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I ran across the following article this a.m........
I don't intend to be pumping, but I think it's relevant to the valuation of Sennen's 254mt Middlemount(Queensland) thermal and coking coal deposit currently up for bid by Ernst and Young, Perth Australia. It appears China Huaneng will pay $29.423 million for a 129mt(25.5%)stake in the following thermal coal deposit. Or .23cents per tonne in situ.
Middlemount's 254mt @ .23cents/tonne equals $58.4 million. The numbers appear to line up with the press release dated 7/5/2005.
http://www.sennenresources.com/s/NewsReleases.asp?ReportID=111461&_Type=News-Releases&_Title....
Article....
Chinese buy stake in Monto coal project
July 28, 2005 - 10:34AM
A leading Chinese power generator has gained exposure to the Queensland mining boom after taking a share in the Monto thermal coal project.
Macarthur Coal Ltd will sell half of its 51 per cent share of the project to the China Huaneng Group (CHG).
China Huaneng will pay $29.423 million for its 25.5 per cent stake in the central Queensland project.
The sale will be in two tranches - $12 million payable on the completion date and $17.423 million following completion of the Stage 2 feasibility study in two to three years.
Macarthur Coal chairman Keith De Lacy said China Huaneng had outstanding qualifications as a partner in the Monto Project.
"Macarthur Coal looks forward to working with China Huaneng Group and the other Monto joint venture participants in completing the Stage 2 feasibility study as soon as possible," he said.
Macarthur purchased its stake in Monto from Burnett Coal Pty Ltd in 2001 for $10 million in cash and a further $10 million worth of Macarthur shares.
The latest analysis of recoverable thermal coal reserves and resources at Monto were estimated respectively at 22.6 million tonnes and 518.7 million tonnes.
As part of Macarthur's deal with China Huaneng, the other joint venturers in the project must agree to a revised development plan.
This involves an extensive exploration program and major feasibility study for up to a 10 million tonne per annum operation.
The feasibility study will involve the establishment of a trial open cut test pit mining operation.
China Huaneng is one of the top ten power companies in the world and the largest power generator in China.
It has a total installed generating capacity of 40,990 MW, representing approximately nine per cent of the total installed generating capacity in China and plans to triple this by 2020.
© 2005 AAP
http://www.smh.com.au/news/Business/Chinese-buy-stake-in-Monto-coal-project/2005/07/28/1122143938327...
Merrill says go long on metal stocks where China short
Wed Jul 27, 2005 8:11 AM BST
LONDON (Reuters) - Investors in mining stocks should focus on firms that supply raw materials in which China is in short supply and avoid firms in areas where it has surplus domestic capacity, Merrill Lynch Investment Managers said.
"Our investment strategy concentrates on those companies that supply the raw materials in which China is not self sufficient. This includes bulk commodities such as iron ore, coking coal and thermal coal, as well as copper, nickel, zinc and alumina," MLIM gold and mining analyst Catherine May wrote in a research note on Tuesday.
She said MLIM's World Mining Trust fund was at an all-time high on the back of its major holdings including CVRD (10.6 percent), Rio Tinto (8.8 percent), BHP Billiton (7.0 percent), Falconbridge (5.6 percent) Teck Cominco (4.5 percent) and Alumina (4.2 percent).
"These are some of the few companies that are not only benefiting from high metal prices, but also have near-term expansion opportunities that will allow them to take advantage of the high price environment going forward," May said.
She said one of the particular fears in commodities markets is that China is producing too much steel after moving from being a net importer in 2004 to a net exporter in 2005 and with domestic production increasing by 33 percent year-on-year.
"There is great confusion in the market about whether the overcapacity in steel is a good or bad thing for the mining sector," May added.
"To us it seems clear: China is short of the raw materials required to produce this steel and having to import commodities such as iron ore and coking coal to supply the hungry steel furnaces."
© Reuters 2005. All Rights Reserved.
http://today.reuters.co.uk/Funds/FundsArticle.aspx?type=fundsNews&storyID=2005-07-27T071024Z_01_....
Merrill says go long on metal stocks where China short
Wed Jul 27, 2005 8:11 AM BST
LONDON (Reuters) - Investors in mining stocks should focus on firms that supply raw materials in which China is in short supply and avoid firms in areas where it has surplus domestic capacity, Merrill Lynch Investment Managers said.
"Our investment strategy concentrates on those companies that supply the raw materials in which China is not self sufficient. This includes bulk commodities such as iron ore, coking coal and thermal coal, as well as copper, nickel, zinc and alumina," MLIM gold and mining analyst Catherine May wrote in a research note on Tuesday.
She said MLIM's World Mining Trust fund was at an all-time high on the back of its major holdings including CVRD (10.6 percent), Rio Tinto (8.8 percent), BHP Billiton (7.0 percent), Falconbridge (5.6 percent) Teck Cominco (4.5 percent) and Alumina (4.2 percent).
"These are some of the few companies that are not only benefiting from high metal prices, but also have near-term expansion opportunities that will allow them to take advantage of the high price environment going forward," May said.
She said one of the particular fears in commodities markets is that China is producing too much steel after moving from being a net importer in 2004 to a net exporter in 2005 and with domestic production increasing by 33 percent year-on-year.
"There is great confusion in the market about whether the overcapacity in steel is a good or bad thing for the mining sector," May added.
"To us it seems clear: China is short of the raw materials required to produce this steel and having to import commodities such as iron ore and coking coal to supply the hungry steel furnaces."
© Reuters 2005. All Rights Reserved.
http://today.reuters.co.uk/Funds/FundsArticle.aspx?type=fundsNews&storyID=2005-07-27T071024Z_01_...
Speaking of heavy hitters....
I ran a company extract on Sennen's Aussie partner DJB Coal Pty Ltd.
Who is DJB Coal Pty Ltd?
Jeremy Barlow (1/6 owner and Officer, DJB Coal) and related companies:
Barlow Jonker http://www.barlowjonker.com/iportal/DesktopDefault.aspx?tabID=3341
Coalportal http://www.coalportal.com/
CH4 http://www.ch4.com.au/a_barlow.html
David Mathew (1/6 owner DJB Coal) and related companies:
CH4 http://www.ch4.com.au/a_mathew.html
Bruce Wood (2/3 owner and Officer, DJB Coal) and related companies:
Santos, V.P. Strategic Projects http://www.santos.com/Content.aspx?p=84 (Scroll down when site opens)
I obtained DJB Coal Pty Ltd ownership info through the Australian Securities and Investment Commission and D&B (it's not free)
http://www.asic.gov.au/asic/asic.nsf http://www.dnb.com.au/express/
So I've been scratching my head wondering what we have going on here? Why was Bruce Wood never mentioned in any press releases? These 3 guys set up DJB Coal just to partner Sennen's 3 coal properties. So what's the story? What's the series of agreements Sennen has with DJB Coal that haven't been made public? What's next when Middlemount sells? What is DJB Coal bound to do by agreement, to earn their 50% interest from the sale of Middlemount? Many unknowns and I could fill this board with questions. I guess it will all play out in time.
The following articles keep my interest in the Aussie coalfields and the Sennen/DJB Coal partnership.
Over the next eight years, China predicts it will put into operation 562 coal-fired plants -- nearly half the world's total -- and India is projected to add 213 such plants. The United States is expected to build 72. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/07/04/MNGDKDISL21.DTL&hw=Over+the+next+eig
China's coal demand to reach 2.5 bln tons by 2010 - report: Guo Yuntao, director of the China Coal Industry Development Research Center, predicted coal demand for this year to hit 2.13 bln tons, the newspaper said. Guo also said coal supply capacity is predicted to reach 1.6 bln tons in 2010 and 2.0 bln tons in 2020, leaving shortfalls of 0.5 bln tons and 1.3 bln tons respectively. http://www.forbes.com/home/feeds/afx/2005/06/22/afx2105287.html
China to gradually reduce coke exports - Xinhua http://www.forbes.com/markets/feeds/afx/2005/06/23/afx2109646.html
Taiwan phases out all nuclear power, for coal 6/28/2005 http://www.taipeitimes.com/News/biz/archives/2005/06/28/2003261244
Coal India Limited must expand its operations abroad by acquiring property for ensuring continued supply of quality coal to meet the domestic demand, Union Minister of State for Coal Dasari Narayana Rao has said. 6/6/2005 http://www.hindu.com/2005/06/16/stories/2005061613330800.htm
STEEL Authority of India Ltd (SAIL) and Coal India Ltd (CIL) are planning to set up a joint venture company for acquiring coal mines abroad. The move aims to end the perennial shortage of coking coal and low ash non-coking coal in the country.6/3/2005 http://www.blonnet.com/2005/06/03/stories/2005060303211100.htm
India 80 MT coal shortage by 2011-12 Thursday July 14 2005 00:00 IST
TALCHER: Despite an ambitious growth projection by Coal India Ltd (CIL), the country will face a deficit of 80 million tonne of coal by the end of the eleventh Five Year Plan, according to Union Coal Secretary P C Parikh.
http://www.newindpress.com/NewsItems.asp?ID=IEB20050713112645&Page=B&Title=Business&Topi
China's ambassador to Australia Madame Fu Ying commented on changing trends underpinned by China's vast energy appetite. "Last year Chinese delegates (to Australia) wanted to know how to buy 10,000 dairy cows. This year delegates wanted to know how to buy a coal mine," she said, adding "of any size." Madame Fu quizzed industry and resources minister Ian Macfarlane on the topic of Chinese investment in Australia and future major mergers with Chinese companies, and asked about Australian attitudes to such developments."We've always welcomed foreign investment from countries that want to be to be part of our future and China is very much one of those countries," he said. 7/11/2005 Australia-China Coal Summit
http://www.longwalls.com/storyview.asp? toryid=42252§ionsource=s0
HIGHER profits and increased interest from offshore parties has led to a flurry of merger and acquisition activity in the Australian coal sector.
Consolidation in the industry means that sizeable opportunities for the majors are now limited - many of the remaining listed coal producers have a major or blocking shareholder. Opportunities for juniors still exist, though. "Most juniors can move much faster and be more nimble than a major in securing new property and taking small- to medium-size greenfield opportunities into the development phase," Wood said. ANZ predicts even more activity from end users. There has been a significant increase in interest in equity positions in Australian coal mines from Indian companies. There has also been increased interest from China and Brazil, with several major groups from these regions recently establishing offices in Australia to source new opportunities, Wood said. "With China becoming a net importer of coking coal and this set to escalate at least for the next few years, this, together with import growth from India and Brazil and other developing countries, means increased competition for feedstock. One would expect this competition for supply to manifest itself in further equity/offtake deals," he said.
Australia also remains a favoured investment destination for the quality of assets (geology, good quality coal and productive mines) and Australia's foreign investment-friendly regulatory regime. Other countries are either too far away (Canada and the USA have higher freight costs to India) or do not have sophisticated regulatory regimes or infrastructure (Russia and the Ukraine).
Aussie Coal Dynamics Author Angie Barr 7/8/2005 longwalls.com
http://www.sennenresources.com/s/RelatedArticles.asp?ReportID=111602&_Type=Related-Articles&...
State fast-tracks $2.1 Billion Coal Planning 5/27/2005
The Queensland Government is fast-tracking planning for approximately $2.1 billion worth of infrastructure for the State's expanding coal export industry.This is in addition to the $1.4 billion of coal infrastructure investments already committed by Government owned trading enterprises. (also)
"Mr McGrady said with world-wide buyers clamouring for Queensland coal it was only a matter of time before major coal buyers in Japan, Korea, China, India and Europe signed on the dotted line to secure additional coal supplies for the coming years. Intense industrial development in China and India is adding to the pressure to step-up coal production." http://www.bowenbasin.cqu.edu.au/news.html#fasttrack
Iron ore prices set for fresh records
July 19, 2005
Record iron ore prices may extend their gains by another 10 percent next year as supplies of the steelmaking raw material from India slow and steelmakers in Asia raise output, ABN AMRO said.
Benchmark prices for so-called iron ore fines, which account for 60 percent of global trade in the ore, may rise to 69 US cents (HK$5.38) a dry metric ton unit for the year starting April 1, 2006, analysts Robert Clifford, Warren Edney, Nick Moore and Michael Sones said in a July 12 report.
Global steel output rose 10 percent in May, led by surging production from China, the world's largest producer, according to the International Iron & Steel Institute. India, the world's third-largest iron ore exporter, can't match ore exports growth achieved last year, Clifford said.
``Demand is going to remain strong given that global steel production is still going up,'' the Melbourne-based analyst said July 15. ``India will have trouble meeting exports as it has drawn down stocks and the steel lobby wants to keep as much iron ore in the country as possible.''
Fines ore is so named because of its powder-like form. Prices of lump ore, which is easier to process than fines, would also rise 10 percent to 88 cents a dry metric ton unit, the report said. ABN previously expected prices to stay unchanged.
Iron ore prices rose 71.5 percent to a record this year because of demand from China, driving profits for miners such as Rio Tinto, Melbourne-based BHP Billiton and Brazil's Cia. Vale do Rio Doce.
China lifted steel production by a record 38 percent in May, adding tonnage equal to almost the supply of Germany, France, Spain and the UK combined. Output grew 37 percent in June, research company Beijing Antaike Information said Monday.
ABN AMRO is raising its iron ore price estimates even as steel prices in the US and Europe have fallen, as customers deplete inventories. That has led steel producers like Mittal Steel and Arcelor to cut output.
Benchmark European export prices for hot-rolled coil have fallen almost 32 percent to US$405 a ton, from a record US$592.50 in January, according to Metal Bulletin. US import prices for the product have fallen to US$430 a ton, from US$630 a ton at the end last year, the London-based publication said.
Goldman Sachs JBWere and Investec over the past month cut their estimates for iron ore for 2006, expecting lower steelmaking output, and supplies of the raw material to rise as congestion at ports and rails eases.
Falling steel prices won't hurt steelmakers' ability to pay higher material costs, Macquarie Bank, Australia's biggest investment bank, said in a report Monday.
Rising iron ore prices over the past three years added US$35-US$40 a ton to the cost of making steel. Benchmark hot-rolled coil prices are still US$175 a ton higher than 2002 average steel prices, Macquarie's analysts said.
ABN AMRO says prices will fall only from April 1, 2007, after miners increase capacity, and prices will decline by 35 percent.
Global steel production rose 8.1 percent in the first five months of the year to 456.7 million metric tons, compared with last year, according to the International Iron & Steel Institute.
``The seaborne iron ore market is a global market, so it is important to look at global steel production figures rather than regional ones,'' ABN AMRO's analysts said.
China's biggest steelmakers, such as Baoshan Iron & Steel, are unlikely to cut production in the second half even with falling prices, analysts have said. Chinese steelmakers are visiting India next month to negotiate for longer-term supplies of iron ore.
Supplies may be harder to find, said ABN AMRO. India is the second-largest supplier of iron ore to China last year. Indian iron ore exports accounted for about 12 percent of global trade, according to Citigroup, ranking behind Australia and Brazil.
Its exports had grown 24 percent to 78 million tons for the year ended March 31, 2005, according to the Indian mineral industry federation.
Clifford said India may raise iron ore exports by 3 percent this year, though that may be an optimistic forecast. BLOOMBERG
http://www.thestandard.com.hk/stdn/std/Markets/GG19Ag06.html
Palladon, 500k block traded in Frankfurt today, 200k block in Frankfurt on Monday. Trying to keep the volume off the TSX?
Palladon; Will be looking for Iron ore contract news next.
Palladon Mobilizes Mining Contractor to Mine Comstock Iron Ore
Thursday July 14, 9:26 pm ET
BROOMFIELD, Colo.--(BUSINESS WIRE)--July 14, 2005--Palladon Ventures Ltd.(TSX VENTURE:PLL - News; "Palladon") is pleased to announce the selection of Gilbert Development Corp. "Gilbert", of Cedar City, Utah, to conduct contract mining at the Comstock Iron Mine in Iron County, Utah. Gilbert will mobilize immediately to commence first phase mining activities. Palladon plans to produce iron ore concentrate for sale to domestic and international customers.
Gilbert has been a mining contractor for over 30 years and has extensive expertise in crushing and magnetic separation. In 1983 the firm began contract mining for USX Corp. and Geneva Steel on the Comstock Iron Mine. Between 1983 and 1997 Gilbert moved over 50 million tons of iron ore and waste from the mine site. Following mobilization, Gilbert will commence mining high-grade zones of the pit in order to build stockpiles for further processing and shipment.
Don Foot, VP of Palladon Iron Corp., said, "Gilbert brings to Palladon intimate knowledge and experience in the Comstock Iron Project. Their extensive year-round experience in mining and loading at the site will provide great assistance in the resumption of mining activities and will enhance our ability to provide consistent product to the marketplace. Gilbert also holds the highest rating in safety from MSHA and OSHA, a point that is very important to Palladon."
Qualified Person and Quality Assurance and Control
Mr. Donald G. Foot, Jr., who holds a degree in Metallurgical Engineering from the University of Utah, has over 30 years of experience in mineral processing, beneficiation equipment design, marketing and sales, and executive management. He has acted as a qualified person as defined in National Instrument 43-101 for the purpose of the technical release of information contained herein relating to the Comstock Iron Project.
ON BEHALF OF THE BOARD OF DIRECTORS OF PALLADON VENTURES LTD.
George S. Young, President, Director
The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of the contents hereof.
Palladon Ventures Ltd. (TSX VENTURE:PLL - News)
--------------------------------------------------------------------------------
Contact:
Palladon Ventures Ltd.
George S. Young
President
(303) 327-1535
Fax: (303) 327-1526
info@palladonventures.com
OR
Palladon Ventures Ltd.
Hamish Greig
Investor Contact
(604) 484-7088
Fax: (604) 484-7044
hg@palladonventures.com
www.palladonventures.com
http://biz.yahoo.com/bw/050714/145853.html?.v=1
80 MT coal shortage by 2011-12
Thursday July 14 2005 00:00 IST
TALCHER: Despite an ambitious growth projection by Coal India Ltd (CIL), the country will face a deficit of 80 million tonne of coal by the end of the eleventh Five Year Plan, according to Union Coal Secretary P C Parikh.
CIL is banking on its subsidiaries Mahanadi Coalfields Ltd, South Eastern Coalfield Ltd, Northern Coalfields Ltd and part of Central Coalfields Ltd to meet this shortfall, he said at the end of his two-day visit to the city on Tuesday.
A two-pronged approach has been adopted to boost production of these companies, he informed, adding, capacity production of major mines and new open cast coal projects would be the focus areas.
According to Parikh, the government also expects substantial contribution from private coal producers who have been allotted 85 blocks in the country for captive mining. Coal production from private mines grew to 12 million tonne last fiscal from eight million tonne the previous year, he disclosed.
According to Parikh, the country is currently facing a shortfall of about 20 million tonne of coal, which has forced the major consumers to import coal from Australia, Indonesia, Africa and other countries.
Announcing that Coal India Ltd decided to diversify its activities, Parikh said the profit-making subsidiaries of CIL will set up power plants like MCL is doing in the Ib Valley area of the state in joint venture with Neyvelli Lignite Corporation.
Parikh ruled out any plan to dismantle CIL at this juncture.
On the issue of reclamation, he said the coal ministry was seriously contemplating a policy provision to ensure that tenants get back their land after the coal mining activities are over. Currently, land once acquired is never returned.
http://www.newindpress.com/NewsItems.asp?ID=IEB20050713112645&Page=B&Title=Business&Topi...
China Coal imports up 56.1%
China imports less auto, steel in first six months
July 12, 2005
The import volume of auto vehicles and steel products have declined obviously in the first half of the year, statistics from the General Administration of Customs (GAC) revealed here Tuesday.
Over the same period, imports of coal, iron ores and soybeans have reported a rapid growth, said Tuesday's China Securities Daily.
China's import of primary products reached 68.78 billion US dollars, up 22.5 percent year-on-year. Of the total, about 130 million tons of iron ore was imported, up 34.3 percent year-on-year.
The import volume of crude oil stood around 63.42 million tons, up 3.9 percent while that of processed oil was 15.7 million tons, down 21 percent year-on-year.
Besides, more than 12.09 million tons of coal was imported, up 56.1 percent over the same period of last year while 12.01 million tons of soybeans was imported, up 33.6 percent year-on-year.
GAC figures also reported an 11.7 percent increase in the aggregated import of industrial products which was 233.91 billion US dollars, or 77.3 percent of the country's total imports.
In a breakdown, the imports of mechanical and electrical products registered a growth of 9.7 percent to 154.54 billion US dollars while that of auto vehicles reported a decrease of 33.6 percent to 64,000. The import of steel products was only 13.22 million tons, down 26.5 percent.
Source: Xinhua
http://english.peopledaily.com.cn/200507/12/eng20050712_195672.html
China Iron Ore Imports up 34.3 percent year-on-year.
China imports less auto, steel in first six months
July 12, 2005
The import volume of auto vehicles and steel products have declined obviously in the first half of the year, statistics from the General Administration of Customs (GAC) revealed here Tuesday.
Over the same period, imports of coal, iron ores and soybeans have reported a rapid growth, said Tuesday's China Securities Daily.
China's import of primary products reached 68.78 billion US dollars, up 22.5 percent year-on-year. Of the total, about 130 million tons of iron ore was imported, up 34.3 percent year-on-year.
The import volume of crude oil stood around 63.42 million tons, up 3.9 percent while that of processed oil was 15.7 million tons, down 21 percent year-on-year.
Besides, more than 12.09 million tons of coal was imported, up 56.1 percent over the same period of last year while 12.01 million tons of soybeans was imported, up 33.6 percent year-on-year.
GAC figures also reported an 11.7 percent increase in the aggregated import of industrial products which was 233.91 billion US dollars, or 77.3 percent of the country's total imports.
In a breakdown, the imports of mechanical and electrical products registered a growth of 9.7 percent to 154.54 billion US dollars while that of auto vehicles reported a decrease of 33.6 percent to 64,000. The import of steel products was only 13.22 million tons, down 26.5 percent.
Source: Xinhua
http://english.peopledaily.com.cn/200507/12/eng20050712_195672.html
No sunset future for coal
Marian Hookham
Monday, July 11, 2005
EVEN as the world undergoes a period of transition to a near-zero emissions future, the role of coal remains central. By 2030 coal will deliver 22% of the world energy mix, much the same as today, while demand will sky-rocket by 70%, said Xstrata Coal chief executive Peter Coates.
Speaking at the Australia-China Coal Summit last week, Coates said the future of coal production depended on developing ways to utilise coal that reduce or eliminate emissions.
Everyone agrees on two things: coal will continue to play a major role in meeting global energy demand, and demand is going up. Over the next 30 years China will account for 25% of global growth in energy demand, with generating capacity the equal of Australia's total power industry to be built each year. Over the same time, world energy demand will climb 70%.
While coal-fired power stations have been steadily driving down emissions, for coal consumption to be sustainable in the future new technologies must be developed.
These include oxy-fuel, IGCC and carbon dioxide capture and storage – "critically important from a sustainable development perspective – and critically important for the coal industry," Coates said.
He underlined the importance of collaboration with international partners in the development of these technologies.
He said Xstrata Coal was funding an oxy-fuel power plant demonstration plant in Queensland, evidence of the company's commitment to developing near zero-emissions technology.
Oxy-fuel, identified as one of the priority technologies by COAL21, had significant potential because it provided retrofit options for standard pulverised coal-fired boilers, according to Coates.
"If we are to meet demand, help developing nations realise their aspirations, alleviate poverty in a carbon-constrained world, and work towards a new zero emissions future, a long-term view and political will is required," Coates said.
"It is also essential there is significant investment in research and development leading to the commercialisation of new technologies and carbon capture and storage."
http://www.longwalls.com/storyview.asp?storyid=42254§ionsource=s0
Sennen; Another article just out concerning Aussie-China Coal
Summit last week.
Excerpt....
China's ambassador to Australia Madame Fu Ying commented on changing trends underpinned by China's vast energy appetite.
"Last year Chinese delegates (to Australia) wanted to know how to buy 10,000 dairy cows. This year delegates wanted to know how to buy a coal mine," she said, adding "of any size."
Article;
Australian-Sino partnership strengthened
Marian Hookham
Monday, July 11, 2005
THE synergies between Australia – the world's biggest exporter of coal – and China – the world's largest consumer of coal – were highlighted at last week's China-Coal Summit in Brisbane. The top-level conference foreshadows increased co-operation between the two countries in areas of coal mining technology and safety, as well as signalling increased bi-lateral investment between the two countries.
The summit was attended by top ranking officials from both countries and was preceded by a series of mine and technical tours. The 23-person Chinese delegation was the cream of China's coal sector and represented 11 large-scale enterprises including Datong Mining, Xuzhou Mining Group, Kailuan Clean Coal Stock Company. Shanxi Coking Coal Group and Huaibei Mining Group.
The group was in Australia to develop cooperation and support in areas such as technology, legislation, policy, training and education, and safety management.
Executive vice president of China National Coal Association, Pu Honggjiu, underlined the major role coal has played in China's phenomenal growth over the last 50 years. Since 1955, Chinese coal production has increased from 32 million tonnes a year to 1.956 billion tonnes, an increase of 60 times.
Pu emphasised the importance of the coal industry to the Chinese Government, saying there was a focus on turning to technology and minimising environmental pollution, with a coordinated approach between these elements critical. He said development of China's coal industry was important for the world coal industry.
This year Australia will export around 6.4Mt of coal to China and is well positioned to meet China's burgeoning demand – predicted to be at around 7 billion tonnes by 2030. Over the next ten years, 500 coal-fired power stations are planned.
Deputy secretary of the Australian Department of Industry, Tourism and Resources, John Ryan said the key aim of the conference was for industry and government to build on synergies so that significant benefits can be realised.
"This will be a strengthening of our relationship in the global coal industry," he said, adding the summit signalled the next chapter in continuing bilateral dialogue between China and Australia.
China's ambassador to Australia Madame Fu Ying commented on changing trends underpinned by China's vast energy appetite.
"Last year Chinese delegates (to Australia) wanted to know how to buy 10,000 dairy cows. This year delegates wanted to know how to buy a coal mine," she said, adding "of any size."
Madame Fu quizzed industry and resources minister Ian Macfarlane on the topic of Chinese investment in Australia and future major mergers with Chinese companies, and asked about Australian attitudes to such developments.
"We've always welcomed foreign investment from countries that want to be to be part of our future and China is very much one of those countries," he said.
"Providing those investments pass the requirements of the Foreign Investment Review Board and the national interest test inherent in that, then Australia welcomes those investments."
Looking ahead to the establishment of a Free Trade Agreement between Australia and China, Macfarlane said for some industries such as textile and clothing manufacture it would be harder to relax tariffs.
"Other industries such as the resources sector will get real opportunities out of a Free Trade Agreement not only in terms of our ability to sell raw materials to China but also in terms of our need to sell processed goods to China," he said.
"In general the resources sector and the higher end of the processing and manufacturing industries will benefit from a much more open and free trade agreement. We know it's going to be a complicated issue but if we look at how the relationship has grown over the last half a decade there is a great opportunity for both our countries."
Two-way trade between China and Australia since diplomatic relations were established in 1973, has grown from $113 million to a colossal $29 billion. In the last five years alone, bilateral trade has almost doubled.
http://www.longwalls.com/storyview.asp?storyid=42252§ionsource=s0
Nice move on Palladon(PLL.V) today. Makes me wonder if there might be iron ore contract news coming, or if Rio buying up ore supply has something to do with it.
Mills don't like Rio move on Hope Downs
By Michael Weir
July 8, 2005
Japanese and Chinese steel mills are furious over Rio Tinto's 11th-hour deal to snatch control of the Hope Downs development, fearing it will further strengthen the power of the Pilbara's two dominant iron ore suppliers.
Already reeling from the 70 per cent price increase won by the miners earlier this year, Japanese steel mills believe Rio's deal to take management control and a 50 per cent stake in the Hope Downs development further tightens its grip on the crucial supply side.
Gina Rinehart's massive Hope Downs project had received strong support from the Japanese and Chinese iron ore buyers because it was seen as a potential alternative supplier and a way to break the BHP Billiton-Rio Tinto duopoly in the Pilbara.
"Some Japanese steel mills, if not all, will be disappointed," said one Japanese industry source, who did not want to be named.
West Australian Premier Geoff Gallop is touring Japan and in an interview with the steel mill mouthpiece The Tex Report moved to head off any unrest.
Dr Gallop is quoted as saying "we have established a long-standing trust-based relationship with Japan" and "we would like to continue the good relationship into the future".
While the close relationship between Japanese steel mills and Australian iron ore producers dates back to the development of the Pilbara in the 1960s, there has been tension over pricing.
Now with demand outstripping supply it is the miners holding the upper hand but the Japanese have warned they will "have things to say" when the market reverses.
"There are strong times and not so strong times but when the supply side over-utilises that power, the mill side will remember when the market reverses," the industry source said.
"The mines and mills must live together and that is how the industry should run: on balance. There is always good and bad times but if one side wants to overpower things it will be an awkward relationship."
Mitsubishi had been considered a front-runner to strike a deal with Mrs Rinehart's Hancock Prospecting before Rio Tinto's move and it's not the first time the steel mills have tried to put a foot on the supply side.
The Japanese steel mills strongly backed Anglo American's attempts in 2000 to take over North, the majority partner in Robe River Iron Associates, a battle ultimately won by Rio Tinto.
But the world's leading suppliers, Rio Tinto, BHP Billiton and Brazil's CVRD, are constantly annoyed that they have to deal with a buyers' cartel in Japan, where most steel mills accept the prices negotiated by the giant Nippon Steel group, while producers are expected to negotiate individually.
A Rio Tinto-led attempt by the big producers to form an equivalent selling group in the early '80s was met with outrage by the Japanese steel mills and led to a buyers backlash against Rio Tinto (then known as CRA). There was another outcry by steel makers in 1999 when news broke that Rio and BHP had been discussing a possible merger of their iron ore operations.
The West Australian
http://www.smh.com.au/news/business/mills-dont-like-rio-move-on-hope-downs/2005/07/07/1120704492624....
Coal: Alternative Energy's Best Bet
Bruce Pile, Marketocracy Marketscope, 07.07.05, 3:00 PM ET
"Alternative energy" is a phrase that makes most investors cringe (if they have any sense). We all know that we'll have to switch over to a new energy economy in the coming years as we outpace the supply of oil and natural gas. But if you've done any shopping in this area, you find that alternative energy companies are either giants that are dabbling in various solutions as an insignificant sideline or smaller companies that are much more focused on one type of solution and swimming in red ink.
And of course, alternative energy is a technological horse race, and an investor is just betting on the ponies when he plunks down his money on a possible technological breakthrough. But this is an area which is probably going to ramp up in intensity in the near future. So is there a sensible way to invest?
When you survey the landscape of the solutions that could give us a seamless switch from oil to whatever is next, you see a common denominator. The common theme seems to be that they all take about as much oil-based effort to facilitate as they give back in "alternative" energy, and they are many years away from being economically viable. But we may not have that much affordable oil or development time to implement the next energy economy. What we may see are some interim substitutes for our foreign oil refined fuels until we figure out the next non-fossil age.
A prime substitute is likely to be coal! We already use coal for most of our electricity. We've known how to make coal into high-grade diesel and gasoline since 1913, and we have about a 200-year supply of it in America, safe from geopolitical disruption.
Coal conversion into synthetic gasoline or "synfuel" isn't exactly an unproven or textbook-only technology as most other alternative energy solutions are at this stage. Germany had 14 synfuel plants humming by 1939, supplying Germany's immense war machine during World War II. I can think of no other alternative energy that has actually been deployed in real life at that scale.
Critics of coal say, "But it's expensive." True, it wouldn't be `the good old days of $1 gas. But government studies done in the aftermath of the 70s oil shocks concluded that the coal process was a cheaper source of gas than oil is when it costs more than $35 per barrel. And if coal is converted chemically, it's an relatively clean fuel that will cause about the same carbon dioxide greenhouse problem we currently have. Considering the alternatives, however, this may become less and less of a horror.
Some companies could benefit greatly. Arch Coal (nyse: ACI - news - people ), the second-largest coal producer in the U.S. is an interesting play. Arch specializes in "compliance" coal, which is low in sulfur for electric power plants.
An even better prospect is a smaller company called Headwaters (nyse: HW - news - people ), which is based in South Jordon, Utah. But unlike most small companies in alternative energy, they are not drowning in red ink; they are engulfed in cash flow, profits and a sharply climbing revenue stream. In 2002, they derived 90% of their revenue from licensing technologies for converting coal to relatively clean gasoline. The company has working relationships with India, China and the Philippines.
Headwaters is the industry leader, but to diversify from the synfuel, they have built a post-combustion coal business in which they use the fly ash from coal burned at electric power plants to make a higher-quality, environmentally friendly concrete and other construction materials. This business now accounts for about half their revenues and is benefiting from the housing market.
Headwaters also does extensive pre-combustion treatment of coal to clean it of its pollutants, and the company is becoming a well-diversified "green chemistry" energy/construction company. This is the type of company offers practical solutions to the issues that the world will face in the near future.
Excerpted from the June 2005 issue of Marketocracy Marketscope.
http://www.forbes.com/newsletter/2005/07/07/arch-coal-headwaters-energy-cx_bp_0707soapbox_inl.html
Aussie coal dynamics
Angie Bahr
Friday, July 08, 2005
HIGHER profits and increased interest from offshore parties has led to a flurry of merger and acquisition activity in the Australian coal sector.
Good times in the Australian coal industry have resulted in a dynamic marketplace for coal suppliers and buyers alike. Mergers and acquisitions (M&A) have markedly increased, ensuring consolidation while limiting the number of entry points into the industry. Activity by offshore end users – particularly China, India and Brazil – has surged, with a marked increase in offshore equity securing positions in Australian coal mines as countries scurry to guarantee supply. Also, greenfield and brownfield projects have taken off – with infrastructure the only factor hindering their progress.
Booming commodity prices, particularly for coking coal, means coal stocks have significantly outperformed the market. For Australian producers, coking coal margins have increased dramatically, with the coal sector outperforming the Australian Stock Exchange All Ordinaries by around 70% over the past five years – and with all of these gains coming in the last 12 months. Simply look at Excel Coal, which floated in April 2004 at $2 and went on to hit a high of $8.66 in March this year.
While coal has shot ahead, increased M&A activity has become a market-wide trend. Generally, the entire M&A market in Australia has continued its upward trend since the low of 2002. According to the ANZ Investment Bank, 2004 saw total deals in the Asia-Pacific region of $US330 billion; on an annualised basis for 2005, Australia is already ahead of that total. Bear in mind, however, that mining represents only 4% of total M&A activity, and coal only 20% of that 4%.
According to ANZ M&A associate director David Wood, limited access to quality coking coal has produced spirited bidding for spot prices - a key driver linking coal offtake with an equity investment. The gold price in nominal Australian dollars has increased by 30% over the past five years, while the coking coal price has increased by around 110%. Higher profits had lead to the coal sector's increased attractiveness, and this, together with increased interest from offshore parties, were key drivers in M&A activity, Wood said.
The most recent, and certainly high profile, M&A transaction in Australia involving an underground mine has been the Austral Coal and Centennial Coal merger. Centennial now controls the Tahmoor longwall in New South Wales, giving it significant exposure to the sought-after coking coal market.
Other M&A activity of late includes the acquisition by First Reserve of 50% of AMCI, Excel Coal's acquisition of the Millennium coking coal project, the acquisition by Felix of 80% of the Ashton coal mine and 100% of the Moolarben coal development project, Yanzhou Coal Mining's acquisition of Gympie Gold's Southland longwall, and the move by JFE, Posco and Nippon Steel to each acquire 5% in the Carborough Downs and Glennies Creek mines, with related coal off-take agreements.
Consolidation in the industry means that sizeable opportunities for the majors are now limited - many of the remaining listed coal producers have a major or blocking shareholder. Opportunities for juniors still exist, though. "Most juniors can move much faster and be more nimble than a major in securing new property and taking small- to medium-size greenfield opportunities into the development phase," Wood said.
ANZ predicts even more activity from end users. There has been a significant increase in interest in equity positions in Australian coal mines from Indian companies. There has also been increased interest from China and Brazil, with several major groups from these regions recently establishing offices in Australia to source new opportunities, Wood said.
"With China becoming a net importer of coking coal and this set to escalate at least for the next few years, this, together with import growth from India and Brazil and other developing countries, means increased competition for feedstock. One would expect this competition for supply to manifest itself in further equity/offtake deals," he said.
Australia also remains a favoured investment destination for the quality of assets (geology, good quality coal and productive mines) and Australia's foreign investment-friendly regulatory regime. Other countries are either too far away (Canada and the USA have higher freight costs to India) or do not have sophisticated regulatory regimes or infrastructure (Russia and the Ukraine).
One example of long-term contracts being bound up with coal equity is the recent acquisition by JFE, Posco and Nippon Steel of an equity stake in Carborough Downs and Glennies Creek mines with linked coal offtake agreements for over 10 years of production. "This is a well trodden path, particularly by the Japanese and the Koreans. However, as steel groups from other regions look for additional certainty of coking coal supply, we expect more agreements of this type," Wood said.
http://www.longwalls.com/StoryView.asp?StoryID=42168
Sennen retains E&Y to advise for MDL282 sale
2005-07-07 13:53 ET - News Release
Mr. Ian Rozier reports
ERNST & YOUNG APPOINTED AS TRANSACTION ADVISERS FOR THE SALE OF MIDDLEMOUNT MDL282
Sennen Resources Ltd. has appointed Ernst & Young Mergers and Acquisitions of Perth, Australia, as transaction advisers in relation to the sale process for the sale of Middlemount (MDL282).
E&Y became aware that Middlemount was available for purchase and through this process approached its bidder regarding its interest in Middlemount. During the course of the previous sale process, E&Y gained substantial knowledge of the economics of Middlemount and now considers that a number of parties would be interested in the acquisition of the project. E&Y has been involved in working with Indian and Chinese companies that have been looking to acquire coal assets in Australia and E&Y believes that there are a significant number of parties that have not been introduced to Middlemount, and therefore E&Y is well positioned to run a successful sale process. The sale transaction process will be private and confidential with respect to E&Y at all times until such time as a sale and purchase, or such other agreement has been reached, and a contract has been signed. The company retains the right to report any material event with respect to the sale.
E&Y's engagement is exclusive for a period of three months unless extended by mutual agreement. A detailed information memorandum (the IM) prepared by E&Y will be distributed to potential purchasers who have signed a confidentiality agreement. The IM will be specifically designed to highlight the unique features of Middlemount and the potential benefit to specific buyers. The IM will include a financial model prepared by E&Y to provide an indicative framework to assist potential purchasers evaluate Middlemount. At the discretion of the company, E&Y may assist with negotiations on terms and conditions of the final sale and purchase agreement. E&Y must provide a purchaser that will enter into an agreement to acquire Middlemount subject to statutory conditions precedent such as consent of the Foreign Investment Review Board of Australia.
E&Y has been engaged on a retainer fee plus a success fee arrangement on the following basis:
a retainer fee at a rate of $10,000 (Australian) for the first month and $15,000 (Australian) for the following two months, and thereafter by mutual agreement;
a success fee of 2.5 per cent of the sale consideration of Middlemount up to $50-million (Australia) and thereafter a further 0.5 per cent for every $5-million (Australia) additional funds in sale consideration received above $50-million (Australia), as follows; up to $50-million (Australian) 2.5 per cent; plus $50-million (Australian) to $55-million (Australian) 3.0 per cent; plus $55-million (Australian) to $60-million (Australian) 3.5 per cent; plus continuing $5-million (Australian) increments continuing 0.5 per cent increments;
E&Y to be reimbursed all reasonable out-of-pocket expenses incurred, to be rebated against the success fee; and
The sale consideration is defined as cash, cash equivalent, securities, assumption of debt and any other exchange of value. If the sale consideration includes a deferred component, E&Y will receive their success fee as if the deferred consideration was paid at settlement.
The appointment of E&Y has been made in order to maximize value for shareholders in any potential sale of the Middlemount (MDL282) coal deposit. E&Y possesses the requisite experience in the valuation, negotiation and can assist in preparation of sale and purchase documentation that is necessary to achieve maximum value for shareholders while at the same time ensuring that any post sale residual risks and liabilities for the company are minimized.
The company looks forward to working with E&Y Mergers and Acquisitions group with the objective of achieving the most beneficial sales consideration for the sale of Middlemount for the company. The company believes that the desire for commodities by South East Asia countries has not been satisfied at this point in time and the economies of China and India are expanding at rates which will see parties prepared to acquire resource assets in Australia, such as Middlemount, for prices in excess of recent valuations. The company is confident that a sale of Middlemount can be made through the services of E&Y.
http://www.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=B-463770-C:SN&symbol=SN&news_r...
Coal-supply disruption has utilities looking for alternate fuel
Washington (Platts)--6Jul2005
Ongoing coal supply problems from the Powder River Basin have some power producers switching to natural gas, and the higher fuel costs will be passed on to customers.
Repairs to the joint line owned by BNSF Railway and Union Pacific following two derailments in May will take through at least November, the railroads said recently.
"We've been aware of it and conserving coal when possible," Xcel Energy Colorado spokeswoman Margarita Alarcon told Platts Coal Trader on Wednesday. "We've also switched to using natural gas at some of our plants."
She said the 700-MW Comanche station in Pueblo, the 547-MW Pawnee station in Brush and the 232-MW Arapahoe station in Denver have been converted to natural gas from PRB coal. The 710-MW Cherokee station in Denver and the 199-MW Valmont station in Boulder can also be switched. The company's Bullock, Cameo and Hayden plants also use coal from Wyoming or Colorado, but cannot switch to natural gas.
Mary Sandok, an Xcel corporate spokeswoman, said the company is conserving coal whenever possible at all of its PRB burning plants in Minnesota, North Dakota, South Dakota, Texas and Wisconsin, as well as Colorado, but wouldn't discuss specific plans. "We're working with the railroads to maximize the coal
deliveries to our plants."
But the higher costs for replacing PRB coal with natural gas will be passed through to customers.
MidAmerican Energy Co. spokesman Mark Reinders said it is company policy not to comment on its coal supply or stockpiles. But he said the company doesn't currently plan to switch any of its coal-fired plants to natural gas. In Iowa, the company's 1,686-MW George Neal plant in Sioux City and the 141-MW Riverside plant in Davenport are dual fired.
The Western Coal Traffic League, which represents coal users west of the Mississippi River, also said it has concerns. In a letter to Surface Transportation Board Chairman Roger Nober, responding to his letter saying the railroads handled the demands of the 2004 peak season "without any significant
degradation of system fluidity and performance," the WCTL said that is not what coal shippers experienced.
"A number of league members, including, but hardly limited to, Arizona Electric Power Cooperative Inc., suffered from impaired service in a variety of respects," President Mark Schwirtz of AEPC wrote. "Several members have had burnable stockpiles at coal plants of 10 days or less at times in the past year (and at least one is suffering from that condition currently)."
On July 1, UP said it is cutting coal shipments from Wyoming mines as much as 20% until November -- and possibly into 2006 -- while repairs are made to tracks along the joint line in Wyoming. Repairs may stretch into next year if the area has a wet summer or an early winter that limits work time.
Union Pacific said on its website that it will allocate shipments among utilities, filling 80%-85% percent of demand.
While BNSF said repairs would take a "modest" amount of time, spokesman Pat Hiatte couldn't provide a better estimate. He also couldn't provide the number of trains the company expects to ship out of the PRB while maintenance is done. But the company's web site shows 50 coal trains/day were shipped the week of March 13. The week of May 22, service fell to 37.3 coal trains/day and for the week ended June 26, the most recent data available, shipments averaged 46.1 trains/day.
For more information about coal supply, take a trial to Platts Coal Trader at
http://coaltrader.platts.com.
Over the next eight years, China predicts it will put into operation 562 coal-fired plants -- nearly half the world's total -- and India is projected to add 213 such plants. The United States is expected to build 72.
U.S. and European officials are touting the most prominent clean-coal method, called Integrated Gasification Combined Cycle, or IGCC. Under this process, coal is turned into a gas, which is then burned in a process that allows carbon dioxide to be siphoned off rather than released into the air.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/07/04/MNGDKDISL21.DTL&hw=Over+the+next+eig...
South African Coal Prices Advance to a Seven-Month High on Domestic Use
July 4 (Bloomberg) -- South African thermal coal prices rose to a seven-month high as the country, the world's fourth-largest exporter, used more of the fuel to run its power plants.
Johannesburg-based Eskom Holdings Ltd., the world's biggest coal buyer, said on June 30 it expected to consume a record 111.6 million metric tons coal in the year ending March 31, 2006. The state-owned company is expanding electricity supply to keep pace with South African economic growth, which accelerated to a four- year high of 3.7 percent in 2004. Eskom burned an estimated 105 million tons of coal in the 12 months ended Dec. 31, 2004.
Coal delivered within three months from Richards Bay increased 95 cents, or 1.9 percent, to $50.55 a ton last week, the highest since the week ended Nov. 27, the globalCOAL RB Index showed. The index is 29 percent lower than a year ago.
Shipments from Richards Bay fell last week for a second consecutive week, Oslo-based ship agents Barwil Agencies AS said in a July 1 report. Richards Bay was due to ship 11 percent less coal last week than in the preceding week, Barwil said. About 1.44 million tons was set to be loaded for export, compared with 1.62 million tons a week earlier.
Richards Bay is owned and used by BHP Billiton and Anglo American Plc, the world's two biggest mining companies, and Xstrata Plc. A May 2 derailment disrupted the movement of 1 million tons of coal, Deutsche Bank AG estimated in a June 17 report. South Africa ships about four-fifths of its thermal coal to Europe.
Shipping costs between Richards Bay and Rotterdam fell 1 percent to $10.70 a ton last week, the lowest since July 2003.
The globalCOAL NEWC Index for coal shipped from Newcastle, Australia, increased 7 cents to $51.99 a ton, the highest since the first week of May.
GlobalCOAL's indexes are compiled from firm bids and from offers and trades made on its online platform. Participants include BHP Billiton, Anglo American and Rio Tinto Group, the third-largest mining companies; Electricite de France, E.ON AG and RWE AG, Europe's largest utilities; and Electric Power Development Co., Japan's largest coal buyer.
To contact the reporter on this story:
Simon Casey in London scasey4@bloomberg.net
Last Updated: July 4, 2005 04:13 EDT
http://www.bloomberg.com/news/markets/energy.html
Chinese Iron Ore Imports Set to Rebound
Rio Tinto's Walsh Says Chinese Iron Ore Imports Set to Rebound
July 2 (Bloomberg) -- Rio Tinto Group, the world's second- largest iron ore exporter, said Chinese imports of the commodity are set to rebound because of buoyant demand from steelmakers and declining inventories.
Iron ore imports to China, the world's biggest buyer of the mineral, fell in May to their lowest in three months after the government imposed an 8 percent duty. China has also been seeking to limit the number of companies importing the commodity.
``The word we're getting from steel mills and freight companies is that everybody sees'' the slowdown ``as a temporary correction,'' Sam Walsh, chief executive of Rio Tinto's iron ore business, said in an interview yesterday. ``The basic fundamentals of the iron ore market, and for steel, continue to be attractive.''
Surging demand from China, the world's largest steelmaker, led to a record 71.5 percent jump in iron ore prices in April. London-based Rio Tinto and rivals Cia. Vale do Rio Doce and BHP Billiton are spending a combined $8.5 billion expanding their mines, railroads and ports to meet demand.
``China's demand for iron ore continues to be strong and is expected to increase further in 2006,'' Tony Robson, an analyst at Global Mining Research in Sydney, said today. ``The licensing restrictions were targeted at the spot market, which is mainly Indian ore, and not directed at the big boys like Rio Tinto.''
China has doubled steel output in the last four years as it makes more cars, household appliances and buildings. Production will probably rise almost 20 percent to 322 million metric tons in 2005, according to the China Iron and Steel Association.
Stockpiles
The nation's iron ore imports fell to 21.8 million metric tons in May, from a record 24.3 million in April and 24.2 million in March, as steelmakers used inventories because of the new tax.
Chinese importers will run down 30 million tons of iron ore stockpiles in a month, Noble Group Ltd., which handles 10 percent of the country's shipments of the commodity, said June 22.
``Traders who were fearful of their ability to trade brought in quantities of iron ore from India and elsewhere and that created a stock buildup,'' Walsh said via telephone from Perth. ``We and many others are seeing this as a correction.''
China's iron ore imports may rise 15 percent this year to 240 million tons, the China Iron and Steel Association said on April 11. That may help prices rise a further 5 percent from April 2006, Merrill Lynch & Co said this week.
``This is a tight market for the foreseeable future,'' Brendan Harris, an analyst at Macquarie Bank Ltd. in Sydney, said yesterday. ``It's a good industry to be in.''
Rio Tinto said yesterday it agreed to take a 50 percent stake in the A$530 million ($402 million) Hope Downs iron ore mine in the Pilbara region of Western Australia. Rio Tinto gets 20 percent of its profit from iron ore.
To contact the reporter on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net
http://www.bloomberg.com/apps/news?pid=10000080&sid=a1pGUgTTiXAs&refer=asia
Maverick shifts gears — again
Saturday, July 2, 2005 Updated at 2:01 AM EDT
From Saturday's Globe and Mail
Toronto — On a warm spring day, the view from Ian Delaney's office window includes a hazy layer of smog.
The pall is a visible reminder of the Ontario government's election vow to shut down the province's coal-fired electricity plants.
The pledge, originally promised by 2007 and recently put off until 2009, was based on the assumption that coal is a relic, a dirty, old-fashioned fuel best consigned to history's slag heap.
But in his office, Mr. Delaney, executive chairman of Toronto-based Sherritt International Corp., tells another story. He is convinced the humble fuel will play an essential role on the North American energy scene. In fact, he's betting on it, as proven by a series of transactions over the past few years that have given Sherritt a 50-per-cent stake in the Luscar Energy Partnership, Canada's biggest thermal coal producer.
It's a classic contrarian move, the kind for which the restless 61-year-old deal maker has become known over the past few decades.
And it's how Mr. Delaney, best known for his bold and contentious investment foray into Cuba, has shifted his focus to Canada. More than half of Sherritt's assets, based on dollar value, are now in his native country. And while earlier bets on Cuban metals as well as oil and gas are driving sales and profits, he is looking to Canadian coal production as the next big thing.
Most of Luscar's coal, dug from mines in Alberta and Saskatchewan, is sold through long-term contracts to nearby power generation facilities. It's a business that provides steady, reliable cash flow. But the real appeal, according to Mr. Delaney, is using cheap, abundant coal to replace scarce, expensive natural gas in industrial applications, using “coal gasification” technologies that will make coal as clean and efficient as its higher-priced competitor.
That hasn't happened yet, but if and when it does, Mr. Delaney will be sitting on heaps of coal that could become much more appealing, and expensive.
Sherritt shareholders who signed on a decade ago for the company's aim to become “the Canadian Pacific of Cuba” might be confused.
Mr. Delaney is unapologetic.
Sherritt “does not lend itself to easy analysis,” Mr. Delaney says.
“A lot of what we have done over time, is that any time you think the sum of the parts is greater than the whole, you look for a way of busting it up.
“In fact, we have busted it up four times. And P.S. — stay tuned.”
Things have never been straightforward at Sherritt.
Back in 1990, the former Sherritt Gordon Mines Ltd. was a Canadian fertilizer company that came into play when U.S. gold producer Newmont Mining Corp. put its controlling stake in Sherritt up for sale.
Eric Sprott, then running boutique brokerage outfit Sprott Securities Ltd., snapped up the stake and resold it to Canadian institutional investors — many of whom threw their weight behind Mr. Delaney when he took a run at Sherritt, which he won in a proxy battle.
Mr. Delaney was already well known on the corporate finance scene, having run a brokerage firm as well as holding company Horsham Corp., where he was president and CEO for three years before he left in 1990.
Sherritt seemed a dubious prize. Its fertilizer arm was generating cash flow, but not enough to keep the business afloat. A metals refinery in Fort Saskatchewan, Alta., was closed because of a lack of feedstock.
At the time, the only two places in the world with a surplus of nickel and a shortage of refining capacity were Russia and Cuba. Talks with Russian interests went nowhere. But by 1991, Sherritt had struck a deal to buy metal from Cuba, an arrangement it cemented through a joint venture in 1994.
The Canadian-Cuban partnership made sense for both parties: Sherritt was hungry for metal and Cuba, reeling from the disappearance of billions in financial aid after the collapse of the Soviet Union in 1991, was desperate for hard currency.
One party, however, was mightily displeased. The United States, which imposed a sweeping trade embargo on communist Cuba in 1961, watched with consternation as foreign investors, including Sherritt, moved into the country.
Slammed by U.S. critics for daring to do business with a communist dictator, Mr. Delaney launched a company to do just that. In 1995, the former Sherritt was split in two, with one arm holding the fertilizer business and the other set up to focus solely on Cuba.
In 1996, the Helms-Burton Act came into effect. The legislation opened the door to lawsuits against companies that “traffic” in property confiscated in the Cuban revolution of 1959, and to this day prohibits Mr. Delaney and other Sherritt executives from setting foot in the United States.
Through it all, Mr. Delaney chomped on Cuban cigars, trumpeted the potential of the Cuban business scene and said one should never back down from a fight.
It's a trait that he's still known for.
“Ian is very much a ‘screw you' kind of guy,” says long-time acquaintance Jeff Green, chairman of Toronto-based Paradigm Capital Inc.
The Cuban controversy made Sherritt too hot to touch for bank-owned brokerage firms but was a bonanza for independent firms that stepped up to fill the gap.
Griffiths McBurney & Partners, now GMP Securities Ltd., was a fledgling firm in 1995 when it wound up leading the Sherritt deal.
Eugene McBurney, GMP chairman, says his firm landed the deal after a rival's participation was vetoed by a major shareholder.
Despite the controversy, the deal was a barnburner, something Mr. McBurney chalks up to Mr. Delaney's track record in spotting hidden treasure. “Ian's strength lies in understanding problematic assets or problematic locations, buying in at a good price and then working on them and growing them,” Mr. McBurney says.
A self-described junk collector, Mr. Delaney always has an eye out for the shiny bit of flotsam that just might turn into the next big thing. Hunting for nickel led him to Cuba. And observations made in Cuba helped influence his bet on Canadian coal and the energy business.
On one trip to Cuba, he spotted idle pumpjacks along the coast. Sherritt got into the oil business. On another trip, he and others started talking about sour natural gas being flared off from oil operations and using it to generate electricity, a plan that would ease Cuba's chronic power shortages. Sherritt got into the power business.
That venture prompted Mr. Delaney and Jowdat Waheed to look at other ways of profiting from the electricity game.
Mr. Waheed, 42, was named Sherritt's chief executive officer last year. But he's been working with Mr. Delaney since 1988, when Mr. Waheed was fresh out of business school and when both men were at Horsham.
When Mr. Delaney left Horsham in 1990, Mr. Waheed left with him.
They zeroed in on electricity supply and demand trends in Canada and the United States, including the role of natural gas. The harder they looked, the more they became convinced that North America “is essentially screwed” for energy.
With that as their guiding principle they weighed investment options ranging from transmission companies to turbine manufacturers. They concluded their best bet was underground.
“The thing we realized was that the most abundant energy source in North America is coal. North America has 40 per cent of the world's coal. And number two — it's out of favour and it's the cheapest possible asset you can buy,” Mr. Delaney says.
So, Sherritt got into coal.
The jury is still out on whether Sherritt's lumps of coal will become its newest treasure. In general, analysts like the move because it spreads the company's assets outside of Cuba and generates steady cash flow.
But the company's longer-term strategy, which involves the use of coal as a substitute for natural gas, has yet to become a reality.
Sherritt says it's working on projects to demonstrate the potential for coal to replace natural gas in the chemical and petrochemical industries. In the meantime, there are some signs that a continental power shift may already be under way.
Several major American coal producers have announced or are weighing clean coal projects.
As part of its $10-billion Climate Change Plan, the federal government has created the Partnership Fund, which provides for funding of up to $3-billion over the next decade for projects including clean coal facilities.
Research into “carbon sequestration” or capturing carbon dioxide before it makes its way into the atmosphere is under way. Calgary-based oil and gas giant EnCana Corp., of which Mr. Delaney is a director, is currently running a carbon dioxide capture project at its oil field in Weyburn, Sask., pumping CO{-2} underground in a system that helps tap more oil from an aging field and also tackles the greenhouse gas issue.
Many people believe coal will inevitably play a bigger role in power markets. Nuclear projects are politically risky and even the most optimistic forecasts for renewable sources don't foresee such systems being able to supply more than a fraction of current consumption.
“In the medium term, we think the only viable alternative is coal for electricity,” says Brian Gibson, executive vice-president at Teachers.
Mr. Delaney believes the main driver will be desperation.
“Do you want the lights to stay on in Toronto? Because if you want the lights to stay on in Toronto, or in Cleveland, or in New York, you better figure out how that's going to happen.
“The real issue is, and increasingly it's being understood, is do you want to keep the lights on, do you want to keep the wheels turning, and if so — where are you going to get the energy?”
http://www.theglobeandmail.com/servlet/story/RTGAM.20050702.wxcover0702/BNStory/Business/
Merrill Lynch raised estimates for coking coal by 10 percent to $138 a ton, for next year. Info is halfway into the article.
BHP, Rio Tinto Profit Estimates Raised by Merrill (Update1)
June 30 (Bloomberg) -- Rio Tinto Group and BHP Billiton, the world's second- and third-largest iron ore exporters, had their profit estimates raised by Merrill Lynch & Co. on speculation prices of the steelmaking raw material may reach another record next year.
Iron ore prices, which increased a record 71.5 percent this April, may gain another 5 percent next year as supplies can't keep up with demand fueled by China, Merrill Lynch analysts led by Vicky Binns said. Binns, who visited BHP Billiton and Rio Tinto mines this month, is revising a forecast made in Feb. 25 that expected iron ore prices to fall 20 percent next year.
Merrill Lynch joins other brokerages in a survey published by Bloomberg on June 20 in predicting record iron ore prices next year. BHP Billiton told analysts this month demand may outstrip supply till 2008 and 2009, as steel consumption is rising in China and miners need time to expand output.
``Iron ore has been the single biggest contributor to BHP upgrades,'' said Merrill Lynch in a note dated June 30. ``The iron ore supply-demand fundamentals do speak for themselves, even assuming very slow growth in demand.''
BHP Billiton, the world's largest miner based in Melbourne, may post profit of $9 billion in fiscal 2007, and $8.2 billion in fiscal 2008, Merrill Lynch said, raising its forecasts by 21 percent and 27 percent respectively.
London-based Rio Tinto, the world's third largest miner, may post a 2006 profit of $4.7 billion, and a 2007 profit of $3.9 billion, the brokerage said, raising its estimates by 14 percent and 22 percent respectively.
Same as Vale
Iron ore prices will stay at records in the next two years due to continued demand from steelmakers in China, the world's biggest user of the alloy, Credit Suisse First Boston said yesterday, citing Brazil's Cia. Vale do Rio Doce, the world's largest exporter of the raw material.
Binns and Vale's forecasts contrast with a call by Investec Plc.'s analyst Nick Hatch, who said prices of iron ore may fall 10 percent as China and Australia boosted port, rail and shipping capacity for the raw material.
Shares of BHP Billiton rose 2 cents, or 0.1 percent, to A$18.15 in Australia. Shares of Rio Tinto rose 2 cents, or 0.04 percent to A$44.82.
Higher iron ore production helped raised Rio Tinto's profit forecasts by $248 million between 2005 and 2007, Merrill Lynch said. The brokerage also raised estimates for coking coal, also used in steelmaking, by 10 percent to $138 a ton, for next year.
BHP Billiton
Rising coal and oil prices as well as purchase of WMC Resources Ltd., the world's fifth largest nickel metals producer, this month, also caused the revision in BHP Billiton's earnings estimates, Merrill Lynch said.
BHP Billiton is the world's largest exporter of coal used in steelmaking. It gets 24 percent of its pretax income from its carbon steel materials unit, which sells coal, iron ore and manganese, its second largest profit contributor. Its petroleum unit is the third largest contributor to pretax income.
Higher iron output and prices will add $2.2 billion to BHP Billiton's profit between fiscal 2005 and fiscal 2008, Merrill Lynch said.
Rio Tinto may get half its profit from selling iron ore by 2007, up from 35 percent this year, Macquarie Bank Ltd. said on May 18. BHP could get a quarter of its earnings from the ore in the next 12 months, compared with 15 percent in the past two years, Macquarie Bank said.
Merrill Lynch has `neutral' recommendations on both BHP Billiton and Rio Tinto's stock, and suggests investors buy BHP stock at between A$16 and A$17 a share, and Rio's stock at less than A$42 a share.
To contact the reporter on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net
Iron Ore Prices To Rise
BHP, Rio Tinto Profit Estimates Raised by Merrill (Update1)
June 30 (Bloomberg) -- Rio Tinto Group and BHP Billiton, the world's second- and third-largest iron ore exporters, had their profit estimates raised by Merrill Lynch & Co. on speculation prices of the steelmaking raw material may reach another record next year.
Iron ore prices, which increased a record 71.5 percent this April, may gain another 5 percent next year as supplies can't keep up with demand fueled by China, Merrill Lynch analysts led by Vicky Binns said. Binns, who visited BHP Billiton and Rio Tinto mines this month, is revising a forecast made in Feb. 25 that expected iron ore prices to fall 20 percent next year.
Merrill Lynch joins other brokerages in a survey published by Bloomberg on June 20 in predicting record iron ore prices next year. BHP Billiton told analysts this month demand may outstrip supply till 2008 and 2009, as steel consumption is rising in China and miners need time to expand output.
``Iron ore has been the single biggest contributor to BHP upgrades,'' said Merrill Lynch in a note dated June 30. ``The iron ore supply-demand fundamentals do speak for themselves, even assuming very slow growth in demand.''
BHP Billiton, the world's largest miner based in Melbourne, may post profit of $9 billion in fiscal 2007, and $8.2 billion in fiscal 2008, Merrill Lynch said, raising its forecasts by 21 percent and 27 percent respectively.
London-based Rio Tinto, the world's third largest miner, may post a 2006 profit of $4.7 billion, and a 2007 profit of $3.9 billion, the brokerage said, raising its estimates by 14 percent and 22 percent respectively.
Same as Vale
Iron ore prices will stay at records in the next two years due to continued demand from steelmakers in China, the world's biggest user of the alloy, Credit Suisse First Boston said yesterday, citing Brazil's Cia. Vale do Rio Doce, the world's largest exporter of the raw material.
Binns and Vale's forecasts contrast with a call by Investec Plc.'s analyst Nick Hatch, who said prices of iron ore may fall 10 percent as China and Australia boosted port, rail and shipping capacity for the raw material.
Shares of BHP Billiton rose 2 cents, or 0.1 percent, to A$18.15 in Australia. Shares of Rio Tinto rose 2 cents, or 0.04 percent to A$44.82.
Higher iron ore production helped raised Rio Tinto's profit forecasts by $248 million between 2005 and 2007, Merrill Lynch said. The brokerage also raised estimates for coking coal, also used in steelmaking, by 10 percent to $138 a ton, for next year.
BHP Billiton
Rising coal and oil prices as well as purchase of WMC Resources Ltd., the world's fifth largest nickel metals producer, this month, also caused the revision in BHP Billiton's earnings estimates, Merrill Lynch said.
BHP Billiton is the world's largest exporter of coal used in steelmaking. It gets 24 percent of its pretax income from its carbon steel materials unit, which sells coal, iron ore and manganese, its second largest profit contributor. Its petroleum unit is the third largest contributor to pretax income.
Higher iron output and prices will add $2.2 billion to BHP Billiton's profit between fiscal 2005 and fiscal 2008, Merrill Lynch said.
Rio Tinto may get half its profit from selling iron ore by 2007, up from 35 percent this year, Macquarie Bank Ltd. said on May 18. BHP could get a quarter of its earnings from the ore in the next 12 months, compared with 15 percent in the past two years, Macquarie Bank said.
Merrill Lynch has `neutral' recommendations on both BHP Billiton and Rio Tinto's stock, and suggests investors buy BHP stock at between A$16 and A$17 a share, and Rio's stock at less than A$42 a share.
To contact the reporter on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net
Last Updated: June 30, 2005 03:27 EDT
Coal comes home to a real flyer
Coal-fuelled aircraft? Don’t laugh – in a few years one might be taking you on your holidays says Dwain Eldred
Coal doesn’t have a grate future. In Pennsylvania, which gave its name to the US version of what the rest of us call the Upper Carboniferous, they are finding new uses for the State’s greatest product. Penn State University researchers believe that jet fuel, no less, can be made out of bituminous coal.
"On a pilot scale, we have produced thermally stable coal-based jet fuel" says Dr Harold H. Schobert, professor of fuel science and director of Penn State’s Energy Institute. "This coal-based fuel can absorb significant amounts of heat and remain stable to 900 degrees Fahrenheit."
The new fuel will not decompose at high temperatures to create the deposits of carbon, which foul valves, nozzles and other engine parts. They are calling it (provisionally) "jet propulsion 900" or JP900, purely because of this high temperature stability.
The researchers are designing the fuel for the new generation of high performance engines in aircraft such as the F35 joint strike fighter and the US Air Forces’ VAATE program - versatile, affordable, advanced turbine engines. However, according to the researchers, it may be possible to use this fuel in conventional jet engines in current aircraft.
The front portion of a jet engine is an air compressor and the new engines compress air at higher and higher pressures generating larger amounts of heat. The outside air is not sufficient as a cooling medium, so the designers use the fuel itself as a heat sink, so high temperature stability is necessary.
"While power generation will remain the mainstay of coal use for many decades, coal does supply a molecular structure that has properties necessary for making high-temperature stable fuel" says Schobert.
Schobert, together with Suchada Butnark, a former graduate student in fuel science, and Leslie R. Rudnick, senior scientist at the Energy Institute, worked on two processes to create JP900 from coal-based materials. One method relies on bituminous coal becoming fluid when heated. The researchers mixed bituminous coal with decant oil, a byproduct of petroleum refining, at normal pressures. When heated, the mixture becomes fluid and the liquid portion distils off and is collected as JP900. The remaining solid is coke, a valuable byproduct for making anodes for aluminium smelting or in making graphite.
"This process is a variant of a standard process used in petroleum refining" says Schobert. "We would really just need a mixer for the two components and then the process could be done in normal refinery operations."
The second process uses light cycle oil, another petroleum byproduct, and coal-derived refined chemical oil, a byproduct of the coke industry. The researchers mix the two components and add hydrogen. When distilled, jet fuel comes off as a distillate.
The Penn State researchers believe that they can carry out both processes in existing refineries. They plan in the next year to test the fuel in a jet engine at Wright Patterson Air Force base. Currently, the researchers are producing JP900 in 55-gallon barrel lots, but they hope in the future to test manufacturing with a run at United Refining in Warren, Pa.
The researchers are also working with the Air Force to develop an official specification for JP900. "Without a specification, no one will put this fuel in an engine" says Schobert.
One potential benefit with manufacturing these fuels in existing refineries is that small amounts of the leftover components will feed into various portions of the petroleum stream. The lighter portions will go to the pool of chemicals that make gasoline and the heavier ones go to the diesel or fuel oil streams.
"The inclusion of coal-based compound in the petroleum steam will probably be beneficial in making gasoline and probably will not make any difference at all in the fuel oil stream" says Schobert. "What we do not know is how it will affect the diesel stream."
In addition to its high temperature properties, JP900 has a 10-degree Fahrenheit lower "cloud point" - the temperature at which a cloud forms over a liquid – making it a better cold weather fuel than either the Jet A or JP8 currently in use.
These coal-derived fuels also have no ash and very low sulphur. Refined chemical oil, derived from coal, has already had the ash removed. In the decant oil process, the coal would need to be pre-cleaned but would also produce a low-ash coke byproduct. When it comes to coal, sulphur is often the most troublesome pollutant, but these processes can be as low sulphur as three parts per million, depending on the original sulphur content of the coal and the amount of hydrogen used. For higher sulphur coal, more hydrogen will allow fuels that are still low sulphur.
"We do not have much doubt now that we can do this" says Schobert. "We have a lot more to do and it will be expensive, but there is not much doubt that it will work."
http://www.geolsoc.org.uk/template.cfm?name=FlyingCoal
Sennen Resources is the only..............
SN.V (SNNJF.PK), Aussie(Queensland) coal play available to us that I'm aware of, somethings been brewing with the sale and or development of the three large coal deposits there. Recent insider buys could be a precussor of news to come. Time will tell.
The coal stocks I'm interested in are, NCOC, HLB.TO, PVM.V, SN.V, and WTN.TO
Cash Minerals and AIDEA Advance Negotiations To Export 1.2m tonnes of Coal from Skagway Ore Terminal
Monday June 27, 8:02 am ET
TORONTO, ONTARIO--(CCNMatthews - June 27, 2005) - CASH MINERALS LTD. (TSX VENTURE:CHX - News) is pleased to announce that negotiations have commenced with Alaska Industrial Development and Export Authority (AIDEA) to export 1.2 million tonnes of coal out of its all-weather port located in Skagway, Alaska.
ADVERTISEMENT
This is a follow up to a meeting held with AIDEA on April 28, 2005, in Skagway to explore logistics associated with the use of the Skagway Ore Terminal (SOT.)
"This is a positive development that advances us towards our objectives to further the Division Mountain coal project," said Basil Botha, President of Cash Minerals.
The use of the Skagway ore terminal provides a two and one half day shipping advantage to Pacific Rim markets over that of traditional west coast ports. Along with this tremendous advantage, road haulage from the mine to the terminal is only 290 kms on a road open year round. For these reasons, SOT is strategically and logistically well-placed to handle and ship 1.2M tonnes of coal per year.
A Cost Reimbursement Plan and Scoping Study is currently being implemented to determine what additional upgrades are required at the SOT facility, this will assist Cash in achieving the 1.2M tonne coal export objective. It is anticipated that the scoping study will be complete by early September 2005.
AIDEA is the contractual owner of the SOT until 2023 and they have the use of the docking facility in conjunction with White Pass & Yukon Rail. Apart from the summer tourist industry there is very little year round import/export movement of goods through the first-class port. The primary use of the SOT facility was to ship ore concentrates out of the Yukon.
To enable the Faro Mine to haul to Skagway on a year round basis, a decision was taken to upgrade the road from Carcross to Skagway in 1986. Work was completed on this upgrade by 1987. In 1997, road haulage activities have ceased from the impact of low commodity prices. Since this time, the loading facility has been idle, with a care and maintenance program in place.
At a recent meeting with Michael Catsi of Skagway Development Corporation, he gave full support to Cash Minerals in achieving their goals to utilize the SOT facility. Calls to the Mayor of Skagway, City Councilors and the City Manager were also positive. "It is our intention to meet with all Skagway officials and interested members in July to present our proposal for using the SOT facility," said Basil Botha.
The main storage area is completely paved and the current loading rate onto ship is in the range of approximately 1,000 tonnes per hour. Modifications to the conveyor system will include higher revolution motors. Upgrading the conveyor belts, will increase the loading rate to approximately 1,500 tonnes per hour. "This will give us the ability to load 80,000 tonne ships in a little over two days," said Basil Botha. "Without modifications to the existing docking and loading facility, 40,000 to 52,000 tonne (HandMax) ships can be accommodated."
Following the latest meeting with AIDEA, a Cost Reimbursement Plan and Scoping Study will commence shortly and will include:
- an appraisal of the facility,
- a master plan, including environmental studies, stockpile and coal handling, and upgrading the loading facility, and
- a cost estimate and finance plan.
Approval to commence the scoping study should be complete by July 25, 2005, following a meeting by the Board of AIDEA. "We are encouraged by the intentions of Cash Minerals to use Skagway to export coal to Pacific Rim markets" said John Wood, Project Manager for AIDEA.
Cash Minerals - an emerging Energy Resource Company
Cash Minerals (CHX) is an emerging energy resource company with coal assets and uranium exploration properties in the Yukon Territory. The company is developing the Division Mountain Coal Project near Whitehorse in the Yukon Territory, where the company recently confirmed the economic potential of approximately 51.6 million tonnes of measured and indicated resources (see Cash Minerals press release dated April 18, 2005 which discussed the Scoping Study prepared by Gary Stubblefield, P.E. of Norwest Corporation on the Division Mountain Coal Project - please note that the scoping study is not adequate to definitively confirm the economics of the Division Mountain Coal Project.
The Company also has a right to earn an interest in six significant uranium projects in Yukon Territory, including four in the Wernecke Mountain area of northeastern Yukon. These uranium projects are hosted in Proterozoic age iron-oxide rich breccia bodies that share numerous textural and mineralogical similarities to the IOCG deposit (Iron-Oxide-Copper-Gold) model, which include Olympic Dam, Ernest Henry and Candelaria. Two uranium properties, (one in west-central and one in southeastern Yukon), are both hosted in Cretaceous granitic intrusions and are best viewed as bulk tonnage uranium targets, modeled on the Rossing Deposit in Southern Africa. .
The Division Mountain Coal Project
The deposit lies 20 km west of Highway 2 and Yukon's main power grid, and 290 km from the closest tidewater port at Skagway, Alaska. The Division Mountain project under study is owned 100% by Cash Minerals, Ltd., and consists of five coal leases measuring 776.4 hectares and 22 Territorial Coal Exploration licenses covering 360,000 hectares. The exploration area covers 4,017 square km of coal-bearing stratigraphy. In addition to the exploration work, geologic and economic studies that have been conducted on the project, the Company has also carried out wide ranging environmental surveys in anticipation of application for mining permits.
--------------------------------------------------------------------------------
Contact:
Cash Minerals Ltd.
Basil Botha
President & C.E.O.
1-604-608-6175
OR
Cash Minerals Ltd.
David Meyer
Business Consultant
1-416-861-5891
http://biz.yahoo.com/ccn/050627/57e9f5b31afe093ecc39db0bd374be5a.html?.v=1
Which helps to explain.....................
Why Queensland is expanding infrastructure, to accomodate statements like this. Excerpt.....
"Mr McGrady said with world-wide buyers clamouring for Queensland coal it was only a matter of time before major coal buyers in Japan, Korea, China, India and Europe signed on the dotted line to secure additional coal supplies for the coming years.
Intense industrial development in China and India is adding to the pressure to step-up coal production."
................................................................
Complete Article follows.
State fast-tracks $2.1 Billion Coal Planning
The Queensland Government is fast-tracking planning for approximately $2.1 billion worth of infrastructure for the State's expanding coal export industry.
This is in addition to the $1.4 billion of coal infrastructure investments already committed by Government owned trading enterprises.
The planning is a result of the Queensland Government's Coal Infrastructure Coordination Group set up in October last year.
Minister for State Development and Innovation Tony McGrady said massive expansion of the $10 billion coal export industry was forecast.
"The amount of coal railed to central Queensland ports for export is expected to increase by between 5% and 13% per annum over the next five years," Mr McGrady said.
"By 2009/10 somewhere between 215 million tonnes per annum and 235 million tonnes per annum of coal could be railed.
This compares to 143 million tonnes per annum in 2003-2004, and only 79 million tonnes a decade ago. Queensland Rail is on target to rail a forecast 155 million tonnes in 2004-2005, demonstrating that we are getting on with the job.
"We're fast-tracking planning to ensure that government-owned corporations are ready to roll out additional rail and other infrastructure developments to meet this increased demand.
"We've prepared a 'program of actions' which identifies:
* $1.4 billion coal infrastructure projects already committed and underway,
* Over $1 billion for additional projects required to be undertaken, to expand capacity to 215 million tonnes per annum, subject to commercial contracts,
* strategic planning that we'll undertake to cater for a significantly larger increase in the demand for coal, to 235 million tonnes per annum capacity, plus
* Significant additional investment in new locomotives and wagons required to transport coal from the mines to the ports.
"We're committing to this planning, so coal mining companies can sign contracts for the infrastructure work with confidence. This continues the major phased expansion of the essential transport and other supporting infrastructure for the State's coal industry over the past 3 decades, and demonstrates the Queensland Government's on-going commitment to remain a major, reliable supplier of quality coal to our customers."
Mr McGrady said he is encouraging mining companies to enter into contracts for new rail, port, water and energy infrastructure so that these projects can proceed at the earliest time.
"It's time for action," Mr McGrady said.
"The new infrastructure and expansion of the coal industry will be worth billions of dollars and mean thousands of jobs will be created in central Queensland.
"But there's nothing more the State Government can do to move this along until the mining companies sign up.
"Earlier this year the Queensland Government announced we were fast-tracking planning for the "Northern Missing Link" railway between the Goonyella and Newlands coal systems.
"In order to demonstrate this Government's commitment to the expansion of the coal industry we have committed to planning for the projects required to expand capacity to 215 million tonnes per annum in the next 5 years.
Mines Minister Stephen Robertson said the government was also progressing plans for new water infrastructure to ensure a sustainable future for the coal industry.
"SunWater has already completed stage one of an 8,000 megalitre offstream storage at Gattonvale to supply water to the coal mines of the Northern Bowen Basin.
"And negotiations are well advanced between SunWater and coal companies to progress the planned Burdekin to Bowen water pipeline," Mr Robertson said.
Mr McGrady said with world-wide buyers clamouring for Queensland coal it was only a matter of time before major coal buyers in Japan, Korea, China, India and Europe signed on the dotted line to secure additional coal supplies for the coming years.
Intense industrial development in China and India is adding to the pressure to step-up coal production.
"Senior Queensland Government Ministers have received support from representatives of the Queensland Resources Council and coal companies for coal infrastructure actions outlined to them at a recent meeting," Mr McGrady said.
The Coal Infrastructure - Program of Actions includes:
Committed Projects
Complete the currently committed $1.4 billion of coal infrastructure investment by our Government owned trading enterprises, including:
o RG Tanna Coal Terminal - $232M
o Barney Point Coal Terminal - $1.5M
o Blackwater Rail System - $93M
o Goonyella Rail System - $55M
o Gattonvale Off-Stream Storage - $22M
o Electricity to new mines - $35M
o Xstrata has commissioned Queensland Rail to construct and operate the Bauhinia Regional Railway - $233M
o Acquisition of additional rollingstock and upgrade of electric locomotives -$570M
o Other coal rail and port infrastructure - $160M
Complete the committed training and skilling initiatives for the coal mining industry.
o Implement the planned $770,000 of Government funded coal industry skilling and training initiatives.
o Establish the Mining Industry Training Centre of Excellence to address medium and longer term training and skills issues in the coal industry, but also all mining.
o Leverage additional training in the mining industry, including the coal sector, through $1,008,000 grant to the Queensland Mining Industry Training Advisory Body, achieving, at a minimum, the same number of annual hours curriculum as funded by the department.
Detailed planning for over $1billion of new infrastructure - to expand capacity to 215 million tonnes per annum, including
Detailed planning, design and approvals for the required coal infrastructure, so that construction can commence once commercial contracts are in place.
o Upgrades to the Goonyella, Blackwater and Moura Coal Rail Systems
o The Burdekin Water Pipeline
o Ergon Energy to work with mining companies to clarify electricity needs and develop a commercial program to provide power to new or expanded mine sites at the earliest possible time
o Further expansion of coal terminals and our ports at Gladstone, Hay Point and Abbot Point.
Facilitate the expansion of the two major coal terminals at Hay Point by their private sector owners, Prime Infrastructure and the BHP-Billiton Mitsubishi Alliance.
Fast-Track Planning for the $1.1 Billion Northern Missing Rail Link/ Abbot Point Coal Terminal
o Complete the $25M detailed planning studies and rail corridor acquisition committed for the 69km long Northern Missing Rail Link between the Goonyella and Newlands rail systems, and a major expansion of the Abbot Point Coal Terminal. This initial commitment will reduce the lead time for infrastructure development in the future, when the coal companies are in a position to enter into firm commercial contracts for the use of the Northern Missing Link and the additional port capacity. The overall project could be completed within 4 years, if timely commitments by the coal miners to its construction are made.
Strategic Planning for Coal Infrastructure - to expand capacity to 235 million tonnes per annum
Commence strategic planning for infrastructure which may be required to support future coal industry development, so that detailed design and construction can commence, once commercial contracts are in place.
o Wiggins Island Coal Terminal and associated port and rail infrastructure at the Port of Gladstone. Detailed planning will commence in the short term, if there is sufficient commercial interest to proceed.
o Identification (where needed) and more detailed planning for long term water security options in the northern and southern Bowen Basin, and the Surat Basin.
o Evaluation of additional rail capacity enhancements, particularly to the Goonyella Rail System and the restricted Connors Range section, linking to the coal terminals at the Port of Hay Point.
o Transport options for the major coal deposits in the Surat Basin.
Housing
o Update population projections and develop a Housing Action Plan for the Bowen Basin.
Government Liaison with Industry
The Government will continue to liaise with the mining industry and coal infrastructure providers so that emerging coal infrastructure issues can be identified and addressed at the earliest opportunity.
http://www.bowenbasin.cqu.edu.au/news.html#fasttrack
Just when you think............
the run might be done, I keep bumping into these type of articles.
Taiwan to switch from nuclear fuel to coal
By Yu-huay Sun Bloomberg News
TUESDAY, JUNE 28, 2005
TAIPEI Taiwan plans to double its capacity to generate electricity from coal as it phases out nuclear power because of public opposition that may prevent a $7 billion plant with two reactors from ever operating, a government minister said.
"Taiwan will eventually become nuclear free," Minister of Economic Affairs Ho Mei-yueh said in Taipei last week at an energy planning conference. Taiwan generated 21 percent of its power from nuclear reactors last year.
At a time when the United States and some European countries have indicated that they may build more reactors, Taiwan is ruling out nuclear power as a way to limit emissions of harmful gases. The decision frees Taiwan Power to embark on a $13 billion expansion of its coal-fired plants and may increase the island's coal imports from miners including Anglo American and BHP Billiton.
"The government is abandoning nuclear power," Jeffrey Bor, a research fellow in Taipei at the Chung-hua Institution for Economic Research, said in a June 23 phone interview. "We will have to use more coal."
Taiwan imported all of the 57.1 million metric tons of coal it used last year, with 75 percent of the fuel burned to generate electricity, government figures show.
Public concern about the safety of nuclear power stations is heightened by the 200 earthquakes that strike the island in an average year. Taiwan sits along faults between the Philippine Sea and the Eurasian Continental tectonic plates, where quakes occur as the plates push together. On Sept. 21, 1999, Taiwan's worst earthquake on record, centered 150 kilometers, or 93 miles, from Taipei, killed 2,500 people.
"Taiwan can't afford to have nuclear plants," said Chen Jiauhua, chairwoman of the Taiwan Environmental Protection Union and a delegate at the energy policy planning conference held in Taipei last week. Earthquakes are common in Taiwan and the island "could one day have a nuclear catastrophe," she said in a June 24 phone interview.
The government may not allow the state-run Taiwan Power, known as Taipower, to start operating the island's fourth nuclear power plant should concerns about the project's safety persist, Ho said during the conference. The policy meeting, Taiwan's first on energy in seven years, involved about 300 government officials, scholars, environmentalists and executives.
Nuclear reactors may account for as little as 5 percent of the island's installed power capacity by 2025, down from 15 percent now, according to a Ministry of Economic Affairs statement issued at the end of the conference. Nuclear capacity may fall to zero if the government blocks the fourth power plant, originally set to start operating next year.
The ministry said on June 21 that it wanted power plants fueled by coal to account for as much as 50 percent of Taiwan's installed capacity by 2025, compared with 32 percent last year.
Coal output continues upward hike
Marian Hookham
Monday, June 27, 2005
QUEENSLAND coal mines set a new record for a 12-month period with an output of 171.4 million tones saleable coal to March 2005, almost 10% better than a year ago.
During the March 2005 quarter, mines produced 41.6Mt, up 8.40% compared with last March, according to just released statistics from the Queensland Department of Natural Resources and Mines.
Mines which contributed most to the growth were Hail Creek, Moorvale, Newlands, Peak Downs and Saraji in the northern district, Ensham, Norwich Park, Crinum, Kestrel and Oaky Creek North in the central district and Callide and Moura in the southern district.
Exports increased 12.8% to 35.7Mt during the March quarter and all Queensland coal ports recorded increased tonnages compared to 2004.
Total exports during the 12 months to March 2005 was up 7.6% to 143.2Mt. Japanese exports increased by 8%, other Asian countries increased by 10.7%, while exports to Europe decreased by 0.9% and exports to other countries increased by 13.5%.
Coking coal exports jumped 13.7% in the 12-month period while thermal coal dropped by 5.11%.
Employment figures have increased by 28% with 14,973 people employed in the Queensland coal industry as at March 31.
Queensland's northern district grew the most with an increase of 1549 jobs in opencut mines, and 211 positions in underground mines.
Productivity was however down for the March quarter by 2.29% from an average of 48.87t per shift for the March 2004 quarter to 47.75t per shift for 2005. Productivity for the 12-month period was also down by 10.65%
Within Queensland, 26.4Mt of coal was sold in the 12-month period, up 5.6%, with electricity generation the major domestic usage.
http://www.longwalls.com/StoryView.asp?StoryID=41446
China continues restriction measure on coke export, UPDATED: 08:56, June 24, 2005
Officials with State Development and Reform Commission (SDRC) and the Chinese Ministry of Commerce (MOC) said Thursday that China will continue to curb export of coke, a coal product crucial for making steel.
At the First China International Market Seminar held in Beijing from June 23 to 24, Bi Jingquan, director of economic and trade bureau under the SDRC, said the Chinese government has a strong mind in restricting export of energy products, including coke.
"Quota administration system on coke export will last and we will cut down the quantity step by step so as to maintain the stability of the market," said the official.
Fu Ziying, assistant to the commerce minister, also said at the seminar that China will strengthen control on export of energy products with heavy pollution.
"We will take tight measures in accordance with the WTO (World Trade Organization) rules and domestic laws and regulations," said the official. China boasts the largest producer, consumer and exporter of coke, now supplying 60 percent of the global demand. In early 1990s, China only exported some 1 million tons of coke, accounting for 5 percent of world trade.
Experts warn such a surge both in production and export of coke is beyond carrying capacity of China, which is now suffering a shortage of energy and rising environmental protection pressure.
"Making coke consumes China's rare coking coal and creates a lot of pollution, even at the cost of Chinese people's health," Bi argued. "Developed countries want blue skies but China has the same right to enjoy health and reasonably protect its strategic resources, such as coal and coke."
Chinese restrictions on exports of coke last year aroused a dispute between China and the European Union. The EU once threatened to launch an action against China at the WTO, saying China's activity forced up world prices to "dizzying" heights.
Based on an agreement reached later, China promised to export at least 4.5 million tons of coke to the EU countries in 2004, no less than that in 2003. The two sides also agreed to hold further consultation on coke trade.
"A healthy and coordinated international coke trade builds on doctrines of equality and reciprocity, which are the ultimate solutions to harmony and stability of the international market," said Chen Haoran, chairman of Commerce of Metals, Minerals & Chemicals Importers & Exports (CCCMC).
In terms of policy, the Chinese government will not completely deregulate the coke export nor will it forbid the export, said Fu Bo, general manager of Sinochem International Corporation.
To control the export within a proper volume can not only prevent price wars among domestic exporters, but also protect the coke producers in other countries from the impact, he said.
Delegate from Germany-based Thyssenkrupp MinEnergy apparently doesn't worry about China's ongoing quota administration system as it bet both world trade of coke and Chinese coke exports will drop in the future.
The two-day conference was co-hosted by CCCMC and Commerce Department of Shanxi, the northern province which has a third of China's coal deposits. Over 330 delegates from 150 companies in 17 countries, including 70 overseas delegates attended the seminar.
Source: Xinhua
http://english.peopledaily.com.cn/200506/24/eng20050624_192076.html
Coal rush? Power project signals boom, debate
http://msnbc.msn.com/id/8332711/
Excerpt.....
Bruce Nilles, the Sierra Club’s senior Midwest representative, said there are around 115 coal-fired power plants on the drawing board around the country because of the nation’s burgeoning demand for electricity, the fast-rising price of natural gas and a coal-friendly administration in Washington. He said the go-ahead for the Wisconsin project could be the signal the rest of the industry is waiting for.
“It is the largest of the first wave of this coal rush. It is a giant, giant coal plant. There are only one or two others bigger” in the country, Nilles said. “Other states are weighing in because of the regional and national significance of this coal plant. Every other utility’s going to say, ‘I want my coal plant, too.”’
The Wisconsin Supreme Court is weighing the future of the plant, which has come under legal challenge from environmentalists and others.
The plant would use pulverized coal to produce electricity, a relatively old-fashioned technology. But the state Department of Natural Resources and We Energies say modern emission controls will drastically cut the pollution.
China to gradually reduce coke exports - Xinhua
06.23.2005, 11:21 PM
BEIJING (AFX) - China will gradually reduce its exports of coke, a key raw material for steelmakers, the official Xinhua news agency reported, citing an official from the National Development and Reform Commission (NDRC).
Bi Jingquan, an NDRC director, says that China pays a heavy environmental toll in extracting increasing amounts of coke for export.
China's coke output now accounts for more than half of the world's total while the share was only five pct at the beginning of 1990s, the report said.
State media also reported earlier this month that China's Shanxi province, the largest coal and coke producer in the country, is cutting its coke output by six mln tons.
Shanxi produced 80 mln tons of coke last year, accounting for over 50 pct of China's total output.
China began capping coal export quotas last year to preserve supplies for its booming steel and power industries, mainly hitting exports to Europe and Japan.
derek.jiang@xinhuafinance.com
dj/ap/tr
http://www.forbes.com/markets/feeds/afx/2005/06/23/afx2109646.html
Maximus options two mining claims in Nevada
2005-06-24 16:36 ET - News Release
Mr. Frederick Graybeal reports
MAXIMUS VENTURES LTD. COMPLETES LAND ACQUISITION ON NEVADA GOLD PROJECT
Maximus Ventures Ltd. has signed a mining lease and option-to-purchase agreement on two patented mining claims located 25 miles southwest of Goldfield in Esmeralda county, Nevada. The claims are in the Walker Lane, a belt of intense structural deformation that contains numerous precious metal mining districts, including the Comstock Lode at Virginia City, Goldfield, Tonopah and others.
The two claims under option cover numerous old workings in the central part of a former gold producing area, where up to 40,000 ounces of gold were mined starting in 1873. The option requires a down payment of $12,000 (U.S.), followed by annual payments of $10,000 until production. All preproduction payments are treated as advance royalties. The production royalty is 2 per cent of gross sales or $20,000, whichever is greater. Maximus may buy out the royalty at any time for $300,000. There are no work requirements.
Maximus has also staked 28 unpatented claims covering all remaining prospects and extensions of visible mineralization in the area. Maximus previously announced an option from Timberwolf Minerals on 12 unpatented claims surrounding the two patented claims in a news in Stockwatch dated March 4, 2005. Historic data and geologic mapping indicate there is potential for disseminated gold mineralization on the claims.
Acquisition of the patented claims and additional staking completes acquisition of mineral rights at what will be called the Excelsior Springs project, said Frederick T. Graybeal, Maximus president. Geologic mapping is in progress and will be followed by exploration permitting and drilling .
China Says Coal Imports Up 59 Percent
By Associated Press
June 24, 2005, 7:47 AM EDT
BEIJING -- China's coal imports soared 59 percent to nearly 10 million tons in the first five months of this year as demand for energy to drive a booming economy surged, the government announced Friday.
Coal consumption is expected to grow even faster from June to August as power plants struggle to meet electricity demand to drive air-conditioners during an unusually hot summer.
Coal imports in the month of May nearly doubled compared with the same month last year, rising by 98.5 percent to 2.4 million tons, according to date released by the Customs General Administration.