Vale Reports Annual Production Records in Copper, Gold, and Highest In Nickel Output

Vale S.A. (Vale) achieved several production records, and also reduced capital expenditures by another $2.254 billion in 2014, the company said in its performance report. 

In 2014, its output of iron ore , copper and gold was 331.6 million tonnes, 379,700 tonnes and 321,000 oz, respectively, all annual production records. 

Over the year, the company also reported the highest annual production in nickel since 2008, producing 275,000 tonnes, according to its report.  

The company also registered record sales volumes of iron ore and pellets (313.6 million tonnes) and gold (351,000 oz), and the highest sales volume of nickel (272,000 tonnes) since 2008, it noted. 

In 2014, the company also completed eight capital projects, negotiated a key partnership for our coal operation in Mozambique and still paid $ 4.2 billion in dividends while preserving a healthy capital structure.

Japan's Mitsui cuts zinc premiums for 1st time in 6 yrs as China exports rise

(Reuters) - Japan's biggest zinc smelter, Mitsui Mining and Smelting Co Ltd , has slashed its annual premiums to overseas buyers for 2015 by around 10 percent, marking the first cut in six years as rising exports by top user China spill into the region.

Premiums are a surcharge paid to producers on top of futures prices to obtain metal.

"Overall premiums for zinc for overseas buyers, mainly Southeast Asian buyers, for this year have been settled at about 10-percent lower than last year," said Sumikazu Ogata, investor and public relations manager at Mitsui Mining.

He added that the step had been driven by growing exports from China in the wake of a metals financing scandal in the port of Qingdao.

"We think China stepped up exports as some companies wanted to cash their inventories after the Qingdao problem," he said on Monday.

Last year's Qingdao metals financing scandal has squeezed access to credit for metals players in the region as banks have tightened lending terms, which sent zinc premiums to two-year lows in December. 

Mitsui Mining, which plans to produce 223,000 tonnes of zinc in the year ending March 31, typically holds talks on annual premiums which are added to the cost of London Metal Exchange

(LME) cash prices and include shipping and insurance costs.

This year's discussions with overseas buyers are nearly finished, Ogata said.

He did not give specific premium levels for this year, but two traders quoted Japanese producer zinc premiums for 2015 at $170-185 per tonne on a cost insurance and freight (CIF) basis, depending on the Asian port.

China, the world's biggest zinc consumer and a net importer of zinc, has exported 131,369 tonnes of zinc in 2014, up from 3,406 tonnes in 2013, according to the country's customs data

London Metal Exchange aims to double cuts to warehouse logjams

* To launch new aluminium premium, ferrous contracts in Oct

* New proposals could cut queues twice as fast
* Opens door to capping, banning rents in warehouse queues

(Reuters) - The London Metal Exchange (LME) announced new rules and proposals on Monday aimed at slashing delivery backlogs at its global network of warehouses twice as quickly as under current reforms.

The move is part of a wide-ranging reform drive sparked by consumer complaints about long delays to obtain aluminium from storage and lawsuits accusing banks and commodity companies of conspiring to restrict supply through the warehouse network.

The LME, the world's oldest and biggest market for industrial metals, also said in a statement it planned to launch new contracts for aluminium premiums and ferrous products on Oct. 26.

The LME launched consultations last November on a second layer of rules governing physical delivery and on Monday it requested even more feedback on further measures.

The exchange asked members for their opinion on proposals that would force warehouses to reduce queues faster.

The 137-year old LME won a major court battle in October, giving it the green light to implement its initial set of regulations on Feb. 1 aimed at cutting delivery queues to a maximum of 50 days from up to two years at some depots. 

On Monday it said was now responding to complaints that under the current reform it may take as long as four years to cut backlogs at the worst affected site -- the Dutch port of Vlissingen.

Under the new tougher rules, it would take a maximum of 2.3 years to reduce queues to 50 days, Matt Chamberlain, LME head of business development, told a news conference.

"So in this example, the rate at which queues will fall would double -- the queues would last half as long."

NEW CONTRACT DELAY

The exchange, owned by Hong Kong Exchanges and Clearing Ltd , also set a firm October date for the launch of three new contracts: aluminium premiums, steel scrap and steel rebar.

The aluminium premium contract, which allows people to hedge additional surcharges for buying metal for immediate delivery, has been delayed from a second quarter launch.

This was because the LME first wanted to conclude any further warehouse reforms, which could have had an impact on premiums, Chamberlain said.

The exchange also released a discussion paper on the possibility of capping or banning rents in queues.

Buyers of metals have complained about having to pay high rent during the months that metals were stuck in backlogs waiting to be delivered from warehouses.

Previously the LME has rejected the idea of setting rent levels at warehouses, saying it had legal advice that it might fall foul of competition law.

The exchange published a detailed set of new rules on Monday to take effect on June 1, one of which will require warehouse firms to report anonymously incentives paid to metal owners so it can determine whether those payments were market distorting.

Chile copper production surged 13% in January

The copper output by Chile rose significantly during the month of January this year. This is when compared with the same month a year ago. According to latest statistics released by the National Statistics Institute (INE), the country’s copper production during the month totaled 524,296 mt. This is 13% higher when compared with the output of 463,321 mt in the same month last year. When compared with Dec ’14, the copper production levels during Jan ’14 held steady.

 

The country’s industrial production registered a growth of 5.8% during the month, on account of robust 10.1% yearly growth in mining. The mining sector growth was led by 13% rise in copper output during the month.

 

According to the government, the higher copper output is mainly on account of increased output from a major mine which had operated below capacities in 2014. In addition, a number of processing plants had undergone temporary maintenance shutdowns during January last year, which led to rise in output during January this year. The higher ore grade output at another key mine also contributed to rise in copper production during the month.

 

The output from large mines was up by 12.2% year-on-year. The medium-sized mines boosted their output by 55.5% during the month. On the other hand, production from small mines continued to struggle, falling by 7.4% over the year.

 

Rising electricity costs and extreme drought conditions are feared to impact copper production by Chile, which accounts for over one-third of the global copper output.

UBS wealth management raises 12-month copper forecast on mine supply challenges

(Reuters) - The wealth management arm of Swiss investment bank UBS has boosted its 12-month copper forecast to $6,700 a tonne from $5,500 on growing challenges to mine supply.

 

"Mine supply challenges from various directions are likely to reverse the copper price decline in recent months. We raise our 12-month forecast to $6,700/mt from $5,500/mt," it said in a note dated Feb. 27.

 

UBS Wealth management is an independent unit of the bank, which creates its own forecasts. UBS cut its copper price target for 2015 to $2.65 a pound ($5,842 a tonne) in mid February due to a deterioration in short-term fundamentals. 

Some simple trading strategies

No respite on transaction costs nor on taxes (STT or CTT)

While the Corporate India may have many reasons to celebrate – from lower rate of taxation to direct and indirect measures to support Make in India, stock brokers have got a raw deal in this Union Budget presented by finance Minister Arun Jaitley. 

Brokers were expecting some respite on security transaction tax, commodity transaction tax to cut down on the transaction tax. The logic was lower STT or CTT will lead to lower transaction costs and more investors and traders will participate in the stock and commodities market. This demand did not fructify. 

Brokers also did not get any favourable response on their prayer of reducing short term capital gain, which is charged at 15.45% on gains on equity investments held for less than one year. 

Brokers have to pay service tax on the brokerage charged to the client. This further inflates the transaction costs for the end traders and investors. Brokers demanded a cut in rate of service tax from extant 12.36%. In line with overall increase in service tax to 14%, brokers have to collect more from their clients, resulting into higher transaction costs.

Brokers were demanding lower transaction taxes and lower capital gains tax.