The resources and mining companies dominating the headlines over the past week include Woodside's potential downgrading of its credit rating, BHP's continuing industrial action and the blow dealt to Murchison Metals' Oakajee port and rail project.
We speak exclusively with the incoming CEO of Mineral Deposits about the new venture with ERAMET. We also hear from Commodities Economists Ben Westmore from NAB and Mark Pervan from ANZ.
Woodside downgrading of credit rating flaggedIt's been a disappointing week for Woodside Petroleum Limited
(ASX:WPL) with two agencies, Standard & Poor's and Moody's, flagging the downgrading of its credit rating. It comes in response to the $900 million cost blowout and delays to its flagship offshore gas project. Protestors at Woodside's proposed site for a $30 billion gas hub in Western Australia's Kimberly entered their third week of blocking access to the site. Western Australian Premier Colin Barnett told ABC Radio that the protestors should move on now they've made their point, and allow the lawful process to go ahead.
ERAMET and Mineral Deposits joint ventureMineral Deposits Ltd
(ASX:MDL) and ERAMET have announced a joint venture to combine ERAMET Titanium & Iron in Norway and the Grande Cote Mineral Sands project in Senegal. ERAMET and MDL have entered into exclusivity arrangements to finalise formal documentation whereby both would hold 50 per cent of the shares in the newly created entity. The combination creates a new major player in the mineral sands industry.
In an exclusive interview with the Finance News Network, the incoming chief executive Rick Sharp revealed he is eager to go head to head with Rio Tinto Ltd
(ASX:RIO) and Exxaro, the two major players in competition with the new joint venture.
Mr Sharp said, "There's only three players in the world, ERAMET being one of them ... now ERAMET, particularly with our feed stock as a supply will be able to compete with them in terms of size".
"The creation of this joint venture is a win-win for both parties. We get a secure home for our ilmenite, which is one of our major products out of the Grande Cote mine. Whereas the ERAMET smelter in Norway now has a secure additional supply of additional ilmenite which allows it to expand over time. There's only five of these type of slag smelters in the world. Two are owned by Rio and two are owned by Exxaro, the fifth one being ERAMET," added Mr Sharp.
Lynas says Malaysian investigation has finishedLynas Corporation Ltd
(ASX:LYC) announced that the International Atomic Energy Agency is closer to revealing the results of its investigation into Lynas' planned Advanced Materials Plant in Malaysia. The rare earth refinery, currently under construction, has attracted significant controversy through public protests that allege it poses dangerous radioactive risks. Lynas says the independent investigation has now concluded and the findings will be reported by the end of this month.
BHP alumina and uranium projects, strikesThe estimated cost of expanding BHP Billiton Ltd's
(ASX:BHP) Worsley alumina project in Western Australia has blown out due to its complexity and inflationary pressures. The estimated cost has risen from an estimated $US1.9 billion in May 2008, to $US2.995 billion.
BHP has also sought to dampen speculation over the future of its Yeelirrie uranium project in Western Australia. BHP says a deferral of a key review has not derailed its commitment to the project.
And workers at BHP's mines in Queensland continue to threaten to strike at major export mines in Queensland. The union says members have given strong indications they want to see progress on enterprise agreements. BHP has offered annual pay increases of 5 per cent at the six mines.
Murchison Metals stung by Sinosteel pull-outMurchison Metals Ltd
(ASX:MMX) has been placed in a trading halt as a result of China's Sinosteel shutting down work on its $2 billion Weld Range iron ore mining project in Western Australia. Before the halt Murchison shares had increased in value by more than 20 per cent in response to the federal government's environmental approval of its Oakajee port and rail project. Murchison is conducting a feasibility study, due by the end of this month. It's likely that the investment will not be viable without Sinosteel.
Resources NewsOil prices plummeted in response to the world's richest countries announcing they would release oil from their emergency stockpiles. It is only the third time this has been done since the 1970s. The International Energy Agency said the extra 60 million barrels released would replace production lost because of Libya's civil war, and prevent soaring prices.
CommoditiesThe NAB's Minerals and Energy Economist Ben Westmore says aluminium is the commodity most at risk of a correction.
"Some of the base metals are still at risk of correction. Aluminium is one where there's very high global stocks and there's no assurance that big amounts of aluminium won't enter the market shortly. And it's also a metal that's done quite well in terms of the growth in prices over the last twelve months," Mr Westmore said.
But Mark Pervan, the ANZ's Global Head of Commodities Research says iron ore is the commodity most likely to see a correction.
He says there are, "very high port stocks, [there are] very high inventory levels now sitting in China. What will probably mitigate that risk is ... the Chinese steel story is going to remain very, very strong. But there is an oversupply in stocks at least."
- Melissa Beaumont Lee
