Articles in Category: Company News

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This morning in metals news, the world is waiting on the Trump administration’s Section 232 auto tariff decision, an Indian Supreme Court ruling opens the door for ArcelorMittal to finally acquire the bankrupt Essar Steel and Rio Tinto plans to raise funds for the rehabilitation of the Ranger uranium mine in Australia.

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Section 232 Auto Tariff Decision Expected Soon

In May 2018, the Trump administration launched a Section 232 investigation related to the national security impacts of imports of automobiles and automotive parts.

The administration had already delayed the decision earlier this year, as talks with major exporters — including the E.U. and Japan — continue. The latest self-imposed deadline fell Thursday, Nov. 14.

A decision has yet to be announced, although E.U. officials have previously expressed confidence Trump would delay the decision once again.

Supreme Court Rules in Favor of ArcelorMittal’s Essar Acquisition Effort

ArcelorMittal’s bid to acquire the bankrupt Essar Steel has dragged on through the courts over the last two years, including a challenge of a National Company Law Tribunal order earlier this year.

According to Reuters, the Indian Supreme Court has approved ArcelorMittal’s resolution plan for the distressed steel firm, overturning a previous appellate court ruling regarding the claims of financial creditors versus those of operational creditors.

Rio Tinto to Invest in Ranger Rehabilitation Project

Rio Tinto plans to assist Energy Resource of Australia Limited (ERA) — of which Rio Tinto is a 68.4% shareholder — in efforts to raise money toward the rehabilitation of the Ranger Project Area in Australia, the company announced Friday.

The Ranger uranium mine is located in Australia’s Northern Territory.

“As a 68.4 per cent shareholder in ERA, Rio Tinto will subscribe to its full entitlement of approximately $221 million (A$326 million),” Rio Tinto said in a release. “Given ERA’s inability to secure third-party underwriting support, Rio Tinto has also agreed to fully underwrite the offer to ensure ERA has the funds it needs to meet its current rehabilitation obligations.”

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According to Rio Tinto, ERA is “required to end mining and processing activities at Ranger by January 2021 and complete final rehabilitation by January 2026.”

When it comes to the bidding for British Steel, it’s now out with the Turks and in with the Chinese.

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It is all change at the sales counter in the process of hawking British Steel to the highest — or any — bidder.

Ataer Holding, a subsidiary of the Turkish military pension fund Oyak, saw its bid for the British Steel Group collapse last month when its terms were considered uneconomic.

Details are sketchy as to exactly what was the problem, whether it was the price, subsidies or conditions around employment.

But as controversial as a sale to the Turkish military pension fund would have been, a sale to a Chinese steel group is potentially even worse.

Arguably, China has been a part of the demise of the British steel industry for the last two decades and continues to depress global steel prices, perpetuating a marginal state of existence for not just British steel assets but also for much of Europe.

However, the British government — or, at least, the liquidator, no doubt with government approval, — has reached a deal with Chinese steel group Jingye. The Chinese group also operates hotels and real estate, employs 23,500 and has registered capital of 39 billion yuan ($5.58 billion), giving it the financial clout to invest, Reuters reported.

Jingye is no minnow when it comes to steel production, with a capacity of 15 million tons. Although no contractual guarantees have been given, the company has pledged to maintain as many jobs as possible. The amount being paid was not confirmed, but it is reported to be between £50 million and £70 million.

Jingye has pledged to invest £1.2 billion in the business over the next decade, upgrading the plants and machinery, the Daily Mail reported.

The government will be delighted to get British Steel off the books, as it has been costing £1 million a day to keep the group operating since May, when it collapsed and private equity owner Greybull Capital threw in the towel.

The paltry price tag — said to be no more than the operating cash in the company, probably comes with some government aid sweeteners — buys a group that includes steelworks at Scunthorpe and Teesside in northern England, as well as its European units (FN Steel in the Netherlands and British Steel France).

According to Reuters, European trade group Eurofer is looking into the deal from a state aid point of view. French authorities are considering seeking assurances from Jingye that it will guarantee supply to a factory in northeast France as a condition for its approval of the deal. The British Steel works supplies steel used to make specialized high-speed rails for France’s TGV network.

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British Steel represents one-third of the U.K.’s steel output and produces long steel products used in construction and the rail industry in the U.K. and France.

Whether Jingye will see a profit out of the company remains to be seen, but maybe that isn’t even the point.

British Steel gives the group a presence inside the European market and, as such, may give them a seat at the European steel producers table.

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This morning in metals news, China again emphasized its desire for a removal of tariffs toward the goal of an initial trade deal with the U.S., U.S. Steel has laid off more workers and a Taiwanese firm is planning to invest $100 million in a new Turkish steel factory.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Tariff Talks Continue

As U.S.-China trade talks continue, with the parties aiming to reach a “phase one” deal, China’s Commerce Ministry renewed a call for the removal of tariffs.

“The trade war was begun with adding tariffs, and should be ended by canceling these additional tariffs. This is an important condition for both sides to reach an agreement,” said Gao Feng, spokesperson for China’s Ministry of Commerce, according to a CNBC report.

More U.S. Steel Layoffs

In addition to layoffs at its Minnesota taconite plants and at its Granite City, Illinois plant, the steelmaker has also laid off workers at its Gary Works and Midwest Plant in Portage, Indiana, the Times of Northwest Indiana reported.

The steelmaker reported a net loss of $84 million in the third quarter, compared with net earnings of $291 million in Q3 2018.

Taiwan to Continue Investment in Turkey

According to a report in the Daily Sabah, the president of the Taiwan External Trade Development Council said the company will invest $100 million toward a new steel factory in northwestern Turkey.

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Walter Yeh, president of the council, added Taiwan hopes to increase its trade volume with Turkey up to $2 billion, according to the report.

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This morning in metals news, U.S. steel import permit applications surged in October, U.S. Steel has laid off workers at its Granite City operation and Port Hedland iron ore shipments to China dropped in October.

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Steel Import Permit Applications Surge

U.S. steel import permit applications for October jumped 34.6% compared with the September final import total, the American Iron and Steel Institute (AISI) reported this week.

Import permit applications for October totaled 2.56 million tons, according to AISI.

Meanwhile, steel import market share in October checked in at 17%.

U.S. Steel Lays Off Workers at Granite City

On the heels of news of layoffs at U.S. Steel’s taconite operations in Minnesota, the steelmaker has reportedly also laid off an unspecified number of nonunion workers at its Granite City, Illinois operation, the Belleville News-Democrat reported.

The Granite City operation famously received a boost after the Trump administration’s imposition of Section 232 tariffs on imported steel. Previously idled, in March and June of 2018, U.S. Steel announced it would restart two blast furnaces at the plant, welcoming back approximately 800 workers in the process.

Port Hedland Iron Ore Exports to China Drop in October

Exports of iron ore to China from Australia’s Port Hedland fell in October, Reuters reported.

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On a month-over-month basis, iron ore exports to China from the major port dropped 0.7% in October.

The Renewables Monthly Metals Index (MMI) fell one point for a November MMI reading of 97.

Slowing Cobalt Mine Output

According to research group Antaike, global cobalt output growth is expected to slow in 2020, Reuters reported.

The report cites Antaike nickel analyst Joy Kong, who said cobalt production is expected to rise by 5,000 tons in 2020.

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The cobalt price has suffered over the last 18 months. On the LME, cobalt has plunged from around $95,000 per ton as of March 2018 to as low as $25,000 per ton earlier this year.

Cobalt is coveted for, among other applications, its use in electric vehicle (EV) batteries, which will be expected to drive demand for several metals as EV demand rises.

However, plunging prices have proved to be a challenge for miners, even mining giant Glencore.

Earlier this year, Glencore announced it would idle production at its Mutanda copper and cobalt mine — the world’s largest cobalt mine — in the Democratic Republic of the Congo by the end of the year.

MetalMiner’s Stuart Burns earlier this year weighed in on the miner’s decision.

“Glencore has a record of taking the hard decisions early and shuttering mines that are loss-making,” he wrote.

“The miner closed zinc mines in 2015 in response to low global prices; its actions are credited with helping the zinc market recover as a result.

“Cobalt demand has traditionally been driven by its use as an alloying element, but it is increasingly being seen as part of the lithium battery demand story because of its role in production of advanced batteries. The electric vehicle (EV) market, though, has failed to match up to its hype this decade. Although both lithium and cobalt prices have risen as a result of battery makers securing their supply chain, the reality is supply is perfectly adequate.”

In fact, LME cobalt has had some upward momentum in recent months, reaching $35,000 per ton this week.

Furthermore, Burns added the fundamentals for the much-coveted cobalt remain strong.

“In the longer term, though the fundamentals remain solid, EV sales will rise over the next decade as prices become more affordable, ranges extend and charging infrastructure improves,” Burns explained. “Glencore is putting Mutanda on care and maintenance for the next two years, after which it will review its options.

“Taking some 20% of global supply out of the market will put a floor under prices and shorten the timeframe over which prices will recover.”

Trafigura’s Bet on Cobalt

Sticking with the cobalt theme, Burns delved into trader Trafigura’s bet on cobalt amid its price resurgence in recent months.

“According to the Financial Times, Trafigura is betting that the Mutoshi mine, which is owned by DRC-based company Chemaf, can become a competitive producer, just as demand starts to rise on the back of a global rise in EV sales,” Burns wrote.

“Trafigura is looking to contribute financing in return for marketing rights on the cobalt. Mutoshi hopes to produce 16,000 tons of cobalt annually by the end of next year, should financing be put in place.”

GOES

The GOES Monthly Metals Index (MMI), which tracks grain-oriented electrical steel, dropped five points for a November reading of 181.

The GOES price fell to 2.6% month over month to $2,499/mt as of Nov. 1.

AK Steel, the only U.S. producer of electrical steel, recently reported its third-quarter financial results. In the third quarter, the company’s stainless/electrical segment saw shipments of 187,900 tons, down from 206,600 tons in Q3 2018.

Meanwhile, for the nine months ending Sept. 30, AK Steel’s stainless/electrical segment saw shipments of 592,900 tons, down from 628,800 tons during the same timeframe in 2018.

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Actual Metal Prices and Trends

The U.S. steel plate price fell 7.1% month over month to $684/st as of Nov. 1.

Chinese steel plate fell marginally to $572.71/mt. Korean steel plate jumped 1.3% to $555.83/mt. Japanese steel plate fell 0.2% to $796.27/mt.

The Chinese silicon price increased 1.6% to $1,463.76/mt.

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This morning in metals news, the U.S.’s steel capacity utilization rate is 80.3% for the year through Nov. 9, up to 40 layoffs are coming at U.S. Steel’s Minnesota taconite operations and a South African steel plant operated by ArcelorMittal is being shut down.

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Capacity Utilization Reaches 80.3%

The U.S. steel industry’s capacity utilization rate reached 80.5% for the week ending Nov. 9, according to the American Iron and Steel Institute (AISI).

Capacity utilization for the year to date was 80.3%.

The sector produced 1.86 million tons of steel for the week ending Nov. 9, down 2.2% on a year-over-year basis and down 1.4% from the previous week.

Up to 40 Layoffs Coming at U.S. Steel’s Minnesota Plants

Challenging market conditions are prompting U.S. Steel to lay off up to 40 nonunion workers at two Minnesota taconite plants, the Minneapolis Star-Tribune reported.

According to the report, the Minntac and Keetac mines employ a total of approximately 2,200 workers.

ArcelorMittal to Shutter Saldanha Plant

Steelmaker ArcelorMittal will close its Saldanha steel plant in South Africa, India Today reported.

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“This difficult decision was taken in the context of constructive ongoing engagements with key stakeholders, including government and organised labour, to find alternative solutions to the dire situation in the South African steel industry,” the company was quoted as saying.

This morning in metals news, a Chinese firm is poised to take over the insolvent British Steel, Chinese iron ore futures were down Monday and speakers at a recent convention in Budapest weighed in on the stainless steel market.

Jingye to Buy British Steel

After talks with Turkey’s Ataer Holding fell apart, Chinese firm Jingye Steel has reportedly signed a deal to rescue British Steel, the BBC reported.

British Steel was put into forced liquidation in May, setting off a bidding process for the ailing steelmaker.

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According to the BBC, Jingye plans to £1.2 billion in British Steel.

The deal is pending and still requires regulatory approval, according to a statement by the Official Receiver.

“Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals,” the Official Receiver said. “The parties are working together to conclude a sale as soon as reasonably practicable.

“The business will continue to trade as normal during the period between exchange and completion. Support from employees, suppliers and customers since the liquidation has been a critical factor in achieving this outcome.”

Chinese Iron Ore Futures Slide

According to Reuters, Chinese iron ore futures fell by as much as 3.1% on Monday.

The most-traded iron ore futures contract on the Dalian Commodity Exchange fell 2.1% to 594 yuan ($84.93) per ton.

Rising Nickel, Falling Stainless Steel

At the recent BIR World Recycling Convention Round-Table Sessions held in Budapest, speakers delved into the seemingly curious current relationship between nickel prices and stainless steel values.

According to Natalie Scott-Gray, senior metals demand analyst at INTL FCStone, stainless steel production is forecast to rise 2% this year, with demand projected to rise 16% over the next five years, Recycling Today reported.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

Another guest speaker at the event, Olivier Masson, said the stainless steel market is going through a “relatively soft patch,” partially impacted by a shift in trading patterns as a result of the U.S.’s Section 232 tariffs and China’s exports of hot-rolled material, according to the Recycling Today report.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, including coverage of: Freeport-McMoRan’s use of artificial intelligence (AI), U.S. steel production, aluminum prices, U.S. automotive sales, construction spending and India’s decision to back away from the proposed RCEP trade pact.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

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This morning in metals news, tensions could ease between the U.S. and China on the tariff front, ArcelorMittal reported its third-quarter financial results and copper prices made gains this week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S., China Could Roll Back Tariffs with an Initial Deal

In what would represent a significant deescalation of trade tensions, the U.S. and China have reportedly agreed to roll back tariffs if they are able to reach a first-phase trade deal.

However, according to Reuters, the proposal faces internal opposition in the White House, with officials making conflicting public statements regarding tariff rollbacks either being or not being a condition for an initial trade deal.

ArcelorMittal Reports 3Q Results

ArcelorMittal reported a net loss of $539 million in Q3, compared with a net loss of $447 million in Q2.

The firm’s steel shipments fell 7.3% compared with the previous quarter.

Copper Price Rises

The LME three-month copper price has made gains over the last month.

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The price approached the $6,000/mt as the week has come to a close, reaching $5,949/mt. The price is up 4.59% on a month-over-month basis, per MetalMiner IndX data.

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The Rare Earths Monthly Metals Index (MMI) dropped one point for a November MMI reading of 20.

Lynas Signs Deal with Malaysia’s MARA

Australia-listed rare earths firm Lynas Corporation, the largest rare earths firm outside of China, announced Nov. 4 it had signed a memorandum of understanding (MOU) with Malaysia’s MARA Corporation through which the parties would “work collaboratively on several key projects, including attracting downstream industries and downstream customers to Malaysia.”

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In August, the Malaysian government granted Lynas a six-month license renewal for its rare earths processing plant in the country. The decision came after months of back and forth between the firm and the government, primarily focused on the environmental impact of radioactive waste stemming from cracking and leaching processes at the plant.

“Lynas is delighted to be partnering with MARA Corporation on this exciting initiative,” Lynas CEO Amanda Lacaze said. “MARA Corporation is a strong and important local partner as we grow our global business from Malaysia. We have always strived to be an excellent foreign direct investor in Malaysia and this joint project is another way that we can facilitate economic development and jobs for Malaysians.”

Launched in 2016, MARA aims to create and develop “investments in key sectors to deliver scalable and sustainable financial returns that shape industries and deliver socio-economic outcomes,” according to its website.

“Creating economic opportunities in Malaysia, especially for the Malay and Bumiputra population is at the heart of MARA Corporation’s business,” said Akhramsyah Muammar Ubaidah Bin Sanusi, chairman of MARA Corporation. “We have followed the impressive progress of Lynas Malaysia as it has grown to become a major global player in the rare earth industry with a strong core of Malay technical professionals driving its progress. We are fortunate to have a key component of this supply chain already operating in Malaysia, and it is time to develop opportunities to further enhance Malaysia’s green and high-tech industries in line with the Pakatan Harapan government’s new Shared Prosperity Vision 2030.”

According to Lynas, it will work with MARA on a number of initiatives, including: attracting downstream industries and downstream customers to Malaysia; education and training initiatives; commercialization of NUF residues from the Lynas Malaysia plant, including making soil conditioner products available to Malay farmers; and design and fabrication work related to the Lynas 2025 Project.

Australia Mulls Funding Rare Earths Exploration

Major economies — notably, the U.S. — are aiming to wean themselves off of dependence on China for rare earths, as China wields overwhelming control of the rare earths mining and processing sector.

However, among the other places with potentially promising sources of rare earths minerals is Australia, which has drawn interest from the U.S. in the form of potential partnerships.

Matt Canavan, Australia’s resources minister, was quoted by Reuters as saying the government might consider underwriting projects to develop the country’s reserves of rare earths minerals.

Canavan underscored the importance of developing those mineral reserves during a speech at the International Mining and Resources Conference late last month.

“The government is also supporting the broader minerals sector with its $100 million Exploring for the Future program,” Canavan said. “That program is using the latest seismic and aeromagnetic techniques to try to find new discoveries. Some great work has already been done especially in the south Nicholson Basin that straddles the Queensland and Northern Territory borders.

“This work is especially important because there has never been a greater need for the mining industry. The mining industry has always been important. The Ancient Roman historian Alexander Demandt once compiled 210 reasons for the fall of the Roman Empire. One of the 210 reasons was the depletion of its mineral resources, especially those at the ancient mines at Rio Tinto.

“Just like in Roman times, the future health of our economy and society will depend on continuing access to high quality mineral resources.”

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Metal Prices and Trends

Chinese yttrium ticked up 1.6% month over month to $31.98/kg as of Nov. 1. Chinese terbium oxide fell 7.5% to $500.24/kg.

Chinese neodymium oxide fell 6.7% to $41,710/mt.

Chinese europium oxide fell 0.7% to $30.55/kg. Chinese dysprosium oxide fell 16.4% to $218.14/kg.