[INFOGRAPHIC] Australia, Brazil controlling Chinese supply of iron ore
According to data from General Administration of Customs, China imported 453.1 million metric tons of iron ore in the first six months of 2015 with 83 percent of it coming from either Australia or Brazil. That is an increase of 74 percent from the same time period in 2014.
RELATED TOPIC: LNG surpassing coal and iron ore in Australia
Mining giants Vale, Rio Tinto, BHP Billiton and Fortescue Metals Group each reported increased output in its second-quarter results from April-June. However, the output of iron ore from smaller mining companies has taken a steep fall.
The Platts IODEX CFR China price of iron ore was recently assessed at $56.75/Dry Metric Tons (dmt), which is up from a record low of $44.50/dmt earlier in July as the market finally stabilized. Many believe the drop was due to recent chaos on Chinese equity markets.
RELATED TOPIC: Iron ore prices fall into danger zone
When the price dips below $50, it’s often much more difficult for smaller mining companies to survive.
As a result of the fluctuation, supply from smaller miners has become far less stable. Although some of the major steel mills would rather purchase from top miners, others continue to work out negotiations with the smaller companies
RELATED TOPIC: Top 10 Iron ore producers based on 2015 guidance
Miners both large and small have begun searching for way to cut costs any way they can due to weak low prices and China’s weakening demand. A slowing economy and property market has cut China’s steel usage by over five percent during the first five months of 2015.
With a crackdown on China’s most polluting industries along with little hope of an increase in demand, things look quite bleak for the industry for the remainder of the year.
Barrick profit beats expectations as copper, gold prices up
Barrick Gold has reported a 78% jump in first-quarter profit, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.
Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia, reports Reuters
Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.
Adjusted profit surged 78% to $507mn in the quarter ended March 31, from $285mn a year earlier, and Barrick announced a 9 cent per share quarterly dividend.
Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.
“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.
Potential for South Africa merger
Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.
Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger.
“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.
Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.
Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900mn belonging to its Kibali mine joint venture out of the country.
“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.