China has committed over $1.55 billion to Australian mining as Beijing gets behind a range of projects to ensure a long term supply of metals that will underpin its ongoing urbanization goals. Chinese state-controlled development banks as well as mining groups are picking up investment in a diverse array projects where other offshore investors, such as those from the US and Europe, have backed off.
This week, mid-tier copper-gold explorer Rex Minerals Limited
(ASX:RXM) reached an agreement with a Chinese source for the provision on $US550 million in debt funding to be contributed toward a $US800 million copper project development in South Australia. Meanwhile, Melbourne based and Hong Kong listed MMG Limited (HKG:1208) is in the process of finalising a proposal from China’s Development Banking Corporation to underwrite $US1 billion of a zinc mine development in Queensland with a total cost of $US1.5 billion.
CEO of Rex Minerals, Mark Parry, is adamant the Chinese interest in Australian projects is no surprise but rather a reflection of more resilient long-term thinking as opposed to the more western mentality of reactionary short term thinking, whereby fluctuating prices or adverse outlooks regularly enforce a 'sell at all costs' response.
John Noonan, of Thomson Reuters, spoke to FNN recently, outlining his take on China’s long term goals:
“I think it’s quite obvious that Chinese authorities have sacrificed growth a little bit to ensure they have long term stability; particularly price stability, they’re worried about asset bubbles, particularly in the housing sector. So I think they are focusing on becoming less export driven and more consumer-driven, so there’s a transition going on there as well.”
To hear more of John Noonan's FNN interview, click
here.
Economic news
The Australian economy expanded below expectations in the March quarter, according to the Australian Bureau of Statistics. Gross domestic product (GDP) in the March quarter grew a seasonally adjusted 0.6 per cent. For the 12 months to March, GDP grew at 2.5 per cent. The result comes as years of heavy investment in the mining and gas industries translates into an export surge as production ramps up.
Commentary
Global Chief Economist of Saxo Bank, Steen Jakobsen spoke to FNN about where he believes China’s growth story is at and how it will play out as a longer term objective:
“World growth for Australia is Chinese growth. They are re-setting the factory floor to something else that takes- in my opinion- three to six years before the start of real reform program that will come back and help the growth in China, help the growth consequently in Australia. All of this is good news in my opinion because the only way we do get change is when we feel a little bit of adversity.”
BHP to push sector and pay the fine
Goldman Sachs is betting on BHP Billiton Limited
(ASX:BHP) to push the resources sector higher. The global investment bank says BHP’s diverse asset base and low-cost operation will continue to deliver strong returns as Chinese commodity demand weakens – and has put a buy recommendation on the mining giant.
In less welcome news, BHP Billiton has been fined as part-owner of one of the world's largest zinc and copper mines for a toxic slurry spill last year in Peru. Peru's Environment Minister says the Antamina consortium, including BHP with a 33.75 per cent stake, was fined $80,000 for infractions that included a delay in alerting authorities.
Atlas on the map
Atlas Iron Limited
(ASX:AGO) says it’s on track to produce at the rate of 10 million tonnes per year during the September quarter. The iron ore miner says it will likely ship 2.2 mega tonnes during the June quarter.
In a busy week for Atlas Iron, the miner responded to media speculation surrounding the alleged provision of infrastructure services. The iron ore miner says it is in discussions with a range of existing and potential infrastructure providers, and is continuing to work with its partners to assess the viability of an independent port and railway in the Pilbara. However, Atlas says all such discussions remain, at this stage, incomplete.
Other movers and shakers among the miners
Yancoal Australia Limited
(ASX:YAL) will continue to cut costs amid difficult global coal market conditions. Chairman Weimin Li said production will lift by 70 per cent by 2017.
Western Areas Limited
(ASX:WSA) boosted its full year guidance and upgraded both nickel in concentrate production and nickel sales for fiscal 2013.
Arrium Limited
(ASX:ARI) has appointed Andrew Roberts its new chief executive officer and managing director, to be effective from July 1. Mr Roberts will replace Geoff Plummer.
Evolution Mining Limited
(ASX:EVN) has received the first payment for the sale of concentrate from its wholly owned Mt Carlton gold-silver-copper mine in North Queensland. The miner continues to produce from its silver rich deposit at Mt Carlton however plans to switch production to a gold focused deposit in the September quarter this year.
By Joel Spreadborough
