Commodity Briefing

Chinese gold output up 33%

China produced 46.8 tonnes of gold inthe first four months of 1998, up 33.7 per cent year-on-year, the China Gold newspaper said last week.

Rio Tinto frets over Nippon-Posco ties

Iron ore giant Rio Tinto has expressed concern about a proposed alliance between the world’s two biggest steel-makers, Nippon Steel and Pohang Iron and Steel Co (Posco). Rio Tinto chief executive Leon Davis said that a marriage between Japan’s Nippon and South Korea’s Posco could lessen competition for iron ore. "That would be of concern, I imagine because that would lessen competition for iron ore." he said. Posco, the world’s second largest steel-maker, said that it might seek an equity swap with number one . A Posco spokesman quoted chairman Yoo Sang-boo as saying an equity swap was a good way to fend off hostile takeover bids. "Something should be done to protect managerial rights from corporate raiders when Posco is privatised," chairman Yoo was quoted as saying. The spokesman said negotiations with Nippon Steel would begin after the South Koreangovernment drew up a final privatisation plan for Posco, expected by the end of June.

SEC may register Norilsk

Russia’s leading metals and mining concern Norilsk Nickel said last week that the US Securities and Exchange Commission could register its level-one American Depositary Receipt programme in the next two to five weeks. Norilsk also reported that a fall in nickel prices had contributed to a drop in net profit to Russian accounting standards on an accruals basis to $142 million from $236 million in 1996.

Posco to improve sales system

South Korea’s Pohang Iron & Steel Co (Posco) said last week that it would soon take over the major sales operations of its unlisted subsidiary, Posco Steel Service Co Ltd (Posteel), to improve sales operations. "Until now, all domestic buyers went through Posteel to purchase our products, but now we will be selling to them directly," a Posco spokesman said. The takeover would result in lower prices for the buyers and boost the overall efficiency ofPosco’s sales operations, a Posco statement said. Posco said it expected the new arrangement would bring an additional 30 billion won in sales for Posco from Posteel.

Geo2 sells gold in China venture

Australian precious metals technology group Geo2 Ltd said last week that an initial 578 ounces of gold poured from its joint venture refinery project in northeast China had been sold to the People’s Bank of China. The Australian company holds a 51 per cent interest in the HuluDao China Australian Gold Refinement Co, which owns and operates the Shui Quang gold refinery in Liaoning Province. Gold production at the refinery started in May at an initial daily rate of about 48 ounces from twenty tonnes of ore a day, the company said.

South Korean copper imports up

South Korea’s copper concentrate imports surged 73 per cent year-on-year to 76,410 tonnes in April, says the Korea International Trade Association. Traders attributed the sharp rise to production capacity expansion by LG Metals Corpearly this year. LG Metals, the only refined copper producer in South Korea, currently has 310,000 tonnes of smelting capacity based on copper concentrates and 420,000 tonnes of refining capacity. South Korea’s copper concentrate imports were 240,316 tonnes in the first four months of 1998 against 176,243 tonnes in the same period a year ago. South Korea’s copper concentrate imports totalled 518,112tonnes in 1997. The country’s lead concentrate imports totalled 19,808 tonnes in April, down 15.7 per cent from the same month a year ago. South Korea’s lead concentrate imports were 68,922 tonnes in the first four months of 1998 against 53,092 tonnes in the same period a year earlier. The country’s lead concentrate imports stood at 104,524 tonnes in 1997.

Australian firm in gold royalty plan

Australian Resources Ltd said last week that it had agreed to purchase the Mt Townsend gold mining prospect in Western Australia from Goldfields Kalgoorlie Ltd under a royalty scheme. "The Mt Townsend projectcontains a number of gold deposits containing oxide, supergene and primary sulphide mineralisation," the company said. Australian Resources said it estimated the deposits contained a measured and indicated resource of 790,000 tonnes of ore, grading 2.58 grammes of gold per tonne, equivalent to 65,250 ounces of gold. In payment, Australian Resources said it had agreed to pay Goldfields a royalty of A$2.25 a tonne treated through its nearby Gidgee treatment plant up to 500,000 tonnes. Thereafter the royalty would increase to A$2.75 a tonne. "This royalty will also increase if the average spot price for gold over a month exceeds A$470 per ounce," the company said. Australian Resources said it expects to start mining andore treatment at Mt Townsend early in 1998/99 (July/June).

PMA lifts vanadium mine’s resource

Precious Metals Australia Ltd said last week that the exploration work had lifted the measured and indicated resource at its Windimurra vanadium mine project in Western Australia. The measuredand indicated total resource increased from 72 million tonnes to 101 million tonnes, the company said. A measured oxidised resource upgrade to 67 million tonnes, grading 0.46 per cent alone gave a proven mine life of some 23 years, PMA said. The measured oxidised resource figure exceeded a 10-year development requirement contained in a bankable feasibility study nearing completion in June, the company said. "It is not anticipated that any further drilling will berequired prior to the completion of the study or commencement of mining," PMA said. Commissioning of the project, a joint venture with Swiss commodities trader Glencore International AG, is on schedule for the third quarter of calendar 1999, the company said. Vanadium is primarliy used in specialty steel alloy-making. Market analysts also expect the use of vanadium in battery-making to increase.

Western Metal eyes lead, zinc milling

Western Metals Ltd said that it had built up a 200,0000-tonne stockpile of ore at its new Pillara lead andzinc mine in Western Australia and will start milling work later this month. "We’ve have approximately 200,000 tonnes of ore on the surface ready to treat and also are producing around 15,000 tonnes a week," Richard Jordinson, general manager of operations, told Reuters. The mine is expected to yield between 70,000 and 75,000 tonnes of zinc contained in concentrate and 30,000 tonnes of lead in concentrate in 1998/99 (July/June), based on the treatment of 1.2 million tonnes of ore, grading about 7.5 per cent zinc 2.5 per cent lead. Lead production at its Cadjebut milling operation was expected to increase to between 11,000 and 12,000 tonnes of lead in the current quarter from 9,000 tonnes in the previous quarter due primarily to richer ore grades mined from its Kapok deposit. Western sees its Australian mines yielding 170,000 tonnes of zinc metal and 62,000 tonnes of lead annually.