Articles in Category: Company News

Thousands of General Motors workers have gone on strike, marking the first nationwide strike at GM since 2007.

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A four-year labor deal between GM and the United Automobile Workers (UAW) union expired over the weekend, with the parties unable to reach an agreement to extend it. The strike of 46,000 workers impacts 31 GM plants.

“While we are fighting for better wages, affordable quality health care, and job security, GM refuses to put hard-working Americans ahead of their record profits of $35 billion in North America over the last three years,” UAW Vice President Terry Dittes said in a prepared statement. “We are united in our efforts to get an agreement our members and their families deserve.”

Union members opted to strike, effective as of midnight on Sunday, Sept. 15. Among its stated goals, the union said it is lobbying for: fair wages, affordable healthcare, its “share of the profits,” job security and “a defined path to permanent seniority for temps.”

Meanwhile, GM said the deal it offered to UAW includes “improved wages and health care benefits.”

“The offer we presented to the UAW prioritizes employees, communities and builds a stronger future for all,” the automaker said. “It includes improved wages and health care benefits, over $7B in U.S. investments and 5,400 jobs. Let’s come together and secure our shared future.”

GM released a brief statement Monday.

“Negotiations have resumed,” the automaker said. “Our goal remains to reach an agreement that builds a stronger future for our employees and our business.”

GM was the first of the Detroit Big 3 to make the move to quarterly sales reports, deviating from the industry standard monthly reports (since then, Ford and Fiat Chrysler have followed suit). As such, the automaker did not release August sales results; however, U.S. automotive sales surged in August, as J.D. Power and LMC Automotive forecast a 5% year-over-year sales increase for the month.

President Donald Trump, who has often criticized GM over the past year, weighed in on Sunday.

“Here we go again with General Motors and the United Auto Workers,” Trump wrote in a tweet. “Get together and make a deal!”

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GM shares closed down over 4% on Monday.

Source: World Gold Council

This morning in metals news, the World Gold Council unveiled a set of principles geared toward promotion of responsible mining, Apple’s newest iPhone includes stainless steel and an Indian steel tycoon is critical of the pace of the country’s insolvency proceedings.

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World Gold Council Launches Set of Principles for Responsible Gold Mining

The World Gold Council this week announced the launch of responsible gold mining principles that it says will offer a “new framework that set out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining.”

The principles are divided into three categories: governance, social and environment.

“It is our aim that these Principles will become a credible and widely recognised framework through which gold mining companies can provide confidence that their gold has been produced responsibly,” the World Gold Council said. “The Responsible Gold Mining Principles are intended to recognise and consolidate existing standards and instruments under a single framework.”

Newest iPhone Includes Stainless Steel

Apple announced this week that its newest iPhone model, the iPhone 11, will be available in stores Sept. 20.

From a metals perspective, the new phone, which features a a triple-camera system, is made of glass and stainless steel.

“iPhone 11 Pro and iPhone 11 Pro Max have a textured matte glass back and polished stainless steel band, and come in four stunning finishes including a beautiful new midnight green,” Apple said in a release.

Indian Steel Tycoon Critical of Insolvency Proceedings

Indian steel tycoon Sajjan Jindal, head of the JSW Group, panned India’s relatively new bankruptcy and insolvency program on the grounds that it has been slow-moving.

Jindal’s JSW Group put in a $2.7 billion bid for the bankrupt Bhushan Power and Steel in February 2018, but only received approval by an Indian court last week, the Financial Times reported.

Since then, the steel tycoon’s interest in the acquisition has “definitely receded,” he told the Financial Times.

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The country’s Insolvency and Bankruptcy Code, initiated in 2016, aimed to streamline the process by resolving an insolvent business within 270 days; however, as the Financial Times noted, insolvency cases in the country have extended past the mandated 270-day deadline.

The Renewables Monthly Metals Index (MMI) dropped two points for a September MMI value of 99.

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First Cobalt Eyes Restart of Canadian Refinery

First Cobalt Corp., a Toronto-based firm, is looking into restarting its idled cobalt refinery in Canada, Reuters reported.

First Cobalt CEO Trent Mell said the company will begin assessing the condition of the plant next week.

Last month, the Canadian firm reached an agreement with Glencore by which the latter would fund a feasibility study for the idled refinery.

“First Cobalt Corp. is pleased to announce that it has entered into a US$5 million loan facility with Glencore AG to complete advanced engineering, metallurgical testing, field work and permitting associated with a recommissioning and expansion of the First Cobalt Refinery in Canada,” First Cobalt said in a prepared statement Aug. 26. “Upon completion of a positive definitive feasibility study for a 55 tonnes per day (“tpd”) refinery expansion in Q1 2020 and subject to certain other terms and conditions and satisfaction of conditions precedent, Glencore is prepared to advance an additional US$40 million to recommission and expand the Refinery.”

As Reuters noted, once operational the refinery would become North America’s lone producer of refined cobalt for the electric vehicle sector.

Cobalt Prices Surge

Speaking of Glencore, its announcement of a planned shutdown of its Mutanda mine this year has seen cobalt prices reach six-month highs, Reuters reported.

Earlier this year, Glencore said it would halt production at the Mutanda cobalt and copper mine in the Democratic Republic of the Congo (where a majority of the world’s cobalt is mined); the site is the world’s largest cobalt mine.

LME cobalt, after reaching $95,000 per ton in March 2018, lost nearly 75% of its value over the next 16 months, falling to $25,000 as of late July. Recently, the price has picked up, rising to $34,750 per ton as of Sept. 6.

GOES Price Surges 7.4%

The MMI for grain-oriented electrical steel (GOES) jumped 14 points for a September reading of 199.

The U.S. GOES coil price rose 7.4% month over month to $2,745/mt as of Sept. 1.

German steelmaker Thyssenkrupp — a prominent producer of electrical steel — is facing a period of significant uncertainty, MetalMiner’s Stuart Burns recently explained.

Faced with financial challenges, the company is mulling its next steps, which include the possible sale of its profitable elevator business.

Evidence of its struggles, the German firm will be booted from the country’s blue-chip stock index, the DAX, later this month. Thyssen, which merged with Krupp in 1999, was a founding member of the DAX.

“For both suppliers and customers of the group, the most worrying development must be the gradual reduction in credit rating,” Burns wrote. “If suppliers cannot insure their debt, they cannot in many instances supply, thus forcing the group to diversify and fragment its supply base.

“The group has survived many trials and tribulations over the decades. It will no doubt survive the current period, but it will be a different, much reduced Thyssenkrupp that emerges in the decade ahead.”

Another giant in the elevator industry, Finland’s Kone, has hired a law firm to advise it during its planned takeover bid of Thyssenkrupp’s elevator business, Reuters reported Monday.

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Actual Metal Prices and Trends

U.S. steel plate rose 2.0% month over month to $797/st as of Sept. 1.

Chinese steel plate fell 5.6% to $577.25/mt. Korean steel plate increased 0.7% to $568.51/mt. Japanese steel plate gained 2.5% to $809.83/mt.

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This morning in metals news, Alcoa announced structural changes to its operating model, Ford Motor Co. was downgraded by Moody’s to junk status and BHP is eyeing a more diversified future.

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Alcoa Announces New Operating Model

Aluminum producer Alcoa this week announced Monday that as of Nov. 1, it will institute a “leaner, more integrated” operating model.

“Alcoa will eliminate its business unit structure and consolidate sales, procurement and other commercial capabilities at an enterprise level,” the company said Monday. “Under the new operating model, the Alcoa Executive Team will also be streamlined from 12 to seven direct reports to the Chief Executive Officer. The new structure will reduce overhead, promote operational and commercial excellence, increase connectivity between the Company’s plants and leadership, ensure a continued focus on safety as our highest priority, and position Alcoa for sustainable profitability.”

Moody’s Downgrades Ford’s Debt Rating

Credit ratings agency Moody’s announced Monday that it had downgraded Detroit automaker Ford’s debt rating to Ba1, or junk status.

“The Ba1 ratings reflect the considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan,” Moody’s said. “The restructuring is expected to extend for several years with $11 billion in charges, and a cash cost of approximately $7 billion. Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers. Moreover, these measures are likely to remain weak through the 2020/2021 period including a lengthy period of negative cash flow from the restructuring programs.”

BHP Prepares for the Future

Trade uncertainty abounds, affecting companies’ strategies going forward.

Miner BHP is looking to “reinvigorate” its portfolio, according to CFO Peter Beaven, as reported by Australian Mining. Among commodities with a particularly positive future, Beaven cited nickel, particularly vis-a-vis its use in electric vehicles.

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“What has also changed is that nickel itself is something that is incredibly important to the world,” Beaven was quoted as saying. “Today, it goes into stainless steel, but in the future all electric vehicles (EV) have batteries and the technology in batteries is changing.”

Zerophoto/Adobe Stock

This morning in metals news, China’s trade activity with respect to aluminum and copper slowed in August, Nucor announced Chairman and CEO John Ferriola will be retiring at the end of the calendar year and residents of an Arizona town expressed staunch opposition to a proposed aluminum recycling plant.

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China’s Aluminum Exports, Copper Imports Fall

China’s imports of copper and exports of aluminum fell in August as the trade war with the U.S. escalated with the most recent exchange of tariffs.

China’s copper imports fell 3.8% in August compared with the previous month, Reuters reported, while aluminum exports fell 4.3% compared with July totals.

Nucor CEO to Retire

Nucor Chairman and CEO John Ferriola will retire at the end of this year, the company reported.

Ferriola has served as chairman since 2014 and CEO since 2013.

Nucor’s Board of Directors elected Leon J. Topalian, 51, to be president and chief operating officer, effective Sept. 5, 2019. Topalian will succeed Ferriola as CEO on Jan. 1, 2020.

Residents Oppose Proposed Arizona Aluminum Recycling Plant

Locals in the Arizona farming town of Wenden have come out in opposition to an aluminum recycling plant proposed for the town, azcentral.com reported.

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According to the report, residents urged officials from the Arizona Department of Environmental Quality not to grant an air-quality permit for the proposed Alliance Metals plant.

Norsk Hydro’s Alunorte refinery. Source: Norsk Hydro

Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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

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No one would argue that Thyssenkrupp has had its fair share of challenges in recent years.

Formed from a merger in 1999 between steelmaking giants, Krupp and Thyssen, a recent Sky News article observed, makes them both older than the country of Germany.

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Krupp was instrumental in the creation of railways in the country that became Germany and pioneered the Bessemer process, the first way of mass producing steel. During the 1900s, it expanded into heavy manufacturing. Both companies contributed to the miracle of German resurgence after World War II.

Once twin jewels in the German industrial crown, the combined company made a string of what proved to be bad investment decisions in Brazil with a major plate mill and in the U.S. with downstream processing operations.

Eventually, Thyssenkrupp managed to extricate itself with considerable losses. However, buoyed by healthy profits from its industrial products divisions — such as elevators, ships and high-speed trains — it struggled on amid growing demands for change.

But after its bid to hive off its steelmaking division into a joint venture with Tata Steel was recently blocked by the European Commission, talk of the group breaking up has again resurfaced, as its bonds are trading at junk status, according to Reuters. Credit cover is being reduced or withdrawn in some markets for parts of its troubled empire.

The group’s shares will this month be relegated from the DAX after more than 30 years of trading on the country’s flagship blue-chip index (Thyssen was one of the founding members).

The group has scant hope it will ever regain its former status as it seeks to sell off its more lucrative divisions to raise cash.

The latest prospect is the elevator division. Even though it may be the smallest of the quartet that makes up two-thirds of the world’s lifts — along with U.S. firm Otis, Swiss group Schindler and Finland’s Kone — Thyssenkrupp is equally well-regarded.

The most likely buyer at present seems to be Kone; the combined business would be the world’s largest elevator manufacturer, making up 28% of the market. The downside, however, would be a source of profitable revenue would be lost to a group that is currently losing €2.7 million a day ($2.9 million) and has net debts of €5 billion ($5.4 billion) – equal to twice the company’s market value, according to Sky News.

For both suppliers and customers of the group, the most worrying development must be the gradual reduction in credit rating. If suppliers cannot insure their debt, they cannot in many instances supply, thus forcing the group to diversify and fragment its supply base.

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The group has survived many trials and tribulations over the decades. It will no doubt survive the current period, but it will be a different, much reduced Thyssenkrupp that emerges in the decade ahead.

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, the U.S. Department of Commerce issued affirmative determinations in its anti-dumping investigation of fabricated structural steel imports, Turkey’s largest industrial group will halt steel production and a U.S. Department of Justice lawsuit poses a roadblock for Novelis‘ bid to buy Aleris.

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U.S. DOC Rules on Fabricated Structural Steel Imports

The Department of Commerce has made affirmative preliminary determinations in its anti-dumping probe of imports of fabricated structural steel from Mexico and China.

The DOC found dumping margins for China and Mexico ranging from 0.00% to 141.38% and 0.00% to 30.58%, respectively.

Meanwhile, the DOC issued a negative determination with respect to imports from Canada.

Turkey’s Largest Industrial Group to Pause Steel Production

According to a report by Ahval, Turkey’s largest industrial group plans to halt steel production due to challenging market conditions.

According to the report, Koç Holding’s Koç Çelik unit will halt production from September until the end of January.

Novelis-Aleris Deal

Novelis‘ planned purchase of Aleris is under scrutiny.

The U.S. Department of Justice filed a lawsuit to prevent the move, citing concerns over potentially higher prices for automotive aluminum sheet.

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The $2.6 billion purchase was initially announced in July 2018.

Aluminum maker Norsk Hydro filed a joint petition — along with its alumina refinery Alunorte, the Pará state environmental agency SEMAS and the Ministerio Publico Federal — asking the Brazilian federal court to lift embargoes on the refinery’s DRS2 bauxite residue deposit area.

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On May 20, 2019, the federal court in Belem lifted production embargoes on the Alunorte alumina refinery, which had been running at half capacity.

However, embargoes first imposed in March 2018 remained in effect with respect to the facility’s new DRS2 deposit area. A return to full capacity at Alunorte cannot take place until the DRS2 embargoes are lifted.

The embargoes were prompted by flooding caused by a heavy rainfall in the city of Barcarena and the surrounding area — including the Alunorte refinery — on Feb. 16-17, 2018. Production at the refinery returned to 50% on Oct. 8, 2018, shortly after the company announced a full curtailment of operations on Oct. 3, 2018.

“This is an important step forward, arising from our ongoing dialogue with the authorities. The DRS2 and press filters is the most sustainable bauxite deposit technology available in the world, and the only long-term solution for Alunorte operations,” said John Thuestad, executive vice president of Hydro’s bauxite and alumina business area.

Hydro said the petition came after “Alunorte, Hydro, Pará state environmental agency SEMAS and Ministerio Publico Federal signed a Memorandum of Understanding establishing an agreement regarding the necessary measures to resume commissioning activities at the new, state-of-art deposit area.”

“As part of the agreement, Alunorte will perform a socioeconomic study on possible impacts of DRS2,” Hydro said. “If the study indicates a need for compensatory measures, such measures shall aim to contribute to sustainable and long-term improvements in potentially affected communities. Moreover, Alunorte is committed to involve Ministerio Publico Federal in the potential necessary updates of the environmental license.”

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While Hydro awaits the lifting of the embargoes on DRS2, it continues to utilize its older DRS1 bauxite residue deposit area to “sustain production at the refinery,” the company said.

Iakov Kalinin/Adobe Stock

This morning in metals news, Tata Steel is closing some of its operations in the U.K., copper is down to a two-year low and the Dow Jones dropped on the heels of the latest round of tariffs going into effect Sept. 1.

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Tata Steel Announces U.K Closures

Tata Steel will close several of its U.K. operations, Reuters reported, with approximately 400 job losses on the line.

Among the closures is Tata’s Orb Electrical Steels plant in South Wales, according to the report.

Copper Slides

The copper price has fallen to its lowest level since mid-2017, Bloomberg reported.

LME copper dropped 1.8% to $5,520 per ton on Tuesday, according to Bloomberg.

Stocks Fall as Latest Tariffs Take Hold

Stock markets were down days after the latest round of tariffs between the U.S. and China went into effect.

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The new duties went into effect Sept. 1. The Dow Jones traded down 1.1% on Tuesday, while the S&P 500 was down 0.7% and the Nasdaq Composite retreated 0.5%, according to CNBC.