REPORT: Early production in gold, copper and iron ore falls flat
If early production announcements for the three months to end-March turn out to represent the entire mining industry, then there has been a significant fall in quarter-on-quarter production for the three most important mined metals: gold, copper and iron ore.
However, the production results published to-date suggest that gold and iron ore production is still higher than the year-ago quarter, up almost 12 percent in the case of iron ore.
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According to the SNL Metals & Mining database, 188 companies have already announced gold, copper and iron ore output for the March quarter for which comparable data is also available for the December 2014 quarter.
In the State of the Market report for the three months to end-March, published May 18, SNL notes that the 46 most significant gold producers — those with a March quarter output of over 50,000 ounces — reported a combined 11.2 million ounces, compared with an equivalent 12.5 million ounces in the December 2014 quarter, equivalent to a fall of over 10 percent.
Cutback in copper and iron ore
By mid-May, SNL had recorded production data for the March quarter from 49 copper-producing companies. The 22 largest listed companies — companies with quarterly output of over 10,000 tons — had combined production of 2.41 million tons, a decline of four percent on the previous quarter, amounting to 88,807 tonnes.
Of these largest producers, 13 companies, or about 59 percent, reported lower output between the December and March quarters.
Glencore Plc booked the largest absolute decline in output compared to the previous quarter, amounting to 46,700 tons; Antofagasta Plc's output was down by 41,000 tons; and Freeport-McMoRan's output fell by 37,648 tons. Nevsun Resources Ltd. booked the largest quarter-on-quarter percentage decline of 28 percent, while Antofagasta's output was down by 22 percent.
Of the top seven copper producers in the March quarter, only the largest, BHP Billiton Group, reported a quarter-over-quarter increase in production, which was up 9 percent, or 36,300 tons, to 460,000 tons.
There has been a welcome decline in iron ore production. According to SNL data, 15 companies have reported iron ore output of over 1.0 million tons in the March quarter. These companies produced a total of 308.5 million tonnes, compared to 324.4 million tons in the preceding quarter — equivalent to a fall of 5 percent or 15.84 million tons. However, this quarterly tonnage represents a year-on-year increase of almost 12 percent.
Of the leading iron ore producers, only BHP Billiton reported a quarter-on-quarter increase in production, but all of them saw significantly higher year-on-year output.
BHP Billiton reported a rise in iron ore production of 5 percent compared with the December quarter, rising 2.63 million tons to 58.98 million tons, and 20 percent on the year-ago quarter. The company has driven production for the first three quarters of fiscal 2015 to a record 172.4 million tons, despite iron ore prices sinking to a record lows.
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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.