Fortescue Metals Chief Sees Opportunity in Iron Ore Future
Despite the company’s 23 percent fall in share price on Wednesday, Fortescue’s chief Nev Powers still sees immense opportunity in iron.
The Australian-based iron ore miner made record shipments of the steelmaking ingredient in the March quarter with 31.5 tons, up by half from the last time last year. Powers isn’t concerned about market shares and said short-term factors were behind the falls, and Fortescue was “continuing to focus on improving our cost position …I’m not at all concerned about where the price is.”
Powers believes China’s demand for steel is still strong regardless of price volatility. The China steel company Baosteel recently issued a big vote of confidence in iron ore by lobbing a joint $1.42 billion bid this week for Perth junior Aquila Resources.
According to Powers, the bid was reaffirming and a positive one and highlights revived Chinese interest in the Australian resources sector. ''It shows a lot of confidence by China in the Pilbara and in Australia generally. There has been concern for a while about the level of investment China has made in the iron ore industry … this shows a change to that policy and I think it is very positive,'' Power said.
China’s economy began rather slow at the start of the year according to official figures, but was still stronger than expected.
“What we’re seeing already in this first quarter of 2014 is continuing strong growth n iron ore demand from China, so at the moment it’s continuing to absorb any increase in supply,” Powers said.
The company has also begun exploring additional options, including supplying customers in South Korea, Japan and other Asian markets.
In addition, the company’s repayment of debt as well as operational and scale efficiencies have reduced the company’s break even cost, meaning it can absorb more fluctuations in the iron ore price better than last year.
Last month Fortescue completed its $9.2 billion mine expansion, allowing it to produce its long held target of 155 million tons of iron ore a year.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.