Coking coal prices are weakening

The price of coking coal, which has been resilient this year, has begun to decline on expectations that a long-running industrial dispute at the BHP Billiton Mitsubishi Alliance mines in Queensland will soon be resolved, the Australian Financial Review reports.

BMA shipments from its wholly-owned Hay Point terminal fell to 7.48 million tonnes in the June quarter, down 5% from the previous quarter, according to port statistics.

However, analysis by The Australian Financial Review shows shipments from Queensland’s major coal export ports of Hay Point, Dalrymple Bay, Abbot Point and Gladstone rose 3% to 37.8 million tonnes in the June quarter, despite a weakening steel market. Exports were also 3% higher than in the June quarter of last year, when the mining industry was still reeling from the effects of the Queensland floods.

BHP and Rio Tinto are due to provide details of their production and shipments during the period when they release their June quarter production reports this week.

The index price of hard coking coal is now $US217 a tonne, having fallen by 2% in the past month. Credit Suisse forecasts a settlement of $US215 a tonne in the fourth quarter, ahead of further declines to a range of $US200 to $US210 a tonne in 2013 and 2014.

Lower mining asset values open opportunities

Drops in valuations for mining projects in Australia mean assets can potentially be snapped up for attractive prices, according to the latest survey by MinesOnline Market Metrics and reported in the Australian Financial Review.

Acquisition costs in the resource sector have continued to fall, weighed down by weak market sentiment, said MinesOnline, which tracks transaction values for exploration and development projects across 100 countries.

Over the past 12 months, the acquisition cost for gold exploration projects has been just $28 an ounce, and $35 an ounce for development projects, said MinesOnline managing director Liam Twigger.

He said the recent acquisitions by Panoramic Resources of a 70% stake in Matsa Resources’ Mt Henry project in Western Australia for $13 per ounce of gold, and LionGold Corporation’s purchase of Bass Metals’ Hellyer project in Tasmania at $6 per ounce of gold equivalent both confirmed the sharp downward trend in gold project valuations.

The long-term average listed value of ASX-listed gold explorers is about $50 per resource ounce, comfortably above the current average value per ounce of listed explorers is about $36, according to MinesOnline.

Pacific trade deal risks new China rift

The federal government will be warned of major geo-strategic consequences if it signs a new trade pact with the US that could exclude China and India, according to the Australian Financial Review.

International trade economist Jagdish Bhagwati said he planned to warn the Gillard cabinet of the risks of signing the Trans-Pacific partnership when he meets with them in Canberra later this month, and recommend negotiations to reshape the partnership.

“I think Australia in particular has to look toward the region and toward the US, it should not have a false choice,” Bhagwati said. “I think the prime minister in particular...ought to take this under advisement and say ‘we cannot afford to alienate China’.”

Any provisions on human rights, labour standards and intellectual property ought to be moved to another agreement, Professor Bhagwati argued, for China and India to be willing to sign. “Make it a trade instrument,” he urged.

Professor Bhagwati has campaigned against including core labour standards, arguing the US demands were based on self-interest rather than altruism. The inclusion of such clauses, he warns, is often inimical to people’s living standards in developing countries.