As Australian miners continue to deliver production reports China’s latest data has cast doubt over future demand. Despite the jitters many output results have exceeded expectations with sales deals and exploration highlights also helping to appease investors. Against this backdrop and following last year’s declines, Commonwealth Bank of Australia’s (ASX:CBA)
broking arm Commsec has predicted a better year ahead for the mining sector.
Concerns rise over China growth
China’s manufacturing has seen a soft start to the year with a preliminary gauge of activity in the world’s second largest economy sinking to a six-month low. HSBC and Markit’s Flash Purchasing Managers’ Index (PMI) dropped to 49.6 in January from 50.5 the month before. The preliminary read fell below the 50 level which separates expansion from contraction. The report was released last week and just days after the Chinese government reported the pace of China’s economic growth fell to a 14-year low at the end of last year.
Commsec Economist, Savanth Sebastian has told FNN resources should see a better year ahead in 2014:
“I think that certainly the resource sector was under some pressure in 2013, it’s probably going to be a better year over 2014. We’ve seen the downside risk to global growth have diminished. A lot of these mining investment firms have pulled back in terms of capital costs and really it is about income flow and trying to effectively increase production output. So, that is going result in higher profitability over 2014. And, we’ve already seen that since the start of this year, base metal prices have seen some pretty healthy gains. There is talk of tight supply in some of those markets, and that will continue to support the mining sector.”
BHP’s production records disappoint
Australia’s biggest company BHP Billiton Limited (ASX:BHP)
has announced record production figures, but missed market expectations. Shares in the world’s largest miner fell following the release of the production report despite strong results across key commodities. Iron ore production rose 16 per cent to 48.9 million tonnes in the December quarter and BHP has also maintained full-year production guidance for its iron ore, petroleum, copper and coal divisions.
Gold miners boost production
Northern Star Resources Limited (ASX:NST)
has called its December quarter outstanding and spruiked a strong operational performance over the period. The gold producer has also announced it will pay $75 million to buy a 51 per cent stake in the East Kundana Joint Venture in Western Australia from Barrick Gold Corporation.
Kingsgate Consolidated Limited (ASX:KCN)
has lifted its production by 7 per cent in the December quarter to more than 54,500 ounces. The gold miner has also confirmed its tracking well to meet its annual production targets to the top end of guidance as it continues to focus on operating efficiencies.
OceanaGold Corporation (ASX:OGC)
has posted record full year production exceeding its guidance in the 2013 calendar year. The gold miner produced 325,732 ounces of gold and affirmed its commitment to driving down its cost profile while increasing cash margins.
Coal miners making headlines
Whitehaven Coal Limited (ASX:WHC)
says it has achieved new records in production, railings and sales in the December quarter. The coal miner says the results were achieved on the back of strong output from its Narrabri Mine in New South Wales. The company’s managed saleable coal output grew 44 per cent over the quarter while coal sales rose 52 per cent from the prior corresponding period.
Shares in Nucoal Resources Limited (ASX:NCR)
plunged amid fears it has lost its Doyles Creek mining licence in New South Wales. The miner has been at the centre of a corruption inquiry and was yesterday dealt another blow when the state government revealed its intention to cancel the licence without compensation. Nucoal’s Chairman lashed out at the decision, calling it grossly unfair and threatening to launch a constitutional challenge.
Mining exploration highlights
Shares in Zambezi Resources Limited (ASX:ZRL)
surged after the Zambian Government gave the green light for the copper, gold and uranium explorer to develop its wholly owned Kangaluwi Copper Project.
Shares in Triton Minerals Limited (ASX:TON)
soared after the mineral explorer said tremendous initial drilling result from its Nicanda Hill Prospect have confirmed its belief in the overall prospectively of the Balama North Project.