Resources and mining companies dominating the headlines this past week include Rio Tinto and BHP, the miners may be forced to slow their expansion plans because of the euro zone debt crisis and the knock on effects to China. We speak exclusively with rare earths developer Lynas Corporation executive director, Nicholas Curtis, about his outlook on rare earths demand and pricing. And investment in Australia's mining industry has jumped 34 per cent, nearly $60 billion in the six months to October.
BHP and Rio set to slowThe chiefs of Rio Tinto Limited
(ASX:RIO), (NYSE:RIO) and BHP Billiton Limited
(ASX:BHP), (NYSE:BHP) may be forced to slow expansion plans because of the euro zone debt crisis and the knock on effects to China. According to the Australian Financial Review, the world's biggest miners said the crisis was affecting the availability of finance needed by their customers. Rio Tinto's chief executive Tom Albanese said the miner would rank and prioritise projects accordingly, if markets continued to deteriorate. The company's expectations for Chinese growth had slipped since August, reported The Australian. BHP chief executive Marius Kloppers told The Australian China was still buying iron ore. Mr Kloppers said his company would aim to live within its means.
Lynas outlook for rare earthsThe Finance News Network spoke exclusively to rare earths developer Lynas Corporation Limited
(ASX:LYC) executive director, Nicholas Curtis, about his outlook on rare earths demand and pricing. Mr Curtis is confident demand should exceed supply for a significant period of time to come.
Despite a sharp pull back in rare earths prices this year, he remains confident. “The pricing environment for rare earths, for a producer of rare earths, is very satisfactory and we [Lynas Corporation] believe will stay so for a number of years to come,” Mr Curtis said.
“Prices went up about 300 per cent and came back by a third, and people are worried about the third retracement. But if you actually calculate what a third of 300 per cent is, it's 100 per cent and many prices are still up 200 per cent on where they were at the beginning of the year,” added Mr Curtis, elaborating on this year's price fluctuations.
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here to watch the full FNN interview with Lynas Corp's executive director, Nicholas Curtis.
Drillsearch dealDrillsearch Energy Limited
(ASX:DLS) has announced a wet gas sales deal from two of its discoveries. The explorer has inked a deal with the South Australian Cooper Basin joint venture, led by Santos Limited
(ASX:STO), Beach Energy Limited
(ASX:BPT) and Origin Energy Limited
(ASX:ORG), that will see the JV buy gas until April 2013. Drillsearch managing director, Brad Lingo, says the sales deal brings Drillsearch one step closer to becoming a significant gas supplier into the eastern Australian gas markets.
Mr Lingo said in a statement to the market, “Getting the project up and running demonstrates the company's commitment to increasing reserves, increasing production and increasing cash flow ... Delivering this initial pilot project gives us confidence for future investment in exploration and development of our wet gas play areas”.
Gloucester production to jumpGloucester Coal Limited
(ASX:GCL) has forecast a six-fold jump in coal production, increasing to 12 million tonnes in less than ten years. The company will move from one to four distinct operations. At the company's annual general meeting, chairman James MacKenzie said the company aimed to double production over the next four years, contingent on the delivery of well-defined projects currently at various stages of development. Gloucester is targeting 5.5 million tonnes of output in the current financial year, compared with 1.8 million tonnes of output posted in the last financial year from only one operation in the Gloucester Basin in NSW.
Aquila approvalAquila Resources Limited
(ASX:AQA) announced the Federal Government has granted it conditional approval to proceed with its $5.8 billion iron ore project in the Pilbara region of Western Australia. The miner can now progress with the construction and operation of mining. Final approvals are expected in the second quarter of next year.
Resources NewsInvestment in Australia's mining industry jumped 34 per cent, nearly $60 billion in the six months to October reports the Bureau of Resources and Energy Economics (BREE). The record level of committed spending has risen to $232 billion. In addition, there is a further $224 billion in projects planned. Projects in coal, iron ore, oil and gas are driving the boom, accounting for 93 per cent of committed capital spending.
The Australian Securities and Investment Commission has expressed concerns that reforms for resources reporting as proposed by the Australian Securities Exchange (ASX) could still mislead investors. The corporate regulator chairman Belinda Gibson said companies were using production forecasts based on exploration targets and inferred resources, rather than more certain reserves and mineral resources.
Melissa Beaumont Lee
