Energy and Natural Resources Market Diary (September 7, 2010)
Strengths
- Goldcorp outbid rival Eldorado for Australian miner Andean Resources Ltd. with a $3.2 billion stock bid.
- Brazil’s iron ore exports jumped to 29.8 million tonnes in August, up from 25.6 million tonnes in July and 23.3 million tonnes a year ago, the country’s trade ministry said.
Weaknesses
- BHP Billiton Ltd. agreed with Japanese steelmakers to cut coking coal prices by 7 percent in the three months ending December 31, the Nikkei English News said without citing a source. The price was set at $209 a ton, compared with $225 a ton for the July-to-September quarter, the report said. Vale SA has indicated it may cut prices for Japan steelmakers by about 10 percent for the October-to-December quarter, the report said.
- After hitting an all-time high in July, oil output in Russia fell to a seven-month low in August falling by 0.8 percent, the country’s Energy Ministry said this week.
Opportunities
- China plans to spend 250 billion to 300 billion yuan under its new five-year plan to boost offshore oil production capacity by 50 million metric tonnes by 2015, the China Securities Journal reported.
- Vale SA said it will invest $12 billion by 2014 to become the world’s second-largest phosphate and potash producer amid rising demand for the nutrient. It plans to boost its annual potash output to 10.6 million tons from 750,000 tons now, a Vale press official said.
- Posco agreed to buy South Korean trader Daewoo International Corp. to expand the company’s raw material resources. Posco will pay $2.8 billion for a stake of about 68 percent in the steel and crude oil trader, Korea Asset Management Corp. said.
- Anglo American Plc is looking for assets with potential annual output of as much as 20 million metric tons in Russia, Mongolia, Indonesia and Mozambique, the head of the company’s coking coal business said.
- Vale SA will explore for copper and gold in Kazakhstan as the country seeks outside investors, a ministry official said. Vale plans to search in the Balkhash and central areas of Kazakhstan with Tau-Ken Samruk, the mining unit of the sovereign wealth fund, the Deputy Head of the Geology said.
- Petrobras released a prospectus for its proposed share offering, and plans to issue as much as 3.76 billion new shares for up to $75 billion in proceeds.
Threats
- First Quantum Minerals Ltd. said it suspended operations at its Frontier copper mine in the Democratic Republic of Congo (DRC) after CAMI, the Congo’s mining registry, withdrew its permit. First Quantum said it received a letter from state-owned mining company SODIMICO demanding First Quantum to stop mining and vacate Frontier. The contents of the letter render it impossible to continue safe and orderly operations at Frontier, First Quantum’s CEO Philip Pascall said.
- Chinese exporters of aluminum products will face higher U.S. tariffs after the Commerce Department ruled that they receive unfair government subsidies. In a preliminary decision, the department said the additional tariff would be as much as 138 percent in a case brought by the United Steelworkers Union and closely held aluminum manufacturers in nine U.S. states.
- The global wheat harvest will drop 5 percent to 646 million tonnes this year from a year earlier, the United Nations Food & Agriculture Organization said.
