[cid:image001.png@01CFD962.266D6680] Friday, 26 September 2014 [cid:image006.jpg@01CFD962.31403E70]
Snapshot � Company news highlights: Anglo American finally receives Minas Rio pipeline approval, Anglo Platinum sales process continues, AngloGold Ashanti U-turn leaves market awaiting sales, Anglo American/Mountain Province approval of water license at Gahcho Kue, Sirius Minerals appoints CFO Rachel Rhodes � Commodity review highlights: Nuclear plants across emerging world defy Japanese concerns, metallurgical coal drops to 6yr low as Chinese demand slows, dispute worsens over CITICs Sino Iron ore project, Chinese aluminium smelters restarting operations � Other economic news: The EU publishes draft law to reduce emissions from non-road engines � African resources update: Transnet confident of ZAR5bn plan to expand Limpopo coal rail capacity, Zambian chamber appeals for VAT refund, Tanzania to start on $3bn mining and power projects in 2015, Todays African Proverb
Company news � Anglo American (AAL LN) receives Minas Rio pipeline approval...finally.

The company has received the approval by the Brazilian environmental body to operate the slurry pipeline at its major Minas Rio iron ore project.

The pipeline approval was a key step in achieving first production by the end of this year.

The total cost of the operation is forecast to reach US$8.8bn from an original estimate of US$2.2bn with delays (originally scheduled to start in 2009) in permitting a key factor behind the cost escalation.

Source: SNL � Anglo Platinum (AMS SJ) sales process continues for Rustenburg and Union PGM assets as PGM prices struggle to make progress.

Markets have continued to speculate on a possible acquirer often citing Sibanye (SGL SJ) as a front runner.

A key issue to the sale could be access to refinery capacity that would enhance the economics of these higher cost operations.

Source: Bloomberg � AngloGold Ashanti (ANG SJ) U-turn leaves market awaiting sales.

Following its botched share sale and spinoff, ANG is considering asset sales to reduce its $3.2bn of debt in order to execute its long-term strategy, including investing in lower-cost mines.

ANG has net debt-to-equity ratio of 103%, the highest among the worlds 14 largest gold miners by production, according to data compiled by Bloomberg.

A more acceptable level of debt would be about $1.5bn, below the companys $1.68bn of EBITDA.

The company states that it is looking at asset sales, targeting realising value from the Colombian portfolio and a partner for Obuasi.

Source: Bloomberg Investec view: With gold now close to $1,200/oz its certainly not an ideal time to be selling gold assets and realising value the. � Anglo American (AAL LN)/Mountain Province (MPV CN) approval of water license at Gahcho Kue diamond project in Canada.

Source: Company Investec View: Gahcho Kue is one of the most significant new diamond mines to be coming on stream in the near future and permitting can be slow going so this is an encouraging development.

The mine is hoped to start in 2016, although permitting is the biggest risk to timing. � Sirius Minerals (SXX LN) appoints CFO Rachel Rhodes.

Rachel was CFO of London Mining until November 2013 and was recently appointed to the board of Anglo Pacific Group (APF LN).

Source: Company
[cid:image007.png@01CFD962.31403E70] Commodities news � Nuclear plants across emerging world defy Japanese concerns.

Three years after Fukushima, developing countries are leading the biggest nuclear construction boom in more than two decades.

Almost two-thirds of the 70 reactors currently under construction worldwide, the most since 1989, are located in China, India, and the rest of the Asia-Pacific region.

Egypt, Bangladesh, Jordan and Vietnam are also considering nuclear plans.

China plans to complete 29 new reactors from 2018-2030, doubling its fleet to 49.

Source: Bloomberg � Metallurgical coal drops to 6yr low as Chinese demand slows.

Australian coal producers and Japanese steel mills agreed to a fourth-quarter price of $119/t, down $1/t from the third quarter, according to Doyle Trading (DTC), adding that this is a six-year low.

Chinese imports in August were down 39% YoY amid a glut of domestic steel.

Producers of coking coal have already announced as much as 30mt of production cuts this year (c.10% of global seaborne supply).

DTC added that the latest contract price could have fallen to $112/t because of a weaker Australian dollar, and the fact that it didnt may reflect concerns a steeper reduction would trigger another round of supply cuts before those already announced had time to take effect.

Source: Bloomberg Investec view: Interesting comment from DTC on the fine balance between customers getting a low price and cutting their own throats.

The ongoing fall in the Aussie dollar, at least until interest rates start rising (not expected before the end of 2015) is likely to be an increasing theme in commodity pricing where Australia is a dominant producer.

Pity those who have a US$ cost base. � Dispute worsens over CITICs massive Sino Iron ore project as Clive Palmers Mineralogy (Pvt) seeks to terminate the mining rights of CITIC on the asset.

The US$9.6bn project has proved to be challenging and is now three years behind schedule.

The two companies have been going through a series of court battles over the payment of hundreds of millions of dollars in royalties.

Clive Palmer recently had to make a public apology for calling the Chinese government as bastards who shoot their own people.

Source: Thomson Reuters Investec View: Its no bad thing that the project is struggling to deliver tonnes to an oversupplied market. � Chinese aluminium smelters restarting operations that could limit price movements for the metal as higher prices have enabled economic margins to justify operations.

So far as much as 1.3mtpa of capacity is thought to have come back on line in China that could continue to 1.6mta by the end of the year.

Chinese primary aluminium output in August reached 2.027mt up 8.8% YoY.

Most of the restarts have been based on promised government subsidies.

The worlds largest producer Rusal indicated that around 40% of mothballed capacity could be restarted if prices were firm enough, a level that the company estimates at US$2,500-2,700/t.

Rusal currently forecasts a 1.2-1.3mt deficit from a 1.5mt deficit this year.

Source: Thomson Reuters
Other economic news � The European Commission published a draft law to reduce emissions from non-road engines as part of an effort to improve air quality.

The legislation would cover lawnmowers to snowmobiles to diesel locomotives.

Most of the engines captured by the legislation run on diesel.

Source: Thomson Reuters Investec View: The legislation would be welcome news for platinum miners as it would likely encourage use of catalytic converters which for diesel engines typically rely on platinum.
African resources update � Transnet confident of signing off ZAR5bn plan to expand coal rail capacity from the Limpopo province to 6mtpa from 2mtpa.

The plan is the second stage of a much larger five stage plan to lift capacity to 27mtpa.

However, to support continued expansions, the rail operator needs coal miners to lift output to fill the capacity.

Source: Mining MX Investec View: A bit of a chicken and egg argument, coal producers wont expand if theyre not confident of getting their coal to markets.

We note also that the current weak coal prices are not conducive toward significant investment in coal mines. � Zambian chamber appeals for VAT refund to get mines back on track.

The Chamber of Mines of Zambia has appealed to the government to refund withheld VAT so that the mining industry could continue to contribute optimally to the countrys economy.

The chamber stated that mining companies had been meeting all the claim requirements, bar the stipulation of proof of arrival in receiving countries, adding that it was impossible to obtain such customs documentation given the practice of commodities changing hands several times before reaching the final point of consumption.

Source: MiningWeekly � Tanzania to start on $3bn mining, power projects in 2015.

Tanzania plans to start construction next year of a long-planned $3bn coal and iron-ore mine and a 600MW coal-fired power plant, the State development agency said yesterday.

The projects were initially set out three years ago under a JV with Chinas Sichuan Hongda.

The project should be e completed in 2018/19.

Source: MiningWeekly � Todays African Proverb.

"Tears are best dried with your own hand"".

Source: BBC
Investec Global Natural Resources Research Team: UK South Africa
Hunter Hillcoat Tel: +44 (0) 20 7597 5182
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