Commodities Australia

FGR granted Government Approvals for Commercial Graphene Facility in WA, Australia

2017-07-12T04:59:00.001-07:00

FRG gets receipt of Government Approvals for Commercial Graphene Production Facility

Highlights

• Works Approval has been granted by the Department of Environment Regulation, enabling construction of a graphene production facility at Henderson to commence and be operational in Q4 of 2017.

• FGR will be the first ASX-listed company to attain a commercial graphene production capability.

• The production facility will be funded from existing cash

balances.

• Initial capacity will be in the order of 15 tonnes per annum of saleable graphene, based on a single shift operation, five days per week. Multiple shifts could escalate production rates to globally significant levels in the event suitable sales contracts are negotiated.

Works Approval

First Graphite (ASX: FGR) is pleased to advise it is now moving towards the construction of a commercial graphene production facility, having been granted a Works Approval by

the Department of Environment Regulation (DER) for its facility at Henderson, Western Australia.

The Works Approval results from the submission of an extensive application to the DER. FGR’s independent laboratory testing demonstrated the controls to be used resulted in minimal

emissions with these being significantly below the levels set by the regulations. These approvals also account for the necessary occupational health and safety controls.

Information source

fgr, frg graphene, australia green, first graphite, graphite, graphene companies, asx asx news

Nickel Gains Most in Week on Signs Producers Are Cutting Output

2015-08-04T05:22:00.001-07:00

Nickel climbed, leading increases in industrial metals, amid signs the slump in prices is forcing some producers to curtail production.

Global nickel output is likely to fall as some producers hit a “pain threshold” on lower prices, Dan Lougher, chief executive officer of Western Areas Ltd., said in an interview on Tuesday. Standard Chartered Plc estimates as much as 65 percent of nickel production is unprofitable at current prices. Metals also rallied as China planned a bond program for construction stimulus, which may improve prospects for raw-material demand.

“I still expect a lift in nickel prices from this level going forward,” Casper Burgering, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “The second half should be better.”

Nickel for delivery in three months advanced 1.3 percent to $10,885 a metric ton by 12:31 p.m. on the London Metal Exchange after rising as much as 1.9 percent, the most since July 28. It’s down 28 percent in 2015 and is this year’s worst performer among the main industrial metals on the LME.

Copper rose for the first day in four after sliding to a six-year low on Monday. The metal is close to a bear market after falling 19 percent from a peak on May 5. Zinc climbed as much as 1.6 percent after orders to remove the metal from warehouses tracked by the LME surged 54 percent.
Bond Stimulus

China is planning at least 1 trillion yuan ($161 billion) in bonds, and potentially a multiple of that, to fund construction projects to address the struggling economy, according to people familiar with the matter. The bond program is taking shape amid fresh signs that growth is running at less than an official target of about 7 percent for this year.

“Prices have lifted for all base metals this morning quite steeply,” Burgering said. “It could be that the market is hoping for some economic stimulus.”

Metals have declined to the lowest since 2009 amid the commodity rout. Oil is in a bear market, while platinum sank 1.7 percent on Tuesday to a six-year low and palladium dropped to an October 2012 low. On the LME, tin and lead increased Tuesday, while aluminum was little changed.

Buru Energy Looks to Brighter Future with Ungani

2015-07-31T01:39:00.001-07:00

Almost four years since it first made the discovery, Buru Energy, and partner Mitsubishi, officially opened the Ungani oil field 100km east of Broome today.

In what the company hopes will be the trigger in a change of fortunes after a tough 12-month period, Buru will produce of 1250 barrels of oil a day at the site with the aim rising to 3000.

Buru received production licences from the Department of Mines and Petroleum in May, following on from the green light it received from traditional owners in April.

However the collapsing oil price put a serious dent in its ambitions for a big-ticket exploration program in the largely untapped onshore Canning Basin, where Ungani sits.

Ungani has produced about 450,000 barrels during two extended production tests spanning two years, with oil trucked to Wyndham for export to refineries. Production flow rates have been capped at 1250 barrels a day.

Buru chairman Eric Streitberg said Ungani was the first oil development in the Canning Basin in over 30 years.

“There was no modern precedent for the development and it took perseverance and co-operation between all the parties to make the transition from a greenfields oil discovery to the current production system,” Mr Streitberg.

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

2015-07-22T15:34:00.003-07:00

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

China imported the most refined nickel in six years in a further sign that the world’s biggest consumer is drawing on global supply. Futures rose 2.4 percent in London.

Inbound shipments of the metal used to produce stainless steel surged 67 percent to 38,545 tons in June from the previous month, the highest since July 2009, and were more than three times the level a year earlier, Chinese customs data show.

Goldman Sachs Group Inc. and Citigroup Inc. are bullish on prices amid prospects for rising Chinese demand. Macquarie Group Ltd. sees a global shortage which may cut inventories further from a record. Stockpiles in London Metal Exchange sheds have already fallen to the lowest in almost two months. Some imports may have been for delivery against the first nickel contract to expire on the Shanghai bourse, said Celia Wang from Tianjin Zhongwei Group’s investment department.

“Huge imports arrived in China from LME warehouses as traders seek profits by delivering against the first settlement of a Shanghai nickel futures contract,” said Wang, the general manager. “Refined nickel imports are expected to remain at a high level into July.”

The Shanghai Futures Exchange started nickel trading in March and the July contract was the first expiry. The bourse is accepting metal from Moscow-based OAO GMK Norilsk Nickel, the top supplier, for settlement to ease concern about shortages.
Goldman, Citigroup

Prices climbed 2.4 percent to $11,980 a ton in London on Tuesday, the highest level since July 6, before trading at $11,875. Goldman expects rates to increase to $14,000 as the market heads toward a deficit next year, analysts including Yubin Fu wrote in a report dated July 6. Citigroup predicts a 2015 average price of $13,960 and maintains a bullish outlook.

Imports of ferronickel rose more than threefold on year to 62,511 tons, another sign China is seeking foreign supply.

An Indonesian ban on exports of nickel ore at the start of 2014 spurred China to stockpile the material and boost supplies from the Philippines, the only other major source. Inventories of nickel ore in China are now at their lowest since September 2011, according to data from Beijing Custeel E-Commerce Co.

China imported more than 100,000 tons of refined nickel in the first half for the first time since 2009 when buyers took advantage of a slump in demand after the financial crisis.

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

2015-07-22T15:34:00.001-07:00

Chinese Nickel Imports Jump to 6-Year High as Shortage Looms

Buru and Mitsubushi Start Commercial Production at Ungani Oil Field

2015-07-20T19:22:00.000-07:00

The cash flow from Ungani marks the next chapter in Buru Energy's growth

Australian oil and gas firm Buru Energy and Japanese Mitsubishi have started commercial oil production at Ungani oilfield in the western parts of the country with the spudding of the Praslin-1 conventional well.

Praslin-1 is located at a 15km from the existing Ungani field and is in the Jackaroo 3D seismic data grid.

Ungani oilfield is a 50:50 joint venture between Buru Energy and Mitsubishi.

Initial production rate for Ungani oilfield is 1,250 barrels of oil per day (bopd). It is expected to be raised to 2,500bopd, and then to a further 3,000bopd within the year.

Buru Energy executive chairman Eric Streitberg said: "The cash flow from Ungani marks the next chapter in Buru Energy's growth.

"Combined with our strong cash position ($41.9m at 30 June 2015), we have the financial strength to fund our aggressive exploration programme and create further growth for shareholders.

"We have the strong support of government and traditional owners for our programmes and an extensive and diverse prospect portfolio to drill. This is a privileged position for a company of our size."

Facilities at the field have been upgraded, which are expected to boost its operations and productions while reduce its costs.

Buru and Mitsubishi intend to expand its hydrocarbon reserves through further explorations near the Ungani field.

The owners have signed a contract with Fuel Trans for cost-effective transportation of oil to the port of Wyndham.

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Grigor Says Talga and MRL are ‘Catalysts for Disruption in the Graphene Sector’

2015-07-18T06:37:00.001-07:00

He says MRL is a new player in the graphene space with the ability to use the same single step, low cost graphene recovery technology

First he singled out Talga, now Warwick Grigor says he has found the other key player in the low cost graphene space.

The Sydney-based resources analyst who runs Far East Capital made headlines in Australian newspapers earlier this year when he proclaimed that he was putting his money where his mouth was and investing a large chunk of his own cash into Talga Resources (ASX:TLG) because of its single-step graphene process.

Now he has picked out another Australian company, MRL Corporation (ASX:MRF) and – again – invested his own money. He says there is room for both in an investor’s portfolio as they are operating in different fields. Talga is looking at a European hub (it is building a pilot plant in Germany and plans to supply European companies from its Swedish project) while MRL (whose deposit is in Sri Lanka) is looking to Asia and Australia as its markets.

As I have said before, Grigor is one of the most experienced Australian analysts of mining companies and, also this year, issued a detailed paper on graphene.

He says MRL is a new player in the graphene space with the ability to use the same single step, low cost graphene recovery technology that Talga “has been holding close to its chest”. His client note is advising taking up shares in MRL because of the differences in valuation: Talga’s market capitalization is A$54 million while that of MRL is A$12.2 million.

There are other differences: Talga’s orebody is much larger and wider, offering long life and technically simple mining conditions. MRL’s orebodies are narrow vein and underground with less amenability to drilling out to prove the size of the resource, but this is offset by the lower costs of working in Sri Lanka.

Another difference is the grade, says Grigor. Talga’s is around 25% whereas MRL’s is over 90%. According to his figure, Talga will need about A$30 million to get into production, MRL less than A$10 million.

He says at this junction Talga is knocking on the door of becoming an institutional-grade stock but has to kick a few more goals to get there, the obvious one being the successful commissioning of the pilot plant. “I don’t think there is much risk here, but the box still needs to be ticked,” write Grigor. By contrast, at A$10 million, MRL is still a private client stock at present; it is difficult to deploy sizeable sums of money into a company with such small capitalization.

Grigor’s second point, arguing that Talga needs to beef up its management team with respect to commercial operations, seems to have been satisfied. Last week Talga signed a non-binding term sheet with Haydale Graphite Industries, based in Britain, which would see the two companies collaborate on the development of finished graphene composite and ink products. [As Roger Bade, at London brokers Whitman Howard noted, “although there is no certainty that this collaboration will come to anything, it could give credibility that both companies – although going along separate routes – are amongst the best graphene plays out there”.]

Grigor draws comfort from the fact that his two picks are essentially non-competitive because of their separate regional focus.

“As each of these companies make progress, sentiment will rub off on other players in the sector as the graphene story becomes more credible,” he says. “Both companies will offer the lowest cost, purest forms of graphene available, so they will both be catalysts for disruption in the graphene sector.”

Perth Mint Gold and Silver Bullion Sales Jump in June

2015-07-13T18:32:00.001-07:00

Demand for Australian bullion coins surged in June, the latest Perth Mint figures show. Gold sales scored their highest level since March and silver sales moved the quickest since April. Bullion sales did retreat from a year earlier, however.

Perth Mint sales of gold coins and gold bars advanced 31,019 ounces last month, rallying 43.1% from the 21,671 ounces sold in May but down 21.3% from the 39,405 ounces delivered in June 2014. Gold sales through the first half of the year tally to 168,650 ounces, off 30% from last year’s starting six-month total of 240,991 ounces.

Perth Mint silver coins at 384,586 ounces in June jumped 13.9% from the prior month’s 337,511 ounces yet slipped 34.4% from sales of 586,358 ounces in June of last year. For the first half of 2015, silver sales combine to 2,810,994 ounces for a drop of 18% from the same six-month start in 2014 when sales reached 3,428,336 ounces.

Perth Mint Gold and Silver Sales by Month

Below is a monthly breakdown of Perth Mint bullion sales from June 2014 to June 2015.

Perth Mint Bullion Sales (in troy ounces)
	Silver	Gold
June 2015	384,586	31,019
May 2015	337,511	21,671
April 2015	472,273	26,545
March 2015	638,557	34,260
February 2015	392,114	31,981
January 2015	585,953	23,174
December 2014	477,731	40,211
November 2014	851,836	49,904
October 2014	655,881	55,350
September 2014	756,839	68,781
August 2014	818,856	36,369
July 2014	577,988	25,103
June 2014	586,358	39,405

United States Mint Bullion Sales in June

U.S. Mint bullion sales in June soared over the prior month and the year ago levels. The agency’s core American Gold Eagles at 76,000 ounces leapt 253.5% higher than May sales and jumped 56.7% higher than sales in June 2014. Its flagship American Silver Eagles at 4,840,000 ounces in June surged 139.2% from the prior month and rallied 79.8% from a year ago.

Pacfico Minerals Surges on Copper Hits

2015-07-13T05:27:00.000-07:00

Core from Coppermine Creek

Three holes drilled at the Coppermine Creek prospect intersected significant intervals of disseminated chalcopyrite and bands of semi-massive chalcopyrite.

One of the holes returned veins and disseminated chalcopyrite from 38-67m, with the interval from 67-73m corresponding to the Gordons Fault and containing bands of semi-massive chalcopyrite, as well as chalcopyrite fracture fill and disseminations.

The company said the chalcopyrite was associated with only minor pyrite and returned values of more than 25% using a hand-held XRF over widths of up to 30cm.

Assays are expected within a fortnight.

Airborne electromagnetics indicate a 3km by 1km alteration and mineralisation system extending away from the Gordons Fault to the southwest, with further drilling planned to test it.

Pacifico has also started drilling the Bing Bong prospect with the assistance of a NT government grant.

Borroloola West was one of the projects Sandfire floated on in 2004 but the company farmed it out to Pacifico in 2013.

Pacifico expects to earn 51% of the project by the end of the year by spending $A1.5 million under the first phase of the agreement.

The company can earn an additional 19% by spending a further $2.5 million and can get to 80% by sole-funding a bankable feasibility study or spending another $3 million.

Shares in Pacifico jumped 130% to 3.2c, while Sandfire shares gained 1.4% to $5.71

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The Shanghai Stock Market Crash and China Gold Demand

2015-07-11T20:48:00.001-07:00

What Does it mean for the future of the gold market?

At present, up to 12 trillion yuan stays in domestic residents' saving accounts. The launch of individual gold investment, therefore, will allow residents to change currency assets into gold assets. At the macro level, it will expand channels for changing savings into investment, thus adjusting the money supply; in the micro aspect, allowing citizens to trade and keep gold can improve social welfare, benefiting both the country and the population.

Moreover, with the dual attributes of common commodity and currency commodity, gold is a desirable instrument for hedging. Therefore, developing gold trade for individuals is practical." – Zhou Xiaochuan, Governor, the People's Bank of China.

Shanghai stocks have fallen over 30% since mid-June. The equivalent in U.S. terms would be for the DJIA to fall 6000 points to the 11,000 level – a crash by any definition. Most of the commentary on this important subject has centered around the potential contagion effect for stock markets in the rest of Asia and beyond. There is another aspect to the crash worth considering though, and that has to do with the effect it will have on Chinese gold demand.

The Chinese people, it is well known, already have a cultural affinity to gold. That attachment just received a shot of adrenaline. Prior to June, trading volumes on the Shanghai Gold Exchange (SGE) were already running 20% higher than the previous year. Now, with crash psychology affecting thinking up and down the spectrum of investors, SGE is reporting volumes off the charts. In early July, Want China Times reported that "SGE posted a record trading volume of 48.33 million grams in a single day in late June." (48.3 metric tonnes, a big number.)

Typically stock market crashes inspire gold demand. In the case of China, where the government and central bank encourage citizen gold ownership as a matter of public policy, that lesson could become enshrined in the national psyche. The important consideration for investors elsewhere around the globe is what effect even stronger gold demand from China will have on the gold price both now and in the future.

Flow of physical metal between buyers and sellers will govern prices in China not paper trades

Ever since 2011 when China's demand began to ratchet up, clients have asked how the price of gold could be stagnant to down under the circumstances. The short answer to that question is that price discovery for gold does not occur in the physical market, but in the multi-trillion dollar leveraged paper trade in London and New York – a volume that dwarfs the physical delivery market. Now China is about to challenge that price discovery mechanism through significant infrastructure changes slated to take effect by the end of the year.

This new construct has as its base China's fundamental understanding and goals with respect to gold as summarized by Peoples Bank of China governor Zhou Xiaochuan in our masthead quote above; its affinity for delivered physical ownership, as opposed to paper-based metal; and, the official measures it has undertaken to make inroads into the international gold market's price discovery mechanism.

To gain a better understanding of how China is likely to affect price discovery in the gold market, let's start with something of interest that surfaced as a result of the recent Shanghai crash. Financial Times reported rumors floating the markets that Goldman Sachs was responsible for manipulating stocks downward. Officials denied those rumors and a spokesman for the exchange stated that "foreign investors with access to the futures market via theQualified Foreign Institutional Investor (QFII) program were only permitted to use futures for hedging operations and are not allowed to make directional bets.

All recent trades by QFIIs complied with regulations." Of course if any manipulation of stocks were to occur, it would be executed in the leveraged futures market where bets can be placed at pennies on the dollar.

Up until I read that quote I was unaware of the strict procedures governing foreign trading on the Shanghai Futures Exchange (SHFE), China's only futures trading venue. A further investigation, helped along with some links from Koos Jansen, the Netherlands based expert on China's burgeoning gold market, revealed stringent rules governing trade on the SHFE for domestic participants as well, though not quite as stringent as the rules for foreigners.

At the heart of those rules, SHFE imposes strict position limitations and margin requirements on traders in order to keep price speculation (or directional bets to use its term) to a minimum. Futures trading in China, clearly is meant to serve as an adjunct to the physical market instead of the other way around as it is in western gold trading centers.

Hedging is maximized. Speculation is minimized. Leverage is controlled within reasonable parameters.

Link SHFE "Operational Manual for Gold Futures Contract Trading"

Atlas Iron restarts mining operations at Mount Webber mine in Australia

2015-07-06T19:30:00.000-07:00

Atlas is on track to grow production over the remainder of 2015 with significantly improved margins compared to operations pre-suspension

Atlas Iron has restarted operations at its Mount Webber mine located in the Pilbara region of Western Australia.

The iron ore company said that it plans to recommence processing during mid-July with Mt Webber ore tonnes contributing to subsqeuent shipping.

Atlas Iron closed the mine in April after iron ore prices dipped drastically.
Mount Webber production is expected to contribute to the company's targeted year-end production rate of 14Mtpa-15Mtpa.

According to the company, the project is expected to produce iron ore at a rate of 6Mtpa for a mine life of more than eight years.

Atlas's break-even cost of production declined to about $50/dmt following agreements with BGC Contracting and other key contractors and suppliers announced on 2 June.

The company also announced various cost reductions in corporate overheads.
Under the agreement, Atlas has agreed to pay BGC an option fee of A$3.45m ($2.6m) in its shares representing A$3m ($2.3m) credit against the future purchase of the Mt Webber crushing as well as screening plant.

Atlas Iron managing director David Flanagan said that mining operations are running at all three of its Pilbara iron ore mines.

Flanagan said: "With Mount Webber mining operations now back underway, Atlas is on track to grow production over the remainder of 2015 with significantly improved margins compared to operations pre-suspension, thanks in large part to the support of our key contractors and suppliers."

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Silver Prices About to Hit $50.00 Per Ounce?

2015-06-29T02:06:00.001-07:00

Silver is one of the most under appreciated commodities around. Back in 2011, an ounce of gold was worth 32 ounces of silver. Today, that same ounce of gold translates to 74 ounces of the grey metal. Does that mean gold has gotten more valuable or that silver has gotten cheaper?

Since its peak a few years ago, silver prices have dropped nearly 70%. Gold prices have also fallen by an astonishing 35% during the same period, which convinces me that investors got overly pessimistic about silver during the pullback.

So, what should the true price of silver be?

In order to properly value silver, we need the silver-to-gold ratio. Historically, silver shadows the movement of gold prices. When gold drops, silver prices are close behind.

Over the last 40 years, the conversion averages out to 42.8 ounces of silver for one ounce of gold. But the relationship fluctuates and sometimes one of the metals will become significantly undervalued.

When the ratio drifts too far from the historical average, it usually foreshadows a big run. This has happened three times in the last 20 years; in 1995, 2003, and 2011. The respective gains for silver prices were 70%, 200%, and 420%.

If we assume the same gold price and use the 2011 conversion rate, silver should be around $36.60. Right now, the price of silver is hovering around $15.90, with a conversion rate of 74.0.

That being said, how can silver possibly go to $50.00?

Well, despite its apparent cheapness, silver is simply not as abundant a metal as investors seem to think. When you compare the actual deposits of silver and gold in the earth, the natural multiple is 17.0. Ideally, the physical relationship between silver and gold deposits should dictate the price relationship.

In order for silver to hit $50.00, the ratio would have to drop to 23.0, assuming that gold stays at its current price of $1,170.

However, if the stock market bubble finally bursts, investors may flee to gold and silver as a safe haven. Under those circumstances, silver could rise to $50.00 much quicker.
Follow the Smart Money

I’m not the first person to notice this amazing buying opportunity.

In the first quarter of 2015, billionaire investor Ray Dalio loaded up on more shares of Silver Wheaton Corp. (NYSE/SLW). The hedge fund manager now owns 510,000 shares valued at roughly $9.0 million.

If you want to cash in on a huge silver run, but are hesitant to own silver directly, Silver Wheaton may be a wise choice. The company finances smaller mining firms and pays for any silver they find, thus limiting the downside risks associated with managing a mine.

The stock is down almost 34% over the last year because of depressed commodity prices, but Ray Dalio and I both think that will change.

Low interest rates from the Federal Reserve have been propping up the stock market, but a rate hike later this year is virtually guaranteed. And when the market loses support from the Fed, a flight to safety will mean huge gains for silver.

China's Revenge Serves Body Blows to BHP and Rio

2015-05-28T05:41:00.001-07:00

China's revenge serves body blows to BHP and Rio

It's taken six years, but China is slowly turning the tables on the heavyweight iron ore miners.

In 2009, iron ore giants BHP Billiton and Rio Tinto decided they wanted to take advantage of China's soaring demand for iron ore, which was pushing prices ever higher. So they ditched the 40-year old system of setting annual contract prices in favour of using spot pricing for the majority of their iron ore shipped to China from 2010.

Needless to say, China's steel mills weren't very happy about that. BHP's previous CEO Marius Kloppers is widely acknowledged as the man most responsible for bringing about the change. With BHP and Rio filling a huge amount of China's demand, the steelmakers had little choice but to acquiesce.

The changes, and China's thirst for iron ore, saw the iron ore price soar as high as US$191 per tonne in February 2011, from around US$60 per tonne in 2008. Rio Tinto produced record underlying earnings of US$15.5 billion in the 2011 financial year, with iron ore contributing US$12.9 billion. BHP, for its part, saw net profit rise 74 per cent to US$21.7 billion as revenues rose 36 per cent.

China may also still be sore over aluminium giant Chinalco's aborted US$19.5 billion investment in Rio Tinto back in 2010, which was aimed at gaining resource security. At the time, reports suggest Chinese officials feared that China was too vulnerable to both Rio and BHP, even separately. Rio's board canned the deal, and announced that it was instead forming an iron ore joint venture with BHP. That deal never went ahead – much to the relief of China.

The giant (re)awakens

But China has never forgotten, and appears unlikely to forgive. Now the sleeping giant has awakened, and looks set to turn the tables on Rio and BHP.

Firstly, China needed to loosen its dependence on the two Australian iron ore miners, so it has turned to Brazil's Vale. For many years Vale was snubbed by the Chinese. The iron ore giant had built a number of very large ore carriers to ship ore to China, but they have been banned from docking at Chinese ports since 2012.

Now, China hasn't just removed the restrictions but Vale has also sold 4 of the ore carriers to two of China's biggest shipping companies. Each carrier can transport up to 400,000 tonnes of iron ore, and could reduce Vale's production costs by as much as 25 per cent, according to some estimates. That would bring Vale's landed costs around the same as BHP and Rio's.

Vale also has a 25-year shipping agreement with China Cosco to transport iron ore from Brazil to China. China has gone another step further too, loaning Vale US$4 billion to help fund a US$16.5 billion project, known as S11D.

S11D is expected to produce 90 million tonnes of very high quality iron ore each year, taking Vale's production to 450 million tonnes of iron ore within the next few years.

In two moves, China has decreased its dependence on BHP and Rio, loosening their control over the iron ore market, and thanks to the increase supply of iron ore, achieved lower prices.

One last dance?

Fairfax Media reports today that Chinese-linked companies have applied to the Foreign Investment Review Board seeking permission for an investment with Australia's self-styled 'new force in iron ore' Fortescue Metals Group.

Fortescue, with its US$7.7 billion in net debt, could strengthen its balance sheet with a capital injection, either to pay down debt in return for an equity stake, or refinance existing debt at lower rates. The miner recently issued US$2.3 billion in senior secured notes, but is paying a whopping 9.75 pe cent interest rate, at a time when interest rates around the world are at record low levels.

Fortescue could struggle to repay its debt load if iron ore prices continue to trade at or under US$60 per tonne, with some estimates putting the miner's breakeven price around US$70 per tonne. The company may well be amenable to a deal with the Chinese, particularly after the recent kerfuffle over the iron ore inquiry that was going ahead, but was cancelled.

Australian Households Chase Sun to Lead World on Solar Adoption

2015-05-17T02:35:00.001-07:00

Australian Households Chase Sun to Lead World on Solar Adoption

Australian households are world leaders in solar power installation, according to new figures from Australia's peak industry body representing the fossil fuel and renewable energy sector.

The Energy Supply Association of Australia, representing the fossil fuel and renewable energy sector, has sourced data from around the world revealing household solar photovoltaic (PV) penetration in Australia is way out in front of any other nation.

The report shows almost 15 per cent of Australian households have adopted the technology to power their homes.

This is more than triple that of Germans, who are second on the world stage and typically thought of as the most prolific solar adopters.

The report breaks the data down to countries and jurisdictions illustrating where the world's most enthusiastic installers of small-scale solar energy are located.

"Germany, the US, Spain and others are held up as being at the forefront of solar power, but it is Australia, where households have taken it upon themselves to install solar PV, that easily lead the world when it comes to solar penetration," the ESAA report states.

The ACT had 15,637 household installations as of September last year, according to ActewAGL figures. Based on 2011 census data this put the ACT at about 10 per cent of households connected to solar – South Australia leads the way with almost 25 per cent of households connected to solar PV.

Although Australia leads the charge on small-scale installations, Germany is out front with utility-scale solar installations.

In terms of total solar energy produced per million people, Germany's capacity is about triple that of Australia's.

Australian Solar Council chief executive John Grimes said that was due to policies that had focused on domestic solar systems.

"The economics are compelling," Mr Grimes said. "The cost of the technology continues to fall at such a rate that it is already much cheaper to install solar than it is to buy electricity from the grid. And with the advent of cheap energy storage technology – battery technology – that really closes the loop.

"People like the Energy Supply Association and others should rightly be thinking about this. If they don't start to embrace the technology as opposed to resist it, their members companies – the big utilities – are set to become the Kodaks of the future."

See more at: http://australiasolar.blogspot.com.au/2015/05/australian-households-chase-sun-to-lead.html#sthash.248JT0Dp.dpuf

Andrew Forrest Makes Surprise Investment in Atlas Iron (AGO)

2015-05-17T02:03:00.000-07:00

Andrew Forrest Makes Surprise Investment in Atlas Iron (AGO)

Mining billionaire Andrew Forrest has emerged as a new investor in rival Atlas Iron, despite continuing to serve as the chairman and major shareholder in Fortescue Metals Group.

Speaking after Atlas announced a strategy to restart mining through lower contracting fees and an equity raising of up to $180 million, the miner's chairman David Flanagan revealed that Mr Forrest had promised to participate in the raising.

"I am just so pleased to be able to announce that Andrew Forrest was the first person to put his hand up and say he was going to invest personally in that raising," he said.

"It is through one of his holding companies, whichever it will be ... we are not going to be sort of a subsidiary of Andrew Forrest Holdings, but it is meaningful in the extent of what we are doing going forward and that is all I can say.

"Thanks again to Andrew for backing Atlas."

Mr Forrest does not currently own shares in Atlas according to Bloomberg records, and the move continues a recent string of investments made by Mr Forrest in small miners.

Mr Forrest last week invested in small Victorian gold producer A1 Consolidated via his private company Minderoo Resources, and also has exposure to uranium play Vimy Resources and nickel junior Poseidon.

Mr Forrest declared earlier this year that he was setting up a new company designed to buy assets during the commodity price downturn, and some believe that company is Minderoo Resources.

Upon launching that new company in March, Mr Forrest vowed it would not compete with Fortescue's current or future strategies.

"A process has been put in place to ensure that if any possibility of doubt regarding conflicting interest arises, the matter will be resolved independently and quickly. I have written to the FMG board asking them to approve this process, and they have returned with their full support for our venture and its governance procedures," said Mr Forrest in March.

When asked about Mr Forrest's investment in Atlas on Sunday, Fortescue chief financial officer Steve Pearce said he had "nothing to add".

"It is not a Fortescue investment," he said.

Mr Flanagan has announced his support for a federal government inquiry into iron ore, which Prime Minister Tony Abbott announced on Friday after listening to the thoughts of Mr Forrest.

BC Iron chairman Tony Kiernan and Cliffs Natural Resources chief executive Lourenco Goncalves also threw their support behind the inquiry on Sunday, along with Queensland University associate professor of regulator economics, Flavio Menezes.

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Silver Buying Only Starting

2015-05-15T16:33:00.001-07:00

Silver Buying Only Starting - Silver Investment News

Silver has enjoyed a fantastic week, awakening from its bottoming slumber to surge with gold. And this strong silver investment demand is likely only starting. American stock traders and futures speculators control two of the world’s largest pools of capital active in the silver market. And the former group still remains woefully under-invested in silver, while the latter still has massive short positions left to cover.

The global leader in fundamental silver analysis is the venerable Silver Institute, a think tank primarily funded by the world’s biggest and best silver miners. Every year, it publishes excellent comprehensive data on global silver supply and demand. Last year, total worldwide silver demand ran 1067m ounces. But investing in silver coins, bars, and ETFs only accounted for 197m, less than 1/5th of total demand.

Silver investment’s relatively small slice of that demand pie implies it isn’t important, but nothing could be farther from the truth. Silver’s two largest demand categories are industrial fabrication and jewelry, weighing in at about 4/7ths and just over 1/5th respectively. But these are very inelastic, they just don’t change much regardless of silver’s price. This is readily evident in the Institute’s past decade of data.

The average silver price in the last 10 years has been a roller coaster, skyrocketing from just over $7 in 2005 to over $35 in 2011 before collapsing back down near $19 in 2014. Yet global industrial demand was 639m ounces in 2005, 628m in 2011, and 595m last year. There is often no substitute for silver in manufactured products, and they use so little per unit that companies really don’t care what silver’s price is.

But silver investment demand varies dramatically with the shifting whims of traders’ sentiment towards this volatile metal. Over the past decade it has ranged from 52m ounces on the low side in 2005 to 289m on the high side in 2008, an incredibly volatile range! And since any market’s prices are effectively set by marginal new buying and selling, nothing is more important for silver prices than investment demand.

The past decade’s average annual silver investment demand was 196m ounces, which 2014’s 197m is dead on. For our purposes today, let’s round that to 200m ounces per year. That works out to under 17m per month. This basic background knowledge of global silver investment demand is essential in order to understand just how bullish silver looks today since this latest round of buying is likely only starting.

Traditional silver investing in physical coins and bars is the largest category of investment demand, averaging 136m ounces per year over the last decade. But it’s challenging to track, since the myriads of silver dealers and investors around the world don’t have to report their transactions. Silver ETFs, on the other hand, report their holdings daily and are easily collated. Their demand averages 67m ounces per year.

The world’s flagship silver ETF is the mighty iShares Silver Trust, which trades as SLV in the States. Its holdings this week were nearly 324m ounces, the equivalent of about a year and 2/3rds of worldwide investment demand. Launched in April 2006, it is the easiest, fastest, and cheapest way for American stock investors to gain silver exposure in their portfolios. This opened silver up to vast new pools of capital.

Silver has always had a zealous hardcore base of investors who decry any type of “paper silver”, which includes ETFs. If it’s not physical silver in their own possession, they want nothing to do with it. While I’ve always personally used and recommended that classic method of silver investing, it’s not for everyone. A lot of investors ranging from hedge funds to institutions legally can’t buy or don’t want the hassles of physical.

And silver ETFs are a perfect alternative for them. These investors buy ETF shares for a trivial fraction of what the premiums run on physical silver, and SLV in particular tracks the silver price perfectly. This can only happen because SLV is a conduit for stock-market capital to flow into and out of physical silver bullion. SLV’s managers have to constantly adjust SLV’s holdings to keep their ETF’s price mirroring silver’s.

When stock traders buy SLV shares faster than silver itself is being bought, they threaten to decouple to the upside. So SLV’s managers issue enough new ETF shares to offset this excess demand. Then they plow the proceeds directly into physical silver bullion held in trust for their shareholders. Thus any differential buying pressure on SLV shares directly bids up the underlying global physical silver market.

And just as silver is on the verge of a major breakout following this week’s sharp rally, American stock investors owning silver via SLV are still woefully underinvested by recent standards. This first chart looks at SLV’s silver-bullion holdings, with SLV’s price superimposed on top. And it reveals big room for new SLV buying, which will shunt stock-market capital directly into silver and accelerate its price gains.

Despite the very weak silver prices in recent years and resulting extreme bearishness on this precious metal, SLV’s holdings have actually risen on balance. They have enjoyed an exceptionally well-defined uptrend channel in the last several years, which seems pretty amazing. But realize that as silver’s price dropped, the amount of stock-market capital invested in SLV shares still contracted though its holdings grew.

Over this chart’s span, silver peaked just under $37 per ounce in late February 2012. That day SLV’s holdings of 313m ounces were worth $11.6b. Silver’s brutal bear market finally looks to have bottomed in early November 2014 at just over $15 per ounce. By that day SLV’s holdings had grown to 343m ounces, but this hoard was only worth $5.3b. So the SLV holdings’ uptrend is not as counter-intuitive as it seems.

Though SLV’s holdings climbed 9.7% between silver’s two extremes of recent years, the value of that silver plummeted 54% which was right in line with silver’s 58% loss over this span. So American stock investors certainly haven’t been hot on silver. In the middle of this week, as silver surged 3.8% to retake $17, SLV’s holdings were worth just $5.5b. That is vanishingly small, a trivial drop in the stock-capital bucket.

For comparison, of the 500 companies included in the benchmark S&P 500 stock index, only 26 had market capitalizations of $5.5b or less as of the end of last month. So American stock investors still have virtually nothing invested in silver. As silver continues rallying, they will start getting interested and then excited and buy in. And that differential buying will catapult silver higher, accelerating its rally and allure.

Only time will tell how much SLV buying we’re going to see, but it has the potential to be really big. This ETF’s peak silver holdings of just over 366m ounces came back in late April 2011 as silver was rocketing up over $48 in a speculative mania. That day SLV’s holdings were worth $17.2b, or 3.1x higherthan this week’s levels! But it could take massive silver gains over years to fuel such a big jump in stock capital invested.

More interesting for the near-term is the SLV-holdings uptrend. Silver has remained epically out of favor since its dismal bottom late last year. Since then its price has largely languished in a super-low trading range, mostly grinding listlessly sideways. So American stock investors have had no incentives at all to up their silver exposure. But this week’s young rally is already starting to change that bearish psychology.

SLV’s holdings around 324m ounces in the middle of this week certainly reflect the universal apathy and antipathy towards silver. As sentiment shifts from extreme bearishness back towards neutral, SLV is likely to see serious differential buying pressure on its shares. Remember that if stock traders bid up SLV shares faster than silver itself is rallying, SLV’s managers have to issue shares to buy more silver bullion.

Today the upper resistance of SLV holdings’ uptrend of recent years is around 352m ounces. Regaining that level would require over 28m ounces of differential buying. And even in silver’s dark recent years, SLV has witnessed multiple holdings surges from support to resistance that didn’t take much time at all. They happened in early 2013, mid-2013, and mid-2014, and each only took a couple months or so.

So the near-term silver buying potential from American stock traders is great. They remain woefully underinvested in silver right as it’s starting to surge, and they are likely to buy SLV shares aggressively enough to force a holdings build on the order of 28m ounces in a couple months. Remember that global monthly investment demand averages under 17m, so that’s a colossal boost from SLV buying alone.

Running these numbers, enough SLV differential buying merely to return its holdings back up to recent resistance would boost global silver investment demand by 85% for a couple months! That’s one major reason why I suspect the recent silver buying is only starting. And the really bullish and exciting thing is nothing begets buying like buying. The more silver rallies, the more investors will notice it and start to chase it.

But despite that large pool of capital by silver’s standards deployed in SLV, there’s another pool that just dwarfs it. There’s no one on the planet that moves more capital into and out of silver than the American futures speculators. They aggressively trade silver’s flows and ebbs with extreme leverage, exerting the greatest influence on silver’s daily price action. And theirshort positions are the key to silver’s near-term fortunes.

This next chart looks at the total levels of long and short silver futures contracts held by these dominant American futures speculators. This data is published weekly by the US Commodity Futures Trading Commission in its famous Commitments of Traders reports. And the latest read current to last Tuesday reveals high short positions remaining in silver futures. These large bets will soon have to be covered.

While silver’s long-term price levels are ultimately a function of global supply and demand, in the short term American futures trading is the whole game. Note the super-strong inverse correlation between the SLV price in blue and speculators’ total silver-futures short contracts in red. Silver plunges when they aggressively short it, and then rallies when they subsequently scramble to exit those leveraged bearish bets.

This outsized influence of futures shorting on silver’s price is primarily a function of two things. First, as silver has fallen deeply out of favor in recent years investing interest has dramatically waned. So the influence of futures speculation on silver prices rose proportionally. Second, futures trading is a hyper-risky zero-sum game played with extreme leverage. That gives futures speculators outsized silver-price impact.

Each silver futures contract controls 5000 ounces of silver, which is worth $85,000 even at this week’s still-terribly-depressed silver prices. Yet speculators only need to keep $7700 in their accounts for each silver contract they own, the current minimum maintenance margin. That means they can run leverage of up to 11x, which is extreme. In the US stock markets, leverage has been legally limited to 2x since 1974.

At 11x leverage, a mere 9% move by silver against speculators’ positions will wipe out 100% of the capital they risked. And they could lose even more than originally bet if they face margin calls! Silver has always had a well-deserved reputation as an exceedingly-volatile metal, so 9% moves are nothing. This past Tuesday and Wednesday, silver surged 5.4% and that was modest by silver’s wild standards.

Speculators shorting silver, betting on its price falling, effectively have toborrow that silver before they sell it. This saddles them with the legal contractual obligation to buy that silver back to repay their silver debt. So high silver-futures short positions by this group of traders are very bullish for this white metal since they represent guaranteed near-future buying. As this chart shows, silver soon rallies after major shorting.

While speculators’ silver-futures short positions today aren’t extreme by recent years’ epic levels, they are still very high. As of last Tuesday’s CoT data, the latest available when this essay was published, American speculators held 49.6k short-side contracts. That is a huge bearish bet on silver prices. Between 2009 to 2012, the last normal years for the precious-metals markets, their short-side bets averaged just 21.5k.

The reason silver collapsed in early 2013 was because gold suffered its worst quarterly loss in 93 years thanks to the Federal Reserve’s radically-unprecedented QE3 manipulations in the financial markets. As the Fed levitated the general stock markets, demand for alternative investments led by gold withered. And silver is ultimately a leveraged play on gold, amplifying the yellow metal’s price action in both directions.

But even since then in the Fed’s epically-distorted markets, speculators’ total silver short contracts have rapidly contracted to or near 27k four separate times. This is support for speculator shorting in recent years. So it’s highly likely this group of traders’ downside silver bets will once again sharply fall back to these levels in the coming months. And that represents incredible levels of buying to catapult silver higher.

As of that latest CoT report, American speculators would have to buy to cover 22.6k contracts merely to return to that 27k short-side support level. And in the futures markets, the price impact of buying a long contract to offset and cover an existing short and buying a new long contract is identical. With each short contract representing 5000 ounces, this support approach would require an amazing 113m ounces of buying!

Now remember annual global silver investment demand averages around 200m ounces, so this short covering alone is equivalent to about 7 months of normal demand. And as the chart above shows, once these short-covering episodes get underway they unfold fast. The more speculators who buy to cover, the faster the silver price rallies. And the sharper silver’s climb, the more pressure on remaining traders to cover.

It’s only taken two or three months in recent years for speculators to buy back enough of their shorts to drive them back down to that 27k-contract support line. And that was from even higher total-short levels. So let’s assume a couple months for this next support approach. Run the numbers on that, and this coming short covering equates to staggering buying of over 56m ounces per month. That’s incredible!

During that short-covering frenzy, silver demand from this mandatory futures buying would run 3.4x the normal monthly average just under 17m ounces! If investors are migrating back into silver at the same time, both in physical and ETF terms, silver is going to power dramatically higher during that brief span. And investors returning becomes more and more likely with each passing day of silver rallying on balance.

So looking at SLV holdings and American speculators’ silver-futures shorts alone, silver buying is only starting. Both groups of traders are likely to shift large amounts of capital into silver in a short period of time, on the order of a couple months. And they will soon be joined by investors from around the world, in a surge of new buying that will almost certainly ignite silver’s next major upleg. Its upside potential is great.

Investors can certainly play this in traditional physical silver coins and bars or through the ETFs led by SLV. Since silver is so universally loathed these days, investors have forgotten that its price averaged over $31 in 2012 before the Fed’s extreme stock-market distortions. And as those are gradually unwound, starting with the coming rate hikes, precious metals should mean revert back up to pre-QE3 normal levels.

But however great silver’s coming gains will be, the beaten-down silver stocks will achieve multiples of that. This entire sector has been left for dead, but has extreme profits leverage to these dismal silver-price levels. At Zeal we recently finished a 3-month research project to uncover the silver stocks with the best fundamentals to thrive. Our dozen favorites are profiled in depth in a popular new report. Buy yours today and get deployed before silver’s upleg accelerates and silver stocks soar!

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The bottom line is the recent silver buying is likely only just starting. American stock investors remain woefully underinvested in silver, while American futures speculators remain heavily short it. Even in the anomalous recent years, it’s only taken a couple of months or so for both extremes to normalize. And that buying alone would run multiples of normal global silver investment demand over that span.

The resulting silver rally will probably be quite big and strong emerging from such bearish sentiment extremes. And it will motivate legions of investors around the world to redeploy in silver again. The more they buy, the faster silver will rally. And that will attract in even more investors, once again forming that very powerful bullish virtuous circle that silver is so famous for. Silver has real potential to surprise on the upside.

Atlas Iron Digs in to Get $180 Million Life Support

2015-05-15T16:01:00.001-07:00

Atlas Iron Digs in to Get $180 Million Life Support

Atlas Iron appears to have defied the odds and secured its future — albeit one that could leave the existing holdings of its investors massively diluted — on one of the brighter days in recent times for Australia’s smaller iron ore miners.

Atlas yesterday said it would raise up to $180 million in new equity to help retire its hefty debts after securing a series of novel agreements with its contractors that will allow it to reopen its Pilbara iron ore mines.

The breakthrough at Atlas came as Tony Abbott confirmed he was open to an inquiry into the industry, responding to pressure from Fortescue Metals Group’s billionaire chairman Andrew Forrest for government action.

Atlas, which at its peak was worth more than $3 billion, had looked all but dead and buried last month when it suspended its shares and announced the planned shutdown of its three Pilbara iron ore mines amid the slump in the iron ore price. Atlas had been burning through its cash and appeared to have little hope of repaying more than $300m in debt.

But the plans provide a path for Atlas to resume full production across its three mines, return to profitability and retire most of its outstanding debt.

Atlas said its Abydos mine was already back in production while its Wodgina operation would restart next week. The Mount Webber mine will come back on line in the September quarter.

The plans will save more than 700 jobs. Under the new structure, Atlas said its mines would be able to break even at a benchmark spot price of just $US50 a tonne. Iron ore is currently trading around $US62 a tonne.

The changes will clear the way for Atlas shares — suspended early last month — to resume trading by the end of next month.

“We basically reckon we’ve got the operating platform that’s going to provide a lot more sustainability and stability through the business,” Atlas managing director Ken Brinsden told The Weekend Australian. “It’s a bloody good deal.”

Key to the rescue of Atlas was a restructuring of agreements between the miner and contractors McAleese Group, Qube Logistics and MACA that will see them reduce the rates they charge Atlas, but share in any future upside as prices improve. The relief from the contractors was flagged by The Australian’s DataRoom column last month.

The contractors have also agreed to subscribe for $30m in new Atlas shares at a price of between 5c and 10c a share as part of the miner’s recapitalisation. McAleese — which had the most to lose from a shutdown of Atlas — will fund its purchase of $14m in Atlas stock entirely through debt. Shares last traded at 12c.

The equity raising from the contractors will supplement by a broader share issue to existing shareholders and new investors of up to $150m.

Each of the new shares, including the contractor shares, will come with one attaching option.

While the final price and full extent of the equity raising is yet to be determined, the number of Atlas shares on issue could increase from 919 million to as much as 4.5 billion as well as another 3.6 billion in options.

If fully subscribed, the Atlas equity raising would be the largest by an Australian miner this year.

The turnaround at Atlas has also been boosted by the WA government’s decision to cut port charges at the Utah Point port facility used by Atlas and fellow miner Mineral Resources by $2.50 a tonne.

The port discount comes on top of royalty relief already extended by the government to smaller iron ore miners. West Australian Resources and Finance Minister Bill Marmion said the relief package would also include the deferral of $12m in haulage fees for 12 months. “This is about doing our best for Western Australian workers and their families, by providing measured support for smaller companies that contribute so much to our communities,” Mr Marmion said.

Atlas chairman David Flanagan said that while the company was yet to receive any firm commitments to the proposed equity raising outside the contractors, he expected the raising to be well supported.

“How many companies would be making 20 per cent cash margins in any mining business right now? Not many. That’s what we’re making,” he said.

Mr Flanagan said that it was unlikely that Atlas would look to issue the full amount of equity flagged yesterday, but was instead seeking maximum flexibility.

“It’s not going to be a snowstorm of paper, it’s going to be a light sprinkling,” he said.

The new funding will be used to retire debt, while the attached options could provide another leg of funding for the company down the track. Mr Flanagan said he expected Atlas’s debt holders to view the proposed raising favourably, although he noted there was no requirement for the lenders to approve the plan.

“It will make their debt trade at a higher price, so it’s a win-win deal,” he said.

The equity raising will draw support from Atlas directors, with Mr Flanagan committing to spend $200,000 on new shares, Mr Brinsden $125,000, Jeff Dowling $30,000 and recently appointed director Cheryl Edwardes $10,000.

Mr Flanagan said Atlas’s near-death experience had reinforced the importance of forging tight bonds with the company’s various contractors. “This is what seems to happen to us every year or two. When we started our first mine, everyone was piling shit in front of us and we had to eat our way through it. Then there was another one, and another one, and this is just another one.”

China Cuts Interest Rates for Third Time in Six Months as Economy Sputters

2015-05-10T17:37:00.001-07:00

China Cuts Interest Rates for Third Time in Six Months as Economy Sputters

China cut interest rates for the third time in six months on Sunday in a bid to lower companies' borrowing costs and stoke a sputtering economy that is headed for its worst year in a quarter of a century.

Analysts welcomed the widely-expected move, but predicted policymakers would relax reserve requirements and cut rates again in the coming months to counter the headwinds facing the world's second-largest economy.

The People's Bank of China (PBOC) said on its website it was lowering its benchmark, one-year lending rate by 25 basis points to 5.1 per cent from May 11. It cut the benchmark deposit rate by the same amount to 2.25 per cent.

"China's economy is still facing relatively big downward pressure," the PBOC said.

"At the same time, the overall level of domestic prices remains low, and real interest rates are still higher than the historical average," it said.

Sunday's rate cut came just days after weaker-than-expected April trade and inflation data, highlighting that China's economy is under persistent pressure from soft demand at home and abroad.

While the PBOC acknowledged the difficulties facing China's economy, it said in its statement accompanying the announcement that it wants to strike a balance between supporting growth and deepening structural reforms.

As part of these reforms, it lifted the ceiling for deposit rates on Sunday to 1.5 times the benchmark level, the biggest increase in the ceiling since it began to liberalise the interest rate system in 2012.

More Easing Ahead

Economists had said it was a matter of when, not if, China eased policy again after economic growth in the first quarter cooled to 7 per cent, a level not seen since the depths of the 2008/09 global financial crisis.

Indeed, some analysts have even said recently that the PBOC had fallen behind the curve by not responding aggressively enough to deteriorating conditions.

With China set to publish more key economic data on Wednesday, including industrial output and investment, the timing of the rate cut could add to worries that figures may disappoint across the board again, as they did in March.

For now, however, some were confident that policymakers can arrest the slide.

"Intensified policy loosening will help effectively halt the economic slowdown," said Xu Hongcai, a senior economist at China Centre for International Economic Exchanges, a well-connected think-tank in Beijing.

A cooling property market and slackening growth in manufacturing and investment have weighed on the Chinese economy. Annual growth is widely forecast to sag to 7 per cent this year, down from 7.4 per cent in 2014.

In an attempt to energise activity, the PBOC has now lowered interest rates and relaxed the reserve requirement ratio (RRR) five times in six months, and many economists believe more policy loosening is in store.

This is partly because despite the steady drum roll of policy easing, there are indications it has not benefited the real economy. Some data suggests banks are not passing on lower interest rates to borrowers, and credit is still not flowing to the sectors in most need of the funds.

"The effectiveness of the rate cut won't be very big," said Li Qilin, an economist at Minsheng Securities. "The PBOC has already cut benchmark interest rate by a total of 65 basis points, but borrowing costs have only fallen marginally."

Struggling Banks

Banks are also struggling as the economy founders. Lending has slowed, bad loans are piling up, and profits margins are getting squeezed as China liberalises its interest rate market. Banks' earnings reports last month showed profit growth hit a six-year low in the first quarter.

Given these challenges, the PBOC said it does not expect banks to pay savers the maximum deposit rate allowed by authorities.

And with the prospect that borrowing costs may stay stubbornly elevated, government economists told Reuters earlier this month authorities may ramp up state spending to shore up growth, in the hope that fiscal policy would work where monetary policy hasn't.

But Li Huiyong, an economist at Shenwan Hongyuan Securities, cautioned against thinking that lower borrowing costs would not trickle down to businesses and consumers at some point.

"Don't underestimate the cumulative effect of the cuts in interest rates and RRR," Li said. "This won't be the last cut.

"The rate could be lowered to 2 per cent at least, and we expect the economy to gradually stabilise in the coming two quarters."

Chinese Demand for Silver Bullion Bars Halved in 2014

2015-05-08T19:35:00.001-07:00

Silver bars weren’t very popular last year — especially in China, where demand fell by half.

Chinese demand for silver bullion bars dropped 52% in 2014 from a year earlier, to 6.2 million ounces, according to the The Silver Institute’s annual World Silver Survey, which was produced by the GFMS team at Thomson Reuters. That was the lowest level since 2010.

“The sharp decline was attributed to the continual implementation of the anticorruption policy, which served a severe blow to the gifting sector, including bars,” according to the survey, which was released Wednesday.

A steep drop in silver prices certainly didn’t help. Silver futures SIN5, +0.79% on Comex fell nearly 20% last year, following a 36% plunge in 2013.

Total global demand for silver bullion bars fell 31% last year to 88.4 million ounces — in value, that’s about a $1.7 billion drop, the survey said.

Andrew Leyland, manager for precious metals demand at Thomson Reuters GFMS, told MarketWatch in an interview that he was surprised to see how weak demand from China actually was.

The government crackdown in gifting and its anticorruption campaign, along with a “softening of economic sentiment through the course of 2014,” impacted bar buying in China, he said. “A lot of luxury goods sectors didn’t have a particularly good year.”

Globally, investment in silver coins and bars fell by 20% last year to 196 million ounces, the survey said.

There was a slowdown in European buying of silver bars and coins, primarily due to an increase in sales tax in Germany that was applied to silver from the beginning of 2014, Leyland said.

He pointed out, however, that the market was coming from a record base year in 2013. Last year’s bar and coin investment figure was still the second highest on record.

And though the world’s silver mine production was up a 12th straight year in 2014 and supplies of the metal were at their highest in about 4 years, the market still saw a supply deficit of 4.9 million ounces last year.

Looking ahead, Leyland expects silver-mine supply to decline and is looking for growth in a number of demand sectors. He forecast an average silver price of $16.50 an ounce for this year.

Prices will see some short-term weakness, but are likely to end the year at more than $17 an ounce, with a couple of years of modest price increases to follow, he said.

Houston – Perth Sister Cities Silver 1/2oz Bullion Coin

2015-05-04T01:19:00.001-07:00

This stunning coin pays homage to the special relationship shared by Houston, Texas and Perth, Australia.

The energy-themed coin originated with the founding of the Houston-Perth Sister City Association (HSPCA) in 1984, which was based on historical naval ties in WWII and the strong synergies between the two cities’ energy sectors.

Today, Houston and Perth are two of the largest energy hubs in the world, and recently celebrated 30 years of partnership.

The ties between Houston and Perth can initially be traced to the World War II battle of Sunda Strait, where both the USS Houston and HMAS Perth attacked a superior force of Japanese ships in an attempt to stall their advance towards Australia.

Both ships were lost along with many men, but their sacrifice allowed the American and Australian navies to halt the Japanese advance and helped forge the relationship now shared by Houston and Perth. The bond between the two cities was further strengthened during John Glenn’s 1962 spaceflight, when the citizens of Perth turned on all their lights, allowing the astronaut to view the city from orbit.

In the 1980s, when Houston sought to expand its global ties, Perth was an ideal partner for cultural, historical, and economic reasons.

This remarkable Sister Cities coin has been exclusively minted by Perth for Texas Precious Metals. Production will be limited to 500,000 coins.

QUALITY
The Perth Mint’s unbeatable minting experience and its use of advanced manufacturing technology contribute to the coins reputation of being the highest quality in the world.

AUSTRALIAN GOVERNMENT GUARANTEE
Struck by the historic Perth Mint from 99.9% pure silver, each coin’s Australian legal tender status guarantees its weight and purity.

AFFORDABLE
Perth Mint bullion coins are universally recognised as the most affordable means of purchasing silver bullion in the secure form of official, legal tender coins.

BEAUTIFUL
Perth Mint bullion coins are tangible assets that are beautiful to behold. Featuring stunning new artistry each year, they are admired worldwide and are highly collectable.

NUMISMATIC APPRECIATION
As well as annual design changes, the coins’ restricted mintages create the potential for even greater investment return in the form of a numismatic premium.

COIN SPECIFICS:
Year:	2014
Condition:	Brilliant Uncirculated
Weight (Au, Ag, Pt):	1/2 ozt
Minted by:	Perth Mint
Mintage:	500,000
Face Value:	AUD$0.50
IRA:	Approved
Packaging:	Plastic Tube
Coins Per Tube:	25

Farmers Own Milk A Huge Success With Customers!

2015-05-01T19:32:00.001-07:00

Woolworths has today announced that the trial of Farmers’ Own milk produced in the Manning Valley has been an enormous success and that this great product will now be available in 105 stores across New South Wales.

This means that Woolworths is directly linking more than 2.5 million Woolworths customers with committed and innovative dairy farmers from the Manning Valley of New South Wales and milk straight from their farms.

In a first for Woolworths milk, the supermarket is working directly with the farmers. After a highly successful trial period, the Manning Valley farmers will now have greater access to this huge customer base for their product.

The milk is permeate free and is available in three varieties; full cream and reduced fat homogenised milk and full cream unhomogenised milk with the cream on top. It truly is the farmers’ own milk, just how they like it.

The trial has run for since October 2013 and Woolworths has seen strong sales, particularly in the Manning Valley stores.

Woolworths Head of Trade, Tony De Thomasis, said the experience has proven to be great for the farmers, great for Woolworths, but most importantly great for customers.

“We are extremely pleased about how well our customers have received Farmers’ Own milk. We know they appreciate a great local product.

“The three varieties have sold very strongly and the return of unhomogenised milk with the cream on top has been a hit. They love the great tasting, fresh milk with a richer, fuller flavour.

Manning Valley dairy farmer, Tim Bale, said: “We’re delighted that this trial has gone so well and that now we’ll be able to deliver our fresh, great tasting milk into a huge market through 105 Woolworths stores.

“We know that customers want farmers to get a fair price for their produce and our direct relationship with Woolworths is delivering that,” said Mr Bale.

The relationship gives the farmers end-to-end transparency from shed to shelf, a longer term contract and a closer relationship with their customers.

http://www.woolworths.com.au/wps/wcm/connect/webSite/Woolworths/about+us/woolworths-news/farmers+own+milk+a+hit+with+customers

My Say On Farmers Own Milk:

Farmers Own unhomoginised Full Cream Milk Won the Consumer Innovation Product of the year award.. congratulations for bringing high quality inexpensive ($2.70 for a 2ltr) milk to the market..excellent product!

Rolling out all over Australia.. a Woolworths near you.

Now that the NZ$ is close to parity.. a very real opportunity exists to import to NZ and attack the #Monopsony and relieve the consumer nightmare that is NZ milk

http://www.farmweekly.com.au/news/agriculture/cattle/dairy/farmers-own-milk-hits-woolies-shelves/2714940.aspx

- See more at: http://pricecomparisonaustralia.blogspot.com.au/#sthash.9Mu56Siu.dpuf

Atlas Iron Maintains Production at Two Out of Three Mines

2015-05-01T02:08:00.001-07:00

Atlas Iron Maintains Production at Two Out of Three Mines

Iron ore miner Atlas has reversed its decision to mothball all of its operations, temporarily at least.

Three weeks ago the miner announced production would cease by the end of April at all three of its sites in the Pilbara region of Western Australia.

At the time Atlas said the decision had been forced by falling iron ore prices, despite considerable cost cutting.

But today Atlas advised the ASX mining will continue throughout May at two of the three sites.

Production will continue at the Abydos site and be resumed shortly at Wodgina, though mining and processing will remain suspended at Mt Webber.

The announcement is expected to give a reprieve to around 400 of the 600 workers affected by the original decision.

"The decision to continue operating at these projects ... is the result of a substantial reduction in forecast cash costs for May," Atlas said in its statement to the ASX on the decision.

"The cost reductions were achieved with the support of Atlas' key service providers."

Iron ore prices have recovered from under $US50 a tonne when the suspension was announced to as high as $US59.20 a tonne earlier this week.

The price has since backtracked a little to $US56.20 a tonne.

"Atlas expects to be cash flow-positive in May," today's ASX statement said.

"This is based on target all-in cash costs plus interest and sustaining capital expense."

But Atlas shares remain suspended and the company has given no indication of its intentions beyond this month.
Hopefully they continue, workers get a reprieve: CFMEU

CFMEU mining and resources division secretary Gary Wood said any reprieve for the workers was helpful in an industry where jobs were becoming rare.

"Obviously it's a positive in the shorter term and one can only hope there's an increase in [the iron ore] price to make it a sustainable operation," he said.

"It is a positive and hopefully they can continue and the workers do get that reprieve because there's no opportunities out there in the field at this time.

"I think they would have been running as efficiently as they can so it all comes back down to the price of ore."

Regional Development Australia (RDA) Pilbara chief Diane Pentz said she remained concerned about the number of people who had been retrenched.

She said the mining company's announcement was a "bright light" that was welcomed by the RDA Pilbara and by people in the community.

"I'm sure that it's a relief to a lot of people who are employed within this resource industry and I think it also starts to signal that there is some confidence around the recovery of the iron ore price," Ms Pentz said.

Iron Ore Revival Puts Local Miners Back in the Black

2015-04-25T23:50:00.001-07:00

Iron Ore Revival Puts Local Miners Back in the Black

At least least four Australian miners are cash-generative at current iron ore prices, thanks to a 23 per cent rise in the bulk commodity price over the past three weeks.

Another 5 per cent rally in the iron ore price late on Friday night capped a rare good week for the local industry, and pushed the benchmark price to $US57.81.

While BHP Billiton and Rio Tinto have easily remained profitable during the recent slump in iron ore prices, it is likely that few other local iron ore exporters were generating cash when the price hit $US47.08 on April 2.

But a weekly gain of 13 per cent means the iron ore price is now at six-week highs, and is believed to be above the "break-even" price for the world's fourth biggest producer, Fortescue Metals Group.

The estimation of break-even prices is fraught given the constantly changing factors involved, but Fortescue is believed to need iron ore prices to be about $US50 per tonne to cover its cost of production, royalties, maintenance spending and its debt obligations.

Fortescue mines at two locations in the Pilbara, with its newer Solomon hub the cheaper operation, while the company's original Chichester precinct is estimated by Deutsche to lose money at benchmark iron ore prices below $US50 per tonne.

The miner has already outlined plans to reduce its costs even further in the 2016 financial year, with a dramatic reduction in the amount of waste ore moved at the Chichester precinct set to drag break-even costs below $US45 per tonne.

The plan, in concert with last week's debt refinancing which pushed the company's next debt repayment back to 2019, should help Fortescue survive the lowest point for iron ore prices, which analysts at Deutsche and Credit Suisse expect to come in between the 2015 and 2017 calendar years.

But Deutsche analyst Paul Young recently opined that Fortescue's revised working plan in the Chichesters is not sustainable longer term, and is likely to be a viable approach for less than two years.

"The change in mine plan at the Chichesters is likely net present value destructive as it will likely shorten mine life and impact product quality," he said in a recent note.

The junior miner that relies on Fortescue to rail, ship and market its product to customers, BC Iron, is also likely to be profitable at the recently improved iron ore price.

According to BC's improved performance during the month of March, UBS believes the miner can be generating cash so long as the benchmark iron ore price is $US55 per tonne or higher.

Those close to break-even around these prices are believed to include Mt Gibson Iron, whose cost position has ironically improved since a wall failure at its Koolan Island mine, and US miner Cliffs Natural Resources, whose Koolyanobbing operation exports through the South Coast of WA.

US miner Cliffs Natural Resources will update investors on Wednesday morning Australian time when it publishes its March quarter results.

Gina Rinehart's Roy Hill project is not expected to start exporting until August or September, and is believed to have a break-even price between $US41 and $US51 per tonne.

Those needing a further improvement in prices include Arrium Limited and Atlas Iron, which ceased operating its mines just over two weeks ago.

While last week's improvement in iron ore prices has injected some hope into the local sector, the rising commodity price has come with some trade-offs.

The Australian dollar, which hurts local miners when it is high, has risen 3 per cent to US78.15¢ over the past two weeks.

Oil prices also appear to have found their bottom, prompting a slight rise in prices for some "bunker fuels", which are consumed by ships that carry commodities like iron ore.

Local miners will be hoping those factors don't continue rising and blunt the impact of improved iron ore prices.

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Rio Tinto Goes Full Ore Ahead

2015-04-21T05:10:00.001-07:00

Rio Tinto has revealed it shipped 72.5 million tonnes of iron ore from its Pilbara mines during the three months to March

CYCLONE season and a train derailment have slowed Rio Tinto’s iron ore business but the mining titan’s expansion plans remain firmly in place.

The Anglo-Australian miner has revealed it shipped 72.5 million tonnes of iron ore from its Pilbara mines during the three months to March.

The result, revealed in a production update on Tuesday, was 12 per cent lower than the previous quarter but 9 per cent higher than the same period a year earlier.

Rio produced 74.7 million tonnes of iron ore for the March quarter with the difference going into stockpiles.

Production was down 6 per cent on the previous quarter but up 12 per cent year-on-year.

The result missed market expectations but analysts were unfazed as Rio maintained its full-year production forecast at a record 350 million tonnes and said it would draw down on inventories to maximise cash flow throughout the year.

Rio said its operations had been impacted by tropical cyclone Olwyn, which battered the West Australian coast last month, and a train derailment that temporarily blocked access to Dampier port.

Smaller competitors such as Fortescue have been deeply critical of Rio and rival BHP Billiton for continuing to bring on new supply as the price of the key steelmaking ingredient tumbles.

Chief executive Sam Walsh said Rio’s push to milk as many low-cost tonnes from its iron ore business as possible was in the best interests of shareholders over the long term.

“By making best use of our high-quality assets, low cost base, and operating and commercial capability our aim is to protect our margins in the face of declining prices and maximise returns for shareholders throughout the cycle,” he said.

The price of iron ore rose 1.3 per cent to $US51.57 a tonne early on Tuesday after hitting a decade low of $US47.08 a tonne in early April.

Rio produced 144,000 tonnes of copper during the March quarter — a 9 per cent drop on the same time a year earlier due to mining lower grades.

Rio shares closed up 1.5 per cent on Tuesday at $55.50

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Atlas Iron Suspends Itself From Share Trade Amid Plunging Prices

2015-04-07T01:28:00.000-07:00

Atlas Iron is stumbling in the face of the slumping ore price, suspending itself from the local share market as it tries to map out a future.

Iron ore slumped over the weekend to a fresh low of $US46.70 a tonne on a key Chinese spot market.
Atlas said it has been surprised by the "extent and the pace of the decline in the iron ore price" which it says has fallen 24 per cent since it released its half-year accounts in February.

"The voluntary suspension is requested pending the outcome of an extensive review of the company's operations, financial outlook, asset sale opportunities and capital structure," the company said in a statement to shareholders.

The company said it has already commenced discussions with a number of its stakeholders in relation to various initiatives it is undertaking to reduce costs and preserve value.

Bulk transporter McAleese Group is one of those stakeholders, it has a major iron ore haulage contract with Atlas worth around $250 million and not due to expire until 2017.

McAleese has issued a statement to shareholders saying it will continue to work with Atlas as a priority to "achieve sustainable solutions for both parties."

Atlas shares, which last traded at 12 cents, will remain suspended until the company makes an announcement at the end of the review, which should be in the next fortnight.

The share price has lost 88 per cent in the last 12 months.

Financial advisory and asset management firm Lazard is assisting Atlas with the review.

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