metals

An Indonesian smelter. More to come?

Many mining companies in Indonesia have warned that a ban on the export of some unprocessed mineral ores, brought into force this month, will deter foreign investment in the sector.

But Mahendra Siregar, the ambitious technocrat who heads Indonesia’s investment co-ordinating board (BKPM), believes that investment will in fact be boosted by the new rule as three metal smelters come on stream this year and 25 more are built over the next three years. Read more

Too big to fail? Aluminij, Bosnia’s aluminium smelter, its biggest exporter and one of its biggest industrial employers, has been given a last-minute reprieve by the regional government at a politically sensitive and economically precarious time. The plant had been expected to close on Monday with the loss of 900 jobs at the plant and an estimated 4,000-plus indirect jobs in Bosnia and neighbouring Croatia. Read more

Rusal, the world’s largest aluminium group, on Monday reported losses for last year, announced new plans to cut output, and repeated calls for other producers to reduce capacity in an over-supplied industry.

All very sensible. But rivals won’t necessarily do as Rusal asks. And there there doubts whether the company can deliver on its pledge to reduce capacity in Russia by 7 per cent this year when the Kremlin won’t want the job cuts. No wonder the shares fell 3.4 per cent. Read more

China’s banks are about to start installing CCTV cameras in steel traders’ warehouses to make sure those traders are using their bank loans to actually trade steel – such is the erosion of trust in that sector.

Banks realised at the end of last summer that things were not going so well for their exposures to the traders, perhaps because, as it turned out, many smaller and mid-sized operations had been using some of their bank loans for purposes other than buying and stocking steel products. Read more

Rusal is stuck between a rock and a hard place. The world’s largest aluminium producer on Monday produced its worst quarterly result since 2008.

Earnings before interest, taxes, depreciation and amortisation were down 82 per cent to $130m in the three months to September compared to the previous quarter, on a 9.2 per cent drop in revenues to $2.6bn. With supply outstripping demand and prices down around 10 per cent over the past year, the debt-laden Russian group has few options but to keep stripping out costs – and maintain good relations with its creditors. Read more

Strikes brought platinum and gold mines across South Africa to a standstill in September. Big producers such as Lonmin, Gold Fields, and Anglo American Platinum were involved. The government has now published mining production figures for the month, so we can begin taking stock of the impact. Read more

Nothing says “downturn” in China quite like the freefall in prices of iron ore, the key steelmaking ingredient.

Prices for the TSI benchmark 62 per cent Fe iron ore stood at $94.8 per tonne on Tuesday, down 19 per cent in the last four weeks. “Watching this market is like watching the Titanic,” wrote commodity broker London Dry Bulk in a research note. Read more

By Paul Bloxham and Andrew Keen of HSBC

Commodity prices have fallen this year, after rising for most of the past decade. This has made resource producers nervous about the prospect that prices could fall significantly further, perhaps even back to the very low levels reached in the 1980s and 1990s.

But we think big falls in commodity prices are unlikely. Unlike in the late 20th century, the emerging rather than developed economies are now the main drivers of global growth: these countries require significant amounts of commodities to grow as they shift from agricultural to industrial and urban economies, which involves building infrastructure and housing. Read more

The crisis in Europe continued to hammer Tata Steel in the quarter ended in June, for which it reported a steep fall in profits, according to its results on Monday.

Tata Steel, India’s largest and Europe’s second-largest steel producer, reported $108m in consolidated net profits, down 89 per cent from $966m during the same period last year (which included one-time gains of $607m) on $6.11bn in revenues. That was up from $78m in profits the company reported during the quarter ended in March. Read more

Quarterly profits at Sterlite Industries, London-listed Vedanta Resources’ India business,  fell by a third on higher costs, depreciation and soaring interest payments, the company announced Wednesday.

This could well be the metals company’s last results announcement without iron ore miner Sesa Goa – billionaire owner Anil Agarwal announced in February he would merge the two companies, both under the Vedanta umbrella. Read more