BHP approves $267m capex for Australian coal projects

JOHANNESBURG – Diversified giant BHP Billiton on Monday approved capital expenditure of $267-million to accelerate the development of a coal projects in Queensland.
BHP Billiton would use the funds for development of the Caval Ridge project and Hay Point Coal Terminal expansion.
The Caval Ridge project would produce 5,5-million tons a year of coking coal from the Caval Ridge mine and an incremental 2,5-million tons a year from the Peak Downs mine.
The terminal expansion project is expected to increase the annual capacity of the Hay Point Coal Terminal from 44-million tons a year to 55-million tons a year.
The $267-million would be used for feasibility studies, the procurement of long-lead time items and initial project activities, BHP, which is developing the projects in a partnership with Mitsubishi, said in a statement.
BHP noted that subject to regulatory approvals, final approval for the development of these projects was expected when the feasibility studies were completed in the third quarter of 2011.
The Caval Ridge mine, Peak Downs mine and Hay Point Coal Terminal are operations of the BHP Billiton Mitsubishi Alliance, a 50:50 joint venture between BHP Billiton and Mitsubishi Development.

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Xstrata halts output at Australia mine over strike

PERTH - Xstrata, the world's largest producer of thermal coal, said a strike at one of its Australian coal mines over a wage dispute has been extended by 24 hours and will significantly interrupt operations.

The labour action at the Bulga mining complex in eastern Australia, which comes on top of a 48 hour strike over the weekend, will halt production on Tuesday but will not affect shipments, the firm said on Monday.

"The union could plan more strike action if the wage dispute is not resolved. We are constantly assessing its impact on production," Xstrata's spokesman James Rickards said.

"Coal shipments are not affected by the strike yet," he said.

Workers from the Construction Forestry Mining and Energy Union are demanding higher wages and have rejected Xstrata's offer of a 15% in base salary over three years.

Bulga produces around eight-million tons of thermal coal used in power generation and semi-soft coal for steelmaking for export. Australia's total coal exports are around 270-million tons a year, one of the top earners for the commodities-driven economy.

The Bulga operation is 87,5% owned by Oakbridge, in which Xstrata holds a 78% shareholding. Nippon Steel owns the remaining 12,5%.

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SA might not reap full benefits of global mining rebound – analyst

JOHANNESBURG– Growing physical demand for commodities, a strong possibility of speculative buying and rising prices were expected to give the global mining industry a boost in 2010, but South Africa might not reap the full benefits of a rebound, a metals and mining analyst said on Monday.
Frost & Sullivan analyst Wonder Nyanjowa said on Monday that while the extent of the global economic recovery remained uncertain, commodity prices were likely to put up a strong performance and that mining companies were likely to expand production capacity.
However, some challenges particular to South Africa could dampen local prospects.
“Many of the local challenges that adversely impacted on production in 2009, such as electricity supply shortages, a lack of skills and safety concerns, are likely to continue affecting the performance of the mining industry in 2010,” he said in a statement.
Nyanjowa believes that growing inflation fears in the developed world, particularly the US, an unstable US dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates pointed towards a strengthening investment demand for gold.
“A price range of $1 300/oz to $1 500/oz in 2010 looks likely, supported by gold demand and supply fundamentals,” he said.
Last week, metals consultancy firm GFMS said the price of gold could climb to $1 300/oz in 2010, exceeding the 2009 record of $1 226/oz.
South Africa’s gold production was likely to slip further this year, to around 200 t.
While platinum was one of the biggest casualties of the global recession, Nyanjowa expected things to be much rosier in 2010.
“Frost & Sullivan anticipates that the platinum industry will recover this year on the back of stronger prospects of recovery in the global automotive sector, particularly in China and India. The launch of two new platinum-based exchange-traded funds in the US will also lead to strong investment demand.”
The platinum price rallied to its highest level in over 17 months on Monday, with the spot price reaching $1 626/oz.
Further, Nyanjowa said that coal miners should remain robust.
He expected the domestic demand for coal to continue to grow in 2010, following expansion programmes at State-owned Eskom and synfuels producer Sasol, which would require an additional 75-million tons of coal.

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Kinross Gold expects to produce 2.2Moz this year - Brazil, Chile

Toronto-based Kinross Gold (TSX: K, NYSE: KGC) has issued a preliminary output guidance for 2009 and 2010 of 2.23Moz gold equivalent and 2.2Moz respectively. Both estimates are in line with previously stated guidance, the company said in a statement Friday.
"As gold demand surged and prices hit record levels, Kinross delivered its highest-ever quarterly output in the fourth quarter of 2009, and expects to produce a record 2.23Moz equivalent for the full-year 2009, a 21% increase over 2008," CEO Tye Burt said.
Costs for last year are expected to have averaged US$435-450/oz of gold equivalent and are forecast at US$460-490/oz for 2010.
By country, in 2009 gold equivalent production from Brazil is expected to have been 430,000oz, Chile 465,000oz, Russia 690,000oz and the US 650,000oz.
As for capital expenditures this year, Kinross said it aims to spend about US$550mn, of which US$225mn will be for mine development, US$90mn for a new ball mill at the Paracatú mine in Brazil and US$48mn for new projects, the company said.

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Baja updates El Boleo's economics - Mexico

Vancouver-based Baja Mining (TSX: BAJ) has updated the economics for its 70%-owned El Boleo copper project in Mexico's Baja California Sur state to include capex of US$889mn for annual output of 56,697t copper cathode, 1,708t cobalt cathode and 25,364t zinc sulfate monohydrate for the first six years of mine life.
The project has a resource of 265Mt grading 1.50% copper equivalent in measured and indicated resources and 159Mt at 1.15% in the inferred category.
El Boleo has an after-tax internal rate of return of 25.6% using the guidelines of the US Securities and Exchange Commission (SEC) or 27.9% at present market prices, the company said.
El Boleo's net present value at an 8% discount rate is US$1.31bn using SEC guidelines or US$1.47bn at market values.
"This update now provides a strong foundation for completing construction financing and recommencing construction of the mine and processing facility in order to move to production as soon as possible," Baja CEO John Greenslate said.

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Mining claim requests sink 46.5% in 2009 - Peru

Peruvian geology, mining and metallurgy institute Ingemmet received 5,235 mining claim applications in 2009, down 46.5% from 9,793 applications in 2008 as the global economic crisis wilted mining stocks and financing options.
In terms of area, 2009 requests covered 2.34Mha compared to 4.93Mha the year before, the Ingemmet figures show. The 2009 figures were also lower than those recorded for 2006 and 2007, but surpassed the 5,052 requests over 2.25Mha made in 2005.
In December 2009, requests totaled just 290, the second lowest of the year after June's 281 and down 16.2% year-on-year. However, looking back at 2005-08, December was also the month of fewest applications submitted every year.
Peru captured 5% of global exploration spending of US$12.6bn last year, according to the Halifax-based Metals Economics Group, which has estimated that 2009 budgets sank to US$8.4bn.

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