore,
which produced just under 100 million tonnes of coal in Australia last year,
said in a statement.
Glencore did not say which mines would be affected. The
firm has 8,600 workers at mines in the Australian states of New South Wales and
Queensland.
Other major miners such as BHP Billiton and Rio Tinto have
continued to ramp up their production levels -- particularly in iron ore --
despite plunging commodity prices.
Glencore chief executive Ivan Glasenberg was reported to
have said in December that "we don't want to oversupply and cannibalise our own
business" in a criticism of other miners.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax:
847-784-0061
E-mail: editor@mcilvainecompany.com
Web site: www.mcilvainecompany.com