Guinea rioters burn down police buildings in mining town, 17 wounded

Date Sep 22 2017 17:10:21 Source:Thomson Reuters

CONAKRY, Sept 21 (Reuters) - Hundreds of rioters in the Guinean bauxite mining town of Boke burned down a police and a gendarmerie building on Thursday and clashed with security forces wielding batons, leaving 17 people injured, the local Red Cross said.

    Guinean authorities managed to avoid the bloodshed of previous days by desisting from using live bullets on the demonstrators in the Boke neighbourhood of Kolabounyi, Guinean Red Cross member Oumar Kalissa told Reuters by telephone.

    Rioting by angry youths - who say bauxite mining has brought constant pollution and noise but no jobs or services like water and electricity - has paralysed Boke for most of the past week.


    Despite decades of mining, Guinea, Africa's top bauxite producer, remains one of the world's least developed countries.

    The mines around Boke produce some 15 million tonnes of aluminium ore for the West African nation's largest mining companies Societe Miniere de Boke (SMB) and Companie Bauxite de Guinee (CBG), but their operations have repeatedly halted in the past week and are currently still blocked by demonstrators.

    CBG is 49 percent owned by the Guinean state and the remainder by Alcoa  AA.N , Rio Tinto Alcan  RIOXXA.UL  and Dadco. SMB is owned by Guinea, China's Winning Shipping Ltd, Shandong Weiqiao  SDWQP.UL  and UMS International Ltd.

    "The Government strongly condemns these acts which are clearly outside law," government spokesman Damantang Albert Camara said in a statement.  

Edited by SHMET

Shanghai, London metals skid on N.Korea tensions, China credit jitters

Date Sep 22 2017 17:10:00 Source:Thomson Reuters

MELBOURNE, Sept 22 (Reuters) - Metals in Shanghai and London tumbled on Friday as investors slashed risk given escalating tensions on the Korean peninsula and ongoing jitters about China debt after a ratings downgrade. 

    "Metals have had quite a rally in the past few months and have done so much faster than fundamentals would suggest they should," said analyst Amy Li of National Australia Bank in Melbourne.

    A combination of factors had led to the sell-off, Li said, among them, rising geo-political tension with North Korea, expectations for a more aggressive interest rate rise cycle in the United States, and to a smaller extent, the ongoing credit concerns in China.

    "I would say this is a pullback from the very, very bullish position we have seen in the past few months."     



    * SHFE: In Shanghai, metals slumped between 1 percent and 6 percent, with the steepest tumble in nickel, which hit limit down as higher trading fees on the Shanghai Futures Exchange (ShFE) came into play. 

    * LME: In London, lead  CMPB3  and nickel  CMNI3  both plunged 4 percent. Investors had surged into metals on prospects of resilient China demand and environmental curbs that have cut into supply. LME zinc  CMZN3  and aluminium  CMAL3  both fell by more than 2 percent.

    * LME COPPER: LME copper  CMCU3  tumbled to its lowest since Aug. 16, touching $6,366 a tonne, before trimming losses to $6,409, as of 0740 GMT.

    * SHFE COPPER: The most-active ShFE copper  SCFcv1  futures slid 1.5 percent to 49,630 yuan ($7,532) a tonne.

    * CONFUSION: "Not sure why so aggressive a move, guess the U.S. sanctions, delayed reaction in metals to FOMC," said one trader in Hong Kong. "Confused markets I have to say, and on top of that trying to get out of risk when its all one way only exacerbates the move and creates deeper moves in ever decreasing liquidity."

    * N. KOREA: China called on all parties on Friday to exercise restraint after North Korea's foreign minister was quoted as saying he believes the North could consider conducting a hydrogen bomb test in the Pacific Ocean. 

    * CHINA CREDIT: S&P Global Ratings downgraded China's long-term sovereign credit rating on Thursday, less than a month ahead of one of the country's most sensitive political gatherings, citing increasing risks from its rapid build-up of debt. 

    * CHINA FACTORIES: Thousands of small factories in China, making everything from steel to chemicals, are scrambling for access to the country's clogged rail network as Beijing curbs the use of diesel trucks in an effort to tackle air pollution.

    * MACQUARIE: Australia's Macquarie Group Ltd  MQG.AX  has overtaken Goldman Sachs to break into the top three banks for commodities business, having significantly expanded its U.S. energy operations in recent years while rivals cut back. 

Edited by SHMET

Brazil's Votorantim Metais files for New York, Toronto IPO

Date Sep 22 2017 17:09:34 Source:Thomson Reuters

SAO PAULO/TORONTO, Sept 21 (Reuters) - Brazil-based mining company Votorantim Metais Holding SA filed on Thursday for an initial public offering in New York and Toronto, to tap into a wide base of investors betting on a long-term recovery in zinc, copper, lead and silver prices. 

    Parent holding company Votorantim SA, Brazil's largest diversified industrial group, is selling an undisclosed stake in the cross-border listing of VM Holding SA, according to a filing with the U.S. Securities and Exchange Commission. VM Holding will be renamed as Nexa Resources SA and be domiciled in Luxembourg, the filing said.

    Other terms of the IPO, including size or a suggested price tag range, were not unveiled in the filing.

    Reuters first reported the plan on April 10, and said on July 12 that the base metals producer - which mines for zinc, copper and lead in Brazil and Peru - was planning a $750 million offering valuing the company at $4 billion.

    People familiar with the transaction told Reuters at the time that parent holding company Votorantim will use proceeds from the miner known as VMH to invest in other, high-return business areas. The IPO could take place between September and December, the people said at the time.

    The IPO should help Votorantim Chief Executive Officer João Miranda, who has spearheaded rapid growth in VMH despite volatility in metal prices, to cut the group's debt of about 15 billion reais ($4.8 billion).  

    Votorantim and VMH hired the investment-banking units of JPMorgan Chase & Co  JPM.N , Morgan Stanley  MS.N , Credit Suisse Group AG  CSGN.S , BMO Financial Group, Bank of America Corp  BAC.N , Citigroup Inc  C.N , Bank of Nova Scotia  BNS.TO , Banco Bradesco SA  BBDC4.SA  and Credicorp Ltd  BAP.LM . 

    With a presence in Brazil and Peru, where it holds a majority stake in Cia Minera Milpo SA  MIL.LM , VMH operates five industrial compounds in Brazil's state of Minas Gerais, and in Cajamarquilla in Peru. VMH also has sales offices in Houston and Luxembourg.  

Edited by SHMET

The graphite fix: Inside China's newest commodity addiction

Date Sep 21 2017 17:04:36 Source:Thomson Reuters

MANILA/BEIJING, Sept 21 (Reuters) - China's aggressive environmental protection campaign has tightened supplies of graphite electrodes used in steelmaking, boosting the fortunes of big producers like Fangda Carbon as mills search far and wide for a material now in short supply.

    Beijing's campaign for clearer skies has closed thousands of mills and mines producing low-quality steel and coal, and makers of electrodes, particularly those near big cities, have not been spared.

    Graphite electrodes are used to melt scrap in electric arc furnaces to produce new steel. Their main ingredient is high-value needle coke - named because of its shape - which is made from either petroleum or coal tar.

    As China tightened the screws on polluting industrial plants, about 30 percent of its graphite electrode production capacity has been shut and some provinces have restricted output, said Dawn Brooks, a consultant at CRU.

    "It's just a fairly polluting industry, so factories near large urban areas were the ones to get hit by the environmental restrictions," Brooks told Reuters.

    But it's boom time for major players who have survived, including Fangda Carbon New Material  600516.SS , China's biggest producer of graphite electrodes. 

    The company is the best performing stock on the Shanghai Stock Exchange with a 263 percent year-to-date gain, while its first-half net profit surged to 412 million yuan ($63 million) from just 15 million yuan a year ago. Analysts expect its July earnings alone to trump that figure as graphite electrode prices explode.

    Prices have soared nearly ninefold to 107,250 yuan ($16,330) a tonne in China  AM-HPC-GLEC  this year amid a shortage of needle coke that has tightened availability elsewhere. Globally, spot prices for graphite electrodes have jumped by even more to about $35,000 per tonne as Chinese shipments dried up. 

    "We cannot handle all enquiries due to the supply shortage," said a major Asian producer of graphite electrode that sells to South Korea, Japan, the United States and Europe. "There are huge inquiries but we cannot even set a price because we don't have the electrode to sell."

    As the main heating element in an electric arc furnace (EAF), it takes 2-3 kg of graphite electrodes to produce one tonne of steel. Producers say it takes up to six months to make these electrodes.    

    Steelmakers typically buy graphite electrodes on yearly contracts, but now suppliers are only quoting prices for six months, the Asian producer said. "With prices rising, nobody wants to commit to today's prices for a year," he said. 

    In China, nearly 300,000 tonnes of graphite electrode manufacturing capacity has been shuttered since the second half of 2016 due to environmental concerns, CRU's Brooks said in a report.

    That's almost 30 percent of China's total capacity, she said, adding that Henan and Shandong provinces have restricted graphite electrode production by 20 percent.

    The closure of cheaper but more polluting induction furnaces in June had pushed many Chinese to move toward EAFs, but the limited supply of graphite electrode has stalled those plans.




    Apart from graphite electrodes, needle coke is used to make lithium-ion batteries, used in phones and electric cars, further tightening availability for the steel sector. Petroleum coke, of which needle coke is a variety, is also widely used in the aluminium industry to manufacture the cathodes that are key to the smelting process.

    Needle coke production is limited to a few suppliers, the biggest being U.S. oil major ConocoPhillips  COP.N  and Japan's C-Chem Co Ltd. Most refineries don't produce needle coke because it takes longer to make than more traditional forms of petroleum coke, analysts say.

    In China, where most needle coke is made from metallurgical coke, stricter environmental rules have closed a lot of factories, said an official from CNPC Jinzhou Petrochemical, a major Chinese needle coke producer. 

    CNPC Jinzhou has no plans to expand production, he added. Fangda, which has its own needle coke plant with an annual capacity of 60,000 tonnes, did not respond to requests for comment.

    The supply-side crackdown is "affecting the whole supply chain - with raw materials suppliers unable to meet demand from electrode manufacturers, and with steel mills around the world concerned that they will run out of replacement electrodes by the end of the year," said Brooks.

    "We hear that there is currently a year-long waiting period for electrodes from manufacturers."

    Top Philippine steelmaker Steel Asia Manufacturing Corp, which runs a 500,000-tonne EAF and buys high-grade graphite electrodes from Japan is finding it tougher to secure material. The company was looking at purchasing from China. 

    "Price are rising so it's difficult to source," said Steel Asia vice president Roberto Cola, adding that the company normally has three to four months inventory of the electrodes. 

    The shortage is also being felt in Europe, where around 226,000 tonnes of graphite electrodes are consumed annually by the European Union. More than 60 percent of smaller electrodes come from China.

    "With Chinese supplies of needle coke and graphite out of the market, there is a clear shortage of both materials," Axel Eggert, director general of the European Steel Association, said in a statement on Monday. 


Edited by SHMET

China's copper smelters hike TC/RCs ahead of 2018

Date Sep 21 2017 17:03:48 Source:Thomson Reuters

BEIJING, Sept 21 (Reuters) - China's top copper smelters have hiked the floor for fourth-quarter treatment and refining charges (TC/RCs) by as much as 10 percent, more than most traders had expected, in a sign of growing confidence about supplies ahead of 2018 contract talks.

    The China Smelters Purchase Team (CSPT) set the minimum level for treatment fees at $95 per tonne and for refining charges at 9.5 cents per pound, at their latest meeting in Shanghai on Thursday, two sources close to the team said.    

    That marks a steep 10.5 percent hike in the fees that smelters charge to turn concentrate into refined metal from the third-quarter rates of $86 per tonne and 8.6 cents per pound, and is the highest level since the fourth quarter of 2016.


    The increase by the 10-member group, which reflects greater copper concentrate supply in China, also pushes the TC/RCs above the 2017 annual benchmarks of $92.50 per tonne and 9.2 cents per pound.

    Daniel Meng, head of China materials research at CLSA in Hong Kong, described the TC/RCs as a "very good result" for the smelters and said he had not expected such high rates as supply and demand were broadly seen as balanced.

    Traders said it could be an attempt to give the CSPT, whose members include major smelters such as Jiangxi Copper Co  600362.SS , Jinchuan Group  JCGRP.UL  and Tongling Nonferrous Metals Group  000630.SZ , more bargaining power as negotiations for 2018 contracts with miners get underway this autumn.

    Those talks will kick off in late October as the global metals market gathers in London for the annual London Metal Exchange dinner and will determine the prices paid on annual contracts.

    Miners, smelters and traders often use a combination of the annual benchmark, quarterly benchmarks and spot prices when agreeing TC/RCs.   

    "Currently, the market is very supportive" for TC/RCs at this level, said one of the sources close to the team, adding that some people present in the meeting thought the charges should have been even higher. 

    Member companies would have low demand for concentrate in the fourth quarter, the source added. 

    A trader who supplies copper concentrate to CSPT members described the TC/RCs as very high. He had expected the TC figure to be $88 per tonne, in line with the current spot market.

    "Spot may be temporarily high due to a number of major smelters turnaround in China and Japan, but  the  market is going be very tight for next year," a senior mining executive said after the decision.

    High copper prices in the third quarter have boosted miners' margins. Three-month copper on the London Metal Exchange  CMCu3  was down 1.1 percent at $6,454.50 per tonne at 0516 GMT on Thursday, having eased from a three-year high above $6,900 per tonne on Sept. 4. 


Edited by SHMET