It was good and bad news for the resources sector last week. Crude oil jumped to its highest level in four months and gold climbed to a six-month high. The Aussie dollar surged to its highest level in a month on Friday, following the US Federal Reserve’ latest stimulus measures.
RBA forecasts steel demand
Australia’s central bank has predicted China's steel demand will remain robust and only peak in 2023. The Reserve Bank of Australia’s September Bulletin says the outlook for the steel sector depends on more than just the outlook for construction and even though residential construction growth is likely to decline over the coming decades, steel demand growth is not likely to decline to the same extent.
China’s trade data disappoints
China’s export growth slowed as imports unexpectedly dropped last month. According to China’s National Bureau of Statistics August exports rose less than expected, up 2.7 per cent and August imports dropped more than expected, down 2.6 per cent: Meaning China’s trade surplus widened to $US26.7 billion in August. Chief China economist at Nomura in Hong Kong says, “The import surprise on the downside is very unusual. It is an alarming sign for the government”.
FNN recently spoke with RBS Morgans Chief Economist and Director of Strategy Michael Knox on whether investment will sustain the mining sector:
“Having gone through a mining price boom we’re now going through a mining construction boom which we enormously expand our capacity. And that lasts for, another four or five years, that’ll keep going on that way. And, after that finishes then what we’ll have is a sustained period of high mining production but with a lower number of people currently employed in mining that are currently employed in mining.”
Click here for full interview
The dispute between unions and BHP Billiton Limited (ASX:BHP) continues at the company's coking coal mines in Queenland's Bowen Basin. Unions have reportedly rejected the latest workplace agreements. Union officials were mostly tight lipped but said they had taken issue with parts of the agreement but would still present the proposal to its members. The dispute has continued for over a year and impacted production through months of rolling strikes.
With a strong Australian dollar, high costs and falling prices, BHP announced earlier this week it will stop production at its Gregory coking coal mine next month impacting almost 300 employees and contractors.
BHP’s Chairman has criticised the Queensland government’s decision to lift coal royalties, describing the move as “unbelievable” and “counterproductive” as he addressed a business lunch in Melbourne. Mr Nasser called on both the state and federal governments to work more closely with the industry.
Atlas Iron Limited’s (ASX:AGO) Chairman David Flanagan says he is confident Atlas can complete its $680 million Pilbara expansion. Mr Flanagan says the company owns 100 per cent of most of its projects and has strong cash flow. The iron ore producer says it may not need to take on additional debt funding. Analysts are sceptical, amid soft iron ore prices.
The Foreign Investment Review Board has given Molopo Energy Limited (ASX:MPO) the green light to sell its Bowen Basin coal seam gas assets in Queensland to PetroChina for $43.4 million. The junior oil and gas explorer inked a deal to sell the assets last month as it moves to focus on its unconventional North American oil assets. Molopo says the transaction now only requires approval from China’s National Development and Reform Commission, which is expected by the end of September.
Aquila Resources Limited (ASX:AQA) subsidiary API Management Pty Ltd (API) has won its case against its joint venture partner Red Hill Iron Limited (ASX:RHI) in the Supreme Court of Western Australia yesterday. Red Hill claimed it was entitled to develop and part own a share of the port and rail infrastructure that will service the West Pilbara Iron Ore project. It is now liable to pay API's costs. Red Hill commenced proceedings in August last year.
Gas developer Dart Energy Limited (ASX:DTE) has welcomed the New South Wales Government’s new framework for the coal seam gas industry. The Strategic Regional Land Use Policy is structured to allow the state to sustainably develop its gas resources in co-existence with other land uses. Dart says the state government will now make offers of renewal on a number of Petroleum Exploration Licences in New South Wales, including all of the company’s licenses.
Pluton Resources Limited (ASX:PLV) has completed the acquisition of the Cockatoo Island iron ore project in a JV with Hong Kong trading company Wise Energy Group. Pluton’s Managing Director says the acquisition marks the company embarking as an iron ore producer and expects reserves and resources on Cockatoo Island totalling 12 million tonnes of direct shipping ore.