#Official Mining Thread

[UrbanSG]

I am surprised some thought the announcement may have already occurred. It should be all over the news when the announcement occurs later this month, no actual date has been put forward but confirmation in this article from The Australian today that it is yet to come. Unfortunately who knows what will actually be announced if they can't provide an updated cost estimate.

BHP-Rio merger to create $10bn bonus, says BHP
Matt Chambers | October 08, 2008

BHP Billiton's $US100 billion ($139 billion) bid to create a super miner with Rio Tinto would lead to a boost in the nation's annual iron ore exports by 70 million tonnes above where they would otherwise be from 2015, the miner says.

The plans, which were revealed yesterday in a preliminary merger document lodged in the US, were the first solid indication of BHP's intended output if it were successful with the merger and would mean up to an extra $10 billion of Australian iron ore sales a year at current prices.

They also clearly show Rio Tinto's easier-expanded Pilbara iron ore operations are at the centre of BHP's bid, with no plans to boost production in any other commodity as a consequence of the bid given.

A merged BHP-Rio would produce about 710 million tonnes of iron ore a year from the 2015 financial year, up 11 per cent on the two mining giants' separate plans, which would see total production at 640 million tonnes a year.

Rio's view is that it would have those expansion options without BHP and maintains that BHP needs to boost its 3.4-for-one all-scrip offer if it wants access to Rio's reserves and less constrained ports.

The bid has been cleared by US and Australian competition regulators but still needs approval from EU, Canadian and South African watchdogs.

The all-important approval, orotherwise, from the European Commission is due by January 15.

BHP also indicated it was not in a position to give a cost estimate for its massive Olympic Dam expansion when it updates the status of its plans at a site visit this month. "Olympic Dam is a relatively complex orebody, so there remains uncertainty about the size, cost, timing and eventual configuration of the expansion," the company said inthe 260-page preliminary prospectus.

BHP emphasised that the merged entity would supply 19 per cent of the world's seaborne coking coal and 23 per cent of combined European Union and Asian supply of iron ore.

However, it did not mention that the merged entity would control nearly 40 per cent of global seaborne iron ore supply, which is expected to be focused on by the EC.

BHP also gave an account of talks with Rio leading up to the bid, saying that chief executive Marius Kloppers had initiated the idea of an unsolicited takeover of Rio in June last year, which was just a month after he was announced as the company's next boss and four months before he took the helm of the world's biggest miner.

BHP chairman Don Argus had floated the idea of a merger with Rio chairman Paul Skinner in September 2006, which led to dinner seven months later between the two chairmen, then-BHP chief Chip Goodyear, departing Rio chief executive Leigh Clifford and then incoming Rio boss Tom Albanese.

Rio rejected the notion of a merger at the dinner, leading to BHP's unsolicited offer, which was put to Rio in November, and rejected, before being made public.

The prospectus reiterated planned synergies of $US3.7billion a year and gave combined earnings figures for a merged giant that showed it would have brought in revenue of $US112billion and net profit of $US26.3 billion in the last financial year.

[Shuz]

Basically there's only better news to come. No news is good news.
The fact that there still remains uncertainity over the size of the project probably means that they probably still have not found the extent of the ore body just yet, meaning that whatever was there 6 months ago, and whatever is there now will bring more and more money to this state.

Expect this baby to be a freaking monster!

[frank1]

BHP also have to consider the share market. Uranium as very low at the moment and it might not be feasible at this stage to go ahead with the expansion.

[muzzamo]

plus there has been a bit of a commodities bubble...

[AtD]

BHP also have to consider the share market. Uranium as very low at the moment and it might not be feasible at this stage to go ahead with the expansion.

The falling Aussie Dollar will help Australian mining exports.

[Professor]

Uranium is King!

"SOUTH Australia is in pole position to increase its uranium exports to China. Mr Rann is leading a business delegation to China visiting Beijing, Shandong and Jinan and will meet local mining bosses today. He will tell them South Australia has 50 per cent of the world's known uranium resources and major deposits of copper, gold, iron ore, zircon and other minerals. With China's decision to massively expand its nuclear power program, SA was well placed to benefit.

"In addition to the giant Olympic Dam uranium resource, we have a range of new uranium mines being developed. Mr Rann said over the next 18 months, SA expected to roll out more than $1.7 billion in extra mining production.

"All of this work will boost jobs, exports and economic growth," he said"

[frank1]

BHP also have to consider the share market. Uranium as very low at the moment and it might not be feasible at this stage to go ahead with the expansion.

The falling Aussie Dollar will help Australian mining exports.

Yes this is true, but ultimately it is better to have the demand of uranium high creating the share market price to be high and at the same time the aussie dollar low.
I have heard that there is an over supply of uranium and it is being stockpiled hence why the share market price is so low.

[mattblack]

Watch out for US growth as well in the next decade. The debate between Obama and the other one had a uniting theme, indepenence from foriegn oil and one way they both agreed on was nuclear. Cant see that stockpile lasting for long if China and the US come on board.

[skyliner]

So,in synopsis, we have 5 big factors in our favour -
1. A massive mine (with gold, copper and silver) that now puts SA as having 50% of all world uranium. (Would also be the biggest uranium mine in the world).
2. 4th biggest copper mine and 5th biggest gold mine in the world in SA.
3. The exchange rate (I think 68c.)Big gain for exporting.
4. The US coming on board with nuclear power.
5. China coming on board with nuclear power.

SA - STATE WITH A FUTURE

[Wayno]

Uranium is King!

Rub rub rub! My crystal ball foresees China signing a multi-decade contract with BHP for ODX uranium...

[UrbanSG]

I am not so sure about the commodities boom, I think it may be close to running out of puff despite China and India. There have been signs this week that demand is falling even in China.

The lack of information regarding Olympic Dam is getting annoying. The update this month needs to contain something with a bit of grunt. I am getting sick of hearing about rough figures, timelines, staging, maybe this maybe that. Despite its huge size it is about time we started to hear something solid. Not just these executives reading the same old company line. Some of the info in this article is interesting but it is all very ''maybe this maybe that'' even from a company executive.

From the Independent Weekly:

BHP Billiton still optimistic despite “US disease”
BILL NICHOLAS
10/10/2008 3:21:00 PM'

The big freeze of American capital is simply another phase in the swing of the economic wealth pendulum towards China, according to BHP Billiton chair Don Argus.

Mr Argus featured in a “two blokes-one couch” wide-ranging, fireside chat on a range of topics from MC Rob Kelvin at a sold-out Institute of Company Directors dinner in the Hyatt ballroom Tuesday night.

Mr Argus, who made a name for himself as a leading businessman as a chief executive of National Australia Bank, applauded the Reserve Bank’s full percentage point interest rate cut. His view is that the Australian economy is basically very sound and our biggest danger is catching the contagious and financially toxic mess from the US. His remarks were made on the same day Reserve Bank governor Glenn Stevens talked of “weakening” economic activity in the major countries and “accumulating evidence of a significant moderation in growth” in Australia’s Asian trading partners.

Mr Argus said the world’s economic pendulum is swinging inexorably towards north east Asia (“You can’t ignore Japan”) and the Chinese stockpile of $US150 trillion worth of US financial assets had been an accomplishment of great pride in that country.

“North-east Asia is going to be the world’s chief motivating economic force over the next 40 years,” Mr Argus said.

“The country is moving 600 million people out of poverty – giving the breadwinner an income, a roof over his head and a standard of living – and that’s the next chapter of the Chinese economic revolution.”

The economic boost was moving westwards into central China away from the coast and Guangdong and it would continue to happen no matter what happens in the US.

“It’s quite a shift and it’ll slow from its recent double digit growth probably to a high single digit growth,” he said.

The BHP chairman remarked that China is a planned, controlled economy and while it’s a big customer for us and a major world trade player, the country still consumes 91 per cent of its own production.

India was shaping up as another economic growth driver with a population of 1.4 billion but Mr Argus said its development was at least 10 years behind China and while it had iron ore, it had little or no coal deposits for a major steel industry as in China. He thought its strong bureaucratic culture could make it the intellectual capital of the world.

Turning to SA’s Roxby Downs copper/uranium/gold mine, Mr Argus said it was probably the richest orebody in the world. Work was proceeding on the expansion plan but he noted that it was unlikely to be a big bang affair.

“Input costs are rising very fast – it’s becoming apparent you have to add 40 per cent to any capital project - so it is very likely to be a staged expansionary project,” he said.

One of the most contentious aspects of the Olympic Dam expansion project – as far as the Rann Government is concerned - the question of whether the concentrates will be refined at Roxby or in the smelter plants of Asia, is still in the mix according to Mr Argus.

“The environmental impact statement we’re preparing is the first piece to move in the game and then we’ll work things out from there,” he said. “There’s no commitment yet; it’ll evolve.”

But he said it was no different from any other BHP projects around the world which had a similar capital need of around $12 billion.

He said Australian infrastructure was holding the country’s export performance back.

He said Dalrymple Bay (a coal port in North Queensland), Hay Point (another one down the coast) and the port of Newcastle were all in a mess – and desperately in need of hard political decisions to free them up.

He said that with the Olympic Dam expansion as well as major resource projects such as LNG, the mining industry could eventually contribute 25 per cent of Australia’s gross national product.

He said inadequate infrastructure planning and spending could derail the regeneration of the industry which was set for a 40 year explosion of demand emanating from China.

“Demand is exceeding supply like you can’t imagine,” he told the Adelaide audience.

Besides infrastructure holding the country back, there was a desperate and growing shortage of qualified science and engineering graduates that were needed to run mining assets all around the country. He said arts and humanities graduates far exceeded science and engineering and wanted the teaching profession to inject a bit of interest and excitement into science to make it more attractive for kids to pursue.

Mr Argus himself wanted to be a pharmacist but was waylaid into doing a business degree at Harvard.

He said that nuclear power was the obvious answer to global warming, whoops, climate change. He referred obliquely to taking vigorous opponents of nuclear power to a Swedish facility developed especially to take nuclear waste from all over the world.

“The uranium industry doesn’t do enough to keep the community informed of the technological changes that are developing,” Mr Argus said.

Turning to his managing director, Marius Kloppers, who took over managing the $170 billion business about this time last year, Mr Argus was fulsome in his praise.

“Simplicity is the ultimate sophistication” is the way he described the Kloppers management method.

Mr Kloppers, a young Afrikaaner who had been called up for national service and served time in Angola, had had a meteoric rise through Billiton and then BHP.

“He’s brought a different philosophy than Chip Goodyear’s capital discipline period in that he doesn’t do a lot of air travel,” Mr Argus said.

“An ex-McKinsey guy, he’s taken their EBIT model and evolved board authority down the line to business units which now have EBIT responsibility – so he’s devolved authority and accountability down into the business groups.

Mr Kloppers, during his time in the marketing division, had reorganised the whole sales process so that a daily snapshot of which customers owed what to every business group was now available. Previously nickel had a different information system to coal or iron ore or oil or uranium. Now it is a simple but sophisticated system based on commodities with better controls and discipline.

“It provides a better two way communication process that is remarkable as it lets him know what’s going on everywhere,” Mr Argus said.

“BHP has a diversified portfolio of commodities which is proving the best strategy because not all are up or down at the same time,” he said.

Later in the week BHP shares fell $2 to $29.70. At this price the anticipated takeover bid for Rio of 3.4 BHP shares for each Rio share was worth $101. This compared with the Rio price of $82.60.

Mr Argus said the European Union competition authority was the next hurdle for BHP to jump in the Rio takeover. He seemed confident the takeover was on track.

[Wayno]

I am not so sure about the commodities boom, I think it may be close to running out of puff despite China and India. There have been signs this week that demand is falling even in China.

The china puff will definitely pause for office/industrial construction (i've seen this already in beijing with 3 half-built high-rise office building carcasses being abandonded), but there's tonnes of puff in the residential construction sector. The govt simply has no choice. As an example, the chengdu district (near the recent massive earthquake) must build 12million homes/apartments in the next ~2 years, just to get the local people housed! There's also the several hundred million people moving from the countryside to already established cities...

The lack of information regarding Olympic Dam is getting annoying. The update this month needs to contain something with a bit of grunt. I am getting sick of hearing about rough figures, timelines, staging, maybe this maybe that. Despite its huge size it is about time we started to hear something solid. Not just these executives reading the same old company line.

I'm not sure the October EIS-focused announcement will give you what you are looking for. Although i do expect Rann to pop up with some ODX post-processing job announcements. I also do expect BHP to start in earnest with the clearing of the ODX overburdern (a million tonnes a day for 2 years) as it's a mandatory 1st step for expansion no matter how you look at it. Once cleared it's simply a matter of ramping-up to suit post-2010 demand...

[Wayno]

Big mining supply contracts = more jobs in SA...

http://www.pir.sa.gov.au/minerals/press ... _australia

Treasurer Kevin Foley today announced local, Australian and New Zealand Suppliers have won more than $450 million worth of contracts for the development of OZ Mineral’s billion dollar Prominent Hill copper and gold mining project.

Mr Foley says $170 million of the contracts were identified through the work of the State Government’s Industry Capability Network. which had supplied a list of companies that were capable of meeting OZ Minerals’ requirements and performance standards.

“More than $150 million of those contracts will be going to local business which is a fantastic result for this state,” Mr Foley says.

“This equates to more than 2,000 jobs created or retained thanks to our efforts.”

South Australian companies involved in the development of Prominent Hill include Lucas Earthmovers, Krueger Engineering, Ahrens, Nilsen and Bolnar.

The Industry Capability Network SA (ICNSA) is a program under the Department of Trade and Economic Development, which works to get local suppliers and businesses involved in major projects.

ICNSA is part of a national organisation that identifies local suppliers with the necessary expertise and resources to bid for and win work with major developers across Australia.

OZ Minerals – formed earlier this year through the merger of Australian-based mining companies Oxiana and Zinifex – is developing one of South Australia’s largest mines at Prominent Hill, 650 km northwest of Adelaide. The mine is scheduled to begin full production in late 2008.

Prominent Hill general manager Mick Wilkes says the calibre of Australian companies that had contributed to the Prominent Hill project had ensured OZ Minerals was happy to continue supporting local businesses.

“OZ Minerals has a very strong focus on local communities, local industry and local employment,” Mr Wilkes says.

“We’re committed to ensuring that they benefit from projects like these.

“This is a global project and we require suppliers who have the proven capacity to deliver at a world standard. The SA Government has linked us with local suppliers who’ve shown they can do just that.”

[Wayno]

It's hard to resist...

SA having 40-50% of the worlds uranium must be very very tempting for the Chinese govt. The sooner we firm up some BIG supply contracts the better. IMHO this is "make or break" for ODX.

Also, interesting to see Rann promoting the notion of china govt cash being used to fund exploration and mine development! that's certainly one way of getting around the credit crunch!

http://www.pir.sa.gov.au/minerals/press ... ining_boom

Premier Mike Rann will meet today with the heads of giant mining corporations in China to boost exports and investment in South Australia’s booming mining industry.

Mr Rann will tell China’s mining leaders that South Australia has 50 percent of the world’s known uranium resources and giant deposits of copper, gold, iron ore, zircon and other minerals.
Mr Rann is being accompanied on his mission by a delegation that includes the head of the SA Chamber of Mines and Energy, Jason Kuchel and other trade representatives. Mr Rann will be visiting Beijing, Shandong and Jinan.

The Premier said China’s decision to massively expand its nuclear power program means South Australia is in ‘pole position’ for uranium exports.

“In addition to the giant Olympic Dam uranium resource, we have a range of new uranium mines being developed and proposed, plus 81 uranium exploration licences now issued in South Australia.

“Overturning the Australian Labor Party’s national ‘no new mines’ uranium policy means the brakes are off and South Australia is way ahead of other States.

“But we are also talking to the Chinese mining industry about joint ventures with Australian companies in developing South Australian mines.

“China is the key to South Australia’s mining exports growth which will generate tens of thousands of jobs.

“I’ll be telling their senior executives that in the next 18 months alone, South Australia is expected to roll out more than $1.7 billion in extra mining production.”

“All of this work will boost jobs, exports and economic growth for South Australia.

“In addition, I will also be highlighting South Australia winning top marks again in another international mining survey.

“SA has been judged the best place for investing in mining and exploration in Australia and the second best place in the world.

“The annual ResourceStocks 2008 World Risk Survey published this week highlights the confidence investors have in investing in South Australia.

“South Australia’s success was described by ResourceStocks magazine as ‘just reward for the investment the state has made in the resources sector.’

To quote the ResourceStock’s analysis of the World Risk Survey: “The one clear message that has come from this world resources risk survey is that ‘South Australia is the best jurisdiction in this country by a significant margin.” ResourceStocks, October 2008, p35.

The survey found South Australia was the leading national performer, well ahead of Queensland, Victoria and Western Australia.

“The impressive results from the ResourceStocks survey are in large part thanks to this Government’s confidence building policies highlighted by the innovative Plan for Accelerating Exploration, or PACE,” Mr Rann says.

“This one-stop-shop approach, combined with PACE, has generated record-breaking growth in exploration spending and investment within the South Australian resource sector.

“Concerted efforts made by this Government to reduce red tape, improve access to land and further develop the necessary infrastructure requirements of the resources sector are reflected in the survey result.”

Mr Rann said that in the meantime, one of the new uranium mines which is scheduled to begin operating by 2010/11 is the Crocker Well Uranium Project 400 km north of Adelaide which is 60 per cent owned by China’s Sinosteel and 40 per cent by PepinNini Minerals Ltd.

“I am meeting with Sinosteel today and I am told they expect to export between $100 and $200 million of uranium a year from their South Australian operations.

“Another of our big projects expected to begin operating before Crocker Well is Four Mile, a rich high grade 3.9 million tonne uranium deposit near the existing Beverley mine.

“Joint Venture Partners Alliance Resources and Quasar Resources have recently announced that they will mine the Four Mile deposit from 2010, subject to necessary regulatory approvals.

“Other projects include uranium deposits at Mt Victoria and Crockers Well, copper and gold at Kalkaroo and Carrapateena and iron ore at Wilcherry Hill, Wilgerup, Bramfield and Hawks Nest.

“Some of these projects have been backed by investment from China, including a heads of agreement between Tonghua Iron & Steel Mining and IMX Resources to process exports from Cairn Hill and Sinosteels’ partnership with PepinNini to develop the Crocker Well uranium deposit.

Mr Rann says the number of mines in South Australia has grown to 10 from four when the Labor Government came into office with more new projects due to begin production within 18 months.

[Wayno]

Better than the Royal Adelaide Show?

The Adelaide Showgrounds (presumably in Goyder pavilion) will host this Expo focused on SA's $45b pipeline of buildings, roads, parks, ports, railways and mining infrastructure. Oct 16-18 with free entry...

http://www.infolink.com.au/c/Expotrade- ... de-n816588

Expotrade Australia’s Infrastructure Australia Expo to hold its first exhibition in Adelaide

Resource companies are planning to spend close to $25 billion on infrastructure over the next decade in order to realise South Australia’s full mineral resources potential, according to Jason Kuchel, Chief Executive Officer of SACOME.

“The more South Australian businesses can deliver the mining industry’s infrastructure needs, the better it will be for the State,” Jason Kuchel said.

The distinct level of construction in South Australia has prompted Australia’s well-known building and construction expo, Infrastructure Australia, organised by Expotrade Australia , to hold its first exhibition in Adelaide.

As one of Australia’s important states in infrastructure development, South Australia has reached a record value of $45 billion worth of major developments either approved or in the pipeline.

“The expo being held in Adelaide is just one of the indicators that this state’s mineral resources industry is poised for massive growth,” said Jason Kuchel.

“The spotlight is on the South Australian resources sector as businesses increasingly realise the opportunities to participate in what may become a mining boom and the expo offers a great chance to showcase some of the capabilities of businesses in meeting the infrastructure needs of this sector,” he said.

The free exhibition, in conjunction with Conmex, a mining and construction equipment industry event, runs at the Royal Adelaide Showgrounds and is expected to attract architects, engineers, project managers, specifiers, council members, and many other key industry representatives.

It will run alongside South Australia’s Infrastructure Conference at which the Deputy Chief Executive, Department for Transport, Energy and Infrastructure, Rod Hook, is an important speaker.

A highly specialised trade exhibition, Infrastructure Australia 2008, will focus on the products and services required for commercial, industrial and major projects.

The event will provide a good opportunity for visitors to source products and services for existing and new projects from over 160 exhibitors.

The exhibition will be divided into six sections to cover the major infrastructure areas of buildings, roads, parks, ports, railways and mining with these areas represented by companies as diverse as Connell Wagner, Peri Australia, Saferoads, Ingal Civil, Alucobond, Caroma-Dorf, Bosch, Bianco Building Supplies, Leda-Vanaclip, Ahrens and ADT Security.

Typical Exhibitor Profile:
* Construction & Mining Machinery
* Scaffolding & Formwork
* Commercial Vehicles
* Lifting & Conveying Equipment
* Surveying Equipment
* Excavation Equipment
* Drilling Equipment
* Spare Parts & Accessories
* Equipment Hire & Rental

Typical Visitor Profile:
* Construction & Mining Companies
* Equipment Hire & Rental Companies
* Transport Companies
* Government
* Utilities
* Quarrying
* Consulting & Design
* Environmental consultants