12 / 12 / 09 We can't afford to ignore our coal resources AS world leaders gather in Copenhagen for the climate change summit, the UK delegation sho..
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22 / 06 / 09 Anglo stresses early-stage nature of Xstrata 'proposal' The board of diversified mining group Anglo American confirmed on Sunday that it had indee..
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14 / 04 / 09 China economy shows signs of recovery China's economy is showing signs of a nascent recovery, but even officials who want to boo..
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02 / 01 / 09 China turns screws on iron ore giants JUST days into the new year the signs from China for our battered big miners are ominous.
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21 / 10 / 08 in
Atlas and iron miners watch China slowdown
ATLAS Iron has joined a growing chorus of emerging iron ore miners reviewing operations amid the demand slowdown from China.
The Perth-based miner said falling demand for iron ore had led to a review of mining schedules, as well as demand forecasts for the short and medium terms.
"Given the current volatility in the iron ore market, Atlas has now rescheduled mining operations to optimise grade and contaminants to ensure that the Pardoo product remains competitive," managing director David Flanagan said.
Read the rest of this entry
20 / 12 / 07 in
Happy Holidays
We would like to thank you all for continuing to support our efforts and web site in 2007, and wish you all a very happy holidays, and prosperous new year.
We will resume posting news and views in January.
Best regards,
Anthony Robinson
MD, BiField Business Resources, Ltd.
23 / 07 / 07 in
Bridging Divide Between South Africa and China
BiField Business Resources, Ltd. has entered discussions with the largest construction materials manufacturer in China to be its sole sales and communication channel for the sale of Chinese-made cement into Southern Africa. The Chinese supplier can also sell clinker if the Southern African market demands it.
Reasons cited for the proposed arrangement are communication issues between the Chinese supplier and South African buyers.
BiField has strong and long-standing relationships with Southern African buyers and suppliers of a variety of mining products, and has partners and associates on the ground in the African region.
The arrangement could be finalised as soon as late August 2007, said Ms. Chloe Ding, Business Coordinator for BiField.
BiField is currently involved in deals that will see the importation to China of Zinc, Chrome ore and Iron ore from South Africa and neighbouring countries, and is also very committed to assisting Africa and China to strengthen business and social ties.
22 / 05 / 07 in
Major ore exports to China secured
In line with expectatioins, virtually every trader and steel mill we have spoken to in the past week is looking for long term supply of about 2 years at least, with price adjustments every 6 to 12 months.
BiField has finally secured 2 contracts and are working towards securing the financing from our buyers. Watch this space.
The testing market in South Africa is once again proviing to be bottle neck as we await assay reports for two zinc contracts, and a potential 2nd chrome ore supplier. We have secured chrome and await the payment structures to be put in place with our partners.
Unbelievable as it is, the slow pace of South African business can work in one's favour as buyers who cannot wait seek supply elsewhere, freeing up supplies for our buyers.
The prices of these commodities just keep rising as iron ore of Fe content 64% or better is close to 100$ US at present.
Iron Ore
OneSteel Limited managing director and chief executive officer Geoff Plummer has announced the signing of a 10-year export iron ore sales agreement involving in excess of six million tonnes of iron ore with Rizhao Steel, based in China's Shandong Province.
The sales agreement is the first long-term contract to be signed for the iron ore exports that have been made available through Project Magnet, OneSteel's $385 million investment in commercialising its magnetite iron ore resources in South Australia's South Middleback Ranges.
This contract will see OneSteel sell approximately 40 million tonnes of hematite lump and fines over a 10-year period.
"The signing of this contract represents another significant milestone for Project Magnet following the recent loading of the first Cape-size vessel at Whyalla," Mr Plummer said.
"We welcome Rizhao Steel as a valued long-term customer and commend BHP Billiton's expertise as OneSteel's export ore marketing agent in finding quality buyers for OneSteel's iron ore exports."
The agreement begins on July 1, 2007, based on current international benchmark pricing and utilising Whyalla's newly- commissioned Cape-size vessel capability.
"What this means is that of the 40-odd million tonnes that we have for sale, six million to 6.5 million of that is under contract over a 10-year period," OneSteel Limited corporate development general manager Mark Gell said.
"What that does is it helps underwrite the security of that sale."
Mr Gell said OneSteel expects top have 80 per cent of the ore under contract, with 20 per cent left for on the spot sales.
On spot sales have been carried out in China over the past 12 months prior to the securing of the contract, with Rizhao Steel determining the quality of the product before committing.
The sales agreement between OneSteel and Rizhao includes a freight component for mutually agreed forward periods.
OneSteel will arrange and provide shipping.
Mr Gell said the contract with Rizhao Steel would see approximately four cape size vessels in the Spencer Gulf per year to carry out the shipment of the ore.
OneSteel will announce details of further export iron ore contracts as they are signed, Mr Gell said.
OneSteel were expecting more contracts to be secured in the future, with further announcements in the near future.
08 / 05 / 07 in
From Holidays come Zinc and Iron Ore
China has just returned to work after the lengthy 7-day holiday that is the Golden Week celebration which began May 1st.
We at BiField have rested and are ready to take advantage of the offers made to us over the holiday period.
The iron ore samples have been passed to the buyers and they are assessing the size and content. So far so good. But with prices fluctuating as they are, we are anxious to lock in a workable 12-month price.
The surprise came when Zambian Zinc Ore was offered to us at the 15-month discounted LME price (http://www.lme.com/zinc.asp). Watch this space.
Chrome is finalised. Now the logisitical issues that haunt South African exports must be overcome. We do anticipate having all of that worked out by next week.
Iron Ore:
Sinosteel to set up $4b plant
Sinosteel Corp, a Chinese mineral trading company, plans to spend $4 billion to build a steel plant in India, joining global steelmakers in tapping the world's fifth-biggest iron ore deposits.
Sinosteel will initially invest $500 million in the planned 5-million-ton plant in Jharkhand, the company's India Managing Director Wang Hongsen said. The total investment, the biggest in India by a Chinese company, will be made over eight years, he said.
Delays in allocating land and mining permits have held up projects amounting to $21 billion in India by Arcelor Mittal and South Korea's Posco. Sinosteel is betting its 16-year-old relationship with India may help it secure approvals faster than rivals.
"We are confident that there will be enough iron ore to support our plant," Wang said. "We have had very good relations with many sellers in India for many years."
Sinosteel has been buying Indian ore since at least 1991.
Arcelor Mittal CEO Lakshmi Mittal last month said progress was slow in the company's proposed Indian mills. In December, Mittal had agreed to build a $9-billion plant in the eastern Indian state of Orissa, after initially announcing a $9-billion, 12-million-ton-a-year plant in Jharkhand state in October 2005.
Posco, the world's fourth-biggest steelmaker, is yet to get all the land required for its $12-billion plant in Orissa because of opposition from some political parties and farmers' groups. Construction work on the project, talks for which began in August 2004, was to begin last month.
But steelmakers aren't deterred by such delays as demand in Asia is growing faster than in Europe and North America. Steel usage in India is forecast to rise 7.7 percent a year from 2010 to 2015, almost twice the 4.2 percent global rate in the same period, according to the International Iron & Steel Institute.
"Foreign companies investing in India are willing to put up with some delays as long-term benefits of such investments will far outweigh such irritants," said Dipak Acharya, who manages about $19 million at BOB Asset Management in Mumbai.
Sinosteel may next month sign an accord for the project with the Jharkhand state government, Wang said. It expects to get rights to mine 300 million tons of ore for 30 years.
"It's clear that there is a market here to be tapped," Wang said. Sinosteel will sell as much as 70 percent of its production in India, he said.
The eastern states of Jharkhand, Orissa and Chhattisgarh account for 70 percent of India's coal reserves and 55 percent of its iron ore, according to McKinsey & Co.
16 / 04 / 07 in
Chrome Prices Up - Copper Volatility and China Iron Ore
This week:
Copper
With the recent increase (and subsequent decline) in copper prices, the punters have come out again, offering supplies many know they cannot secure. The same thing happenned last year when the price of copper rallied to abover the USD 8,000 per metric tonne mark. And many people scrambled to get allocations of non-LME registered copper for the China market. Needless to say, 95% of that copper was never delivered. We are keeping an eye on those promising non-LME registered copper for China. Bloomberg asserts that over supply will drive the price down, however, for LME registered supplies.
Chrome
Chrome too has had a rally recently as South Africa insists on processing the product before shipping to China - to "add value". Not surprisingly, much of that price increase is from shipping companies taking advantage of the situation.
The allocations of chrome we have secured are smaller now, but the China steel market needs it, and is going along with the price increases... for now.
China has 59b tons of proven iron ore reserves
The day is fast approaching when China will significantly curb its imports of iron ore as local reserves are proving to be a perfect alternative to expensive imports.
The proven iron ore reserves in China are 59.39 billion tons, according to the Ministry of Land and Resources.
The iron content of the reserves is 30 to 35 percent on average and 41.5 billion tons among the total reserves is magnetite, the ministry said in a statement posted on its Web site.
It noted that China has proven copper reserves of 85.31 million tons, located mainly in Tibet, the middle and lower reaches of Yangtze River, the southeast coastal areas and the eastern part of China's Northeast.
The proven reserves of bauxite, the raw material to make aluminum, stand at 2.66 billion tons, according to the statement. It added that more than 90 percent of the reserves are located in Shanxi, Guangxi, Henan and Guizhou.
02 / 04 / 07 in
Yes for South Africa iron ore corridor
South Africa has approved an expansion of a key iron ore export corridor to its western coast, dismissing opposition by environment groups, the government has said.
The expansion by state-owned logistics group Transnet Ltd will entail increasing the handling capacity of the bulk terminal at Saldanha Bay from the current 38 million tonnes a year to 45 million tonnes.
Environment and Tourism Minister Marthinus van Schalkwyk said in a statement he was satisfied that environmental risks raised in an objection could be "successfully mitigated".
The 861km railway line between Sishen and the port of Saldanha is one of South Africa's premier routes for the export of iron ore. The bulk of it is exported by Africa's biggest iron ore producer, Kumba Iron Ore, mostly to China.
Transnet said last year it would inject R64.5bn over five years to upgrade infrastructure in its various units.
The new supplies of iron ore coming online prefer to use Richards Bay because of its proximity to mines in Northern Cape province, and elsewhere near eastern South Africa - and carries some elements of prestige we at BiField have yet to fully comprehend.
However, if it means our allotments will be shipped faster, we are all for it.
Meanwhile:
SA private companies gear up for competition in 2007
Excellent customer service delivery, product or service range expansion and increased marketing efforts are South African private companies’ top growth and expansion strategies for 2007.
Large and medium-sized companies are gearing up for an improved competitive performance. This will be done through targeting customers; developing employee skills; retaining qualified staff, reducing operational costs; growth and expansion and investing in research & development (R&D).
The key performance measure is customer satisfaction, which is considered more important than profitability, market share and turnover.
These are some of the key findings of the PriceWaterhouseCoopers (PwC) Private Company Business Insights Survey 2006 conducted by independent research firm Ask Africa.
PwC’s survey offers invaluable insight into the strategies and views of a large segment of the local economy. Since private companies are not required by law to announce their results publicly, little is known about the operational issues they grapple with on a daily basis.
More than 700 well-established, private companies operating in the commercial, financial services and industrial sectors participated in the survey of which nearly a third have turnovers exceeding R100 million.
According to PwC, business leaders say their key competitive strength is their company’s product and/or service offering (40%), good stakeholder relations (10%) and cost effectiveness (7%). Interestingly, only 3% of survey participants see their marketing strategies as a competitive strength.
Though product or service range expansion is a top priority, most participants attributed 10% or less of revenue generated in 2005 to the sale of new products and services, the survey revealed.
In addition, the majority of companies surveyed spent 2% or less of their annual turnover on research and development (R&D) in the last 12 months.
Leaders are optimistic about doing business in SA
PwC said most business leaders are optimistic about doing business in South Africa over the next few years.
The survey results are closely linked to a number of key macro-economic indicators.
Most private companies are confident about outperforming the SA government’s medium-term growth target of 6% per annum.
A third of PwC’s survey participants expect growth of between 11% and 20%. Another third forecast growth in the region of 5% and 10%.
“The majority of survey participants expect to increase their market share, which indicates strong growth in demand,” said PwC economist Dr. Roelof Botha.
Private companies’ confidence “reflects the general mood of growth and optimism throughout the country and their perceptions of improved market share support the signs of an expanding economy,” he added.
Done properly, BEE could be a valuable expansion vehicle
Survey participants see government regulation and specifically BEE as major threats.
However, PwC said envisaged expansion and growth opportunities could be unlocked by the overwhelming need for “black” and “empowered” goods and services.
Business leaders could be looking towards BEE as a way of achieving their envisaged expansion objectives.
“If done properly, BEE may well provide companies with opportunities to expand product and service ranges, as well as enhance their marketability,” PwC said.
Private companies consider active participation; financial independency; strength of character; the application of managerial skills, expertise, experience and qualifications are the top BEE partner criteria, the survey revealed.
Joint ventures and partnerships are less popular BEE strategies. The majority of companies favour employee equity deals.
“This creates the opportunity for real broad-based transactions where the economic benefits can flow through to those who have the capacity to make a true contribution to the South African economy,” said PwC.
Investing in core and managerial skills development is crucial
“Empowering employees creates the opportunity for blue-collar workers to become future managers.”
However, PwC pointed out this could only happen if proper training takes place. This highlights the importance of spending money on the development of core and managerial skills.
“Real sustainable growth should be underpinned by a clear and concise strategy,” PwC Private Company Services national leader, Andries Brink said.
“The execution of such a strategy will depend on the ability of business leaders to spot opportunities in the marketplace and to capitalise on their available resources.”
Training and education is a major focus area. Private companies are prepared to pay a premium for improvements in staff productivity. However, 45% of participants spent less than 2% of their annual turnover on training the survey revealed.
The survey also found that although business leaders are focused on improving productivity, they plan to cut operating costs by reducing wages and headcounts.
Survey highlights top threats
Despite a generally optimistic business outlook, PwC said the top threats facing private companies include:
• Increased government regulation
• Black economic empowerment (BEE)
• The value of the rand; a shortage of skilled labour
• Increased operating costs
• Increased raw material and commodity prices
• Increased competition.
• According to the survey, the top five issues affecting private companies are:
• The recruitment of skilled staff
• Government policy and legislation
• Exports and problems in foreign markets
• Competition and discounting
• Raw materials and commodity prices.
PwC said business leaders expected the same issues to affect their businesses in 2007.
Though business leaders have a more positive outlook in terms of their competitive position, they believe the availability and cost of raw materials may have a greater negative impact on their businesses in the next 12 months.
Both senior government officials and business leaders acknowledge that the country’s regulatory environment often acts as a barrier to starting a business and creating jobs in the SMME sector.
“However, government has promised through Asgisa (Accelerated and Shared Growth Initiative for South Africa), to remove such obstacles to facilitate higher economic growth.” Asgisa’s objective is to dramatically reduce the level of unemployment, poverty and inequality by accelerating the economic growth rate to 6% beyond 2010.
Private companies contribute significantly to formal sector job creation. Government should, ideally, consider these entities’ experiences in the future formulation of economic policy, Botha said.
Doing business in SA comes at a price
Private companies are experiencing significant cost pressures. This suggests “the economy may be exposed to a cost/price spiral that will lead to the continuation of strict monetary policy for some time to come,” PwC said.
SA has a chance of achieving the 6% GDP (gross domestic product) per annum growth target before 2010, if the country’s monetary policy becomes less strict, Botha noted. “Keeping the prime lending rate at 5% would guarantee this,” he added.
Eighty percent of survey participants believe the cost of operating their business has increased of which 24% say it has increased a great deal.
Labour and transport are seen as the two major areas where operating costs have increased significantly.
Since the beginning of the year, high levels of consumer demand, combined with seasonal food shortages, a depreciating rand and high oil price have resulted in higher inflation. These triggered three successive increases of half a percentage point each in the prime overdraft rate.
Private companies mainly source working capital from short-term and medium-term credit facilities. “This will unfortunately aggravate cost-push pressures in the economy.”
Seventy-six percent of respondents use bank overdraft facilities to finance their businesses.
This is in line with the findings of the Global entrepreneurship Monitor’s global study of entrepreneurship report, released early last year. For every new venture funded through classic venture capital, more than 10 000 are self-financed by entrepreneurs.
The survey identified the cost of finance as a significant private company cost structure element.
“The average cost of finance amounts to 6.3% of turnover. This figure is likely to increase under the current monetary policy regime of higher interest rates,” PwC said.
Fifteen percent of survey participants attribute more than 10% of their annual turnover on costs attributed to the cost of capital.
Those who pay high premiums in terms of cost of finance as a percentage of turn over, literally have their backs to the walls, when interest rates go up. This makes it more difficult for people to do business in SA.
• This is an adapted version of an article which first appeared in Business Day’s Management Review in January 2007. It was then published by the University of Pretoria’s Gordon Institute of Business Science; www.gibsreview.co.za.
19 / 03 / 07 in
South Africa: The Promise Land
My Colleague and I just completed a two-week trip to South Africa's Johannesburg. And while the country is rich in mineral resources, its legacy is equally rich as most people there spend a great deal of time addressing the past. Everyone has some story.
The present day is couched in the ability to get things done - and through the long talk, everyone has a promise to make; it could be for an introduction, a product, or just a time to meet. It is "The Promise Land". Need I mention that most of it nothing other than talk? Read the rest of this entry
04 / 01 / 07 in
Unhappy 2007 Internet Disruption
Earthquakes in Taiwan have seriously disrupted internet and telecom traffic between east Asia and North America.
BiField too is affected and so we will not be updating our unique news items until the 8th of January when news on China/South Africa cooperation in mineral exploitation and Chrome Ore trading will be featured.
We hope your holidays were restful and enjoyable.
See you again next week.
Anthony Robinson
MD, BiField Business Resources, Ltd.
18 / 12 / 06 in
Season's Greetings
We at BiField Business Resources, Ltd. would like to thank you for your continued support as we worked our way through 2006 and on towards 2007.
Our site will be complete by the end of January 2007, and we will keep you up to date on all the other changes which will take place in the new year.
For now, we anticipate moving into new offices in the first quarter and establishing a physical presence in South Africa.
All very exciting developments.
Once again, we look forward to your patronage in the new year. We will resume posting our China related news and views in the first week of the new year.
Top of the season to one and all.
Anthony Robinson
MD, BiField Business Resources, Ltd.
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