Dear Industry Colleagues,
As always I would like to promote some positive news that you may not have heard of as yet. Coal contracts are in place with other commodities to follow shortly. People are now getting on with the business of mining and construction.Mining and Construction related Activity.
BHP Billiton recently presented the EIS for its plans to expand Olympic Dam from oxide output to up to 19,000tpa. "Exporting uranium to new customers like China will be an integral part of creating value from the Olympic Dam ore body," said Dean Dalla Valle, COO for the company's Uranium Australia unit. Some analysts have suggested the expansion could cost as much as $20B.
Aurox Resources has received environmental approval for its WA iron ore project. The project is to mine and process up to 10.1mtpa of magnetite ore over a 15 year mine life.
Focus Minerals has announced the appointment of Como Engineers for the refurbishment and re-commissioning of its Three Mile Hill Treatment Plant in WA. The contract comprises a $16.965M fixed price contract. The development will increase processing capacity to underpin its objective of increasing production to over 100,000 ounces pa by 2011. The project is scheduled to commence by the end of April 2009 and it is expected that commissioning will occur in late Dec 2009.
Lihir Gold has reported a record first quarter gold output of 318,000 ounces. Total cash costs during the first quarter fell to $US329 an ounce, down 7% on the quarter. Unit costs are expected to stay below $US400 an ounce for the year with lower industry cost pressures, weaker oil prices and a softer Australian dollar contributing to reduce costs. Lihir’s million ounce plant upgrade at Lihir Island continues on schedule and on budget.
Red Rock Resources says it has purchased a $200,000 mobile gold treatment plant from Resource Gold Proprietary and plans to buy a second. The unit is a turnkey gravity plant and smelter which will be built at its factory in Perth.
Syngas has confirmed it plans to continue developing a $3B on-site coal mining operation and premium diesel processing plant in Port Clinton, SA. The company predicts the plant will produce 15,800 barrels of diesel/day over a mine life of 33 years and create 380 full-time jobs, with up to 1,500 jobs to be available during construction. Syngas says it has completed the prefeasibility study and is now commencing a full feasibility study, which will take until around 2012, with full operation to commence in 2015.
Gunson Resources has reconsidered its decision to build a zircon processing plant in China after it has received recommendations that WA is cheaper. One of the three engineering firms competing for the Coburn mineral sands plant tender suggested the separation plant be built near the mine. The company says it has been told that it could save money in supervision and engineering costs during construction. It would also have increased control over product quality and flexibility in marketing to non-Chinese customers. The firm added that there would be a simplification of cash flow and tax accounting if the plant were to be built in WA. A final decision on the preferred contractor is expected in June 2009
OZ Minerals increased production at its Prominent Hill copper and gold mine processing plant. The miner expects to deliver about 600t of concentrate/day, six days a week, with copper concentrates to be shipped to smelters across Asia, starting from late April 2009.The miner says the operation has now reached the planned production rate of around 80% and is expected to reach its nameplate rate by the end of 2009
Meanwhile the Aus. Federal Govt has given China Minmetals the green light to pay $US1.2B to buy OZ Minerals, but made preserving jobs a condition of approval. To approval excludes Prominent Hill mine from the sale on the grounds of national security. The list of conditions on the purchase stipulate that Minmetals will need to operate the mines using a predominantly Australian management team, working companies incorporated in Australia and maintain and increase indigenous employment.
Fortescue Metals investment by Hunan Valin Iron and Steel's has been approved by the Aus. Federal Govt. The $1.2B investment has strict criteria on what the Chinese firm could do.
Atlas Iron has announced that it is looking for a partner to develop its Ridley magnetite project in WA. The $3B plan will include an open-pit mine capable of producing 15mtpa and generating EBITDA of $535M a year for more than 30 years. The company has conducted a prefeasibility study which found the bulk of the $2.97B capital cost, which includes $250M in contingency, is for the minerals processing plant which is estimated to cost around $986M.
Ensham is progressing with the $120M trial underground coal mine, part of a $1B investment to form the Ensham Central expansion project. The mine's planned transition from open cut to highwall, to board and pillar, and eventually a $700-800M underground operation exporting eight to 10mtpa. The gradual shift to board and pillar, to go into development in the second half of 2010, would see 40% of the available coal mined at a depth of 120-130m before underground mining commenced between 80 and 220m.
Whitehaven Coal has locked in its coal contract pricing for the coming year as it continues to make progress on its Narrabri project, which is expected to reach first coal in the December quarter
Macarthur Coal remains focused on the thermal coal market, with the global steel slump slashing metallurgical coal sales in the first three months of the year, while advancing the Moorvale Underground and Middlemount projects
Aquila Resources has retained its determined coal developer status this year with work forging ahead on its prospective Queensland longwall developments
Felix Resources strode a strong development path in the March quarter, moving the new Yarrabee coal preparation plant towards commissioning and seeking approvals for a new open cut area and additional underground mine at Moolarben. GRD Minproc has been awarded a contract for the design of the materials handling areas at its Moolarben coal project.
Indonesia plans to issue a presidential decree to allow miners to carry out underground mining in its protected forest, a government official said on Tuesday, alarming green groups. The decree, which is expected to benefit dozens of mining firms, clarifies Indonesia's forestry law issued in 1999 that prohibited open-pit mining in protected forest areas but did not specify whether underground mining was permitted. "The presidential decree will give legal basis so that underground mining is allowed in protected forest areas," Bambang Setiawan, DG of mineral, geothermal and coal at the country's energy ministry, told reporters. "It will encourage miners to carry out exploration to find new mineral resources that are often located in the forest," Marpaung said, adding that U/G was suitable for Indonesia with mineable nickel reserves of 547 million tonnes, 112 million tonnes of bauxite and 43 million tonnes of copper.
Santos has submitted its draft EIS for its planned Gladstone LNG project in Qld.Commodities News
AUSTRALIA had a seasonally adjusted trade surplus of $A2.11B for February, up 128% from January, but price falls in annual contracts for coal exports and expected falls in iron ore contracts are expected to kick in for April.
Australia's export earnings from energy and mineral resources rose 10% a record $47.3B in the December quarter of last year, export earnings for iron ore and coking and thermal coal had been high. The positive effect on export unit returns from the depreciation of the Australian dollar, resulted in substantial increases for metallurgical coal (34%) and thermal coal (41%), refined nickel class (77%), liquefied natural gas (LNG), thermal coal, diamonds and alumina, mined tin (362%); mined silver (21%); diamonds (12%); crude oil and condensate (8%); and mined zinc (6$).
Leading stainless producers in Taiwan reported substantially improved sales in April, kindling hopes that the market has at least touched the bottom, if not yet started to rebound. Yieh United Steel Corp. the largest integrated stainless steel mill in SEA with an annual capacity of 1 million metric tons -- indicated that thanks to rising international nickel prices, its stainless steel supply in April is expected to reach 70,000 metric tons.Most producers said they believe that as long as nickel prices remain above US$10,000 per metric ton in May and June, their monthly revenues in the second quarter will continue to recover. Stainless-steel producers use about two-thirds of global nickel supplies, as the alloy contains up to 9 percent nickel, which accounts for about half of total stainless-steel production costs.
Coal Seam Gas, Origin Energy Ltd which plans to build a major gas export facility, has entered a conditional agreement to acquire a coal seam gas (CSG) exploration permit for A$660M. Origin is in a joint venture with U.S. energy major ConocoPhillips (COP.N) to build a A$35B LNG export facilities using coal seam gas. The project is targeted to produce 3.5 million tonnes of LNG in 2014, with the potential to increase output to 14 to 16 million tonnes a year in later phases. As many as eight proposed LNG projects in Queensland are vying to boost their CSG reserves to underpin ambitions to export the fuel. Global players including Malaysia's Petronas and Britain's BG Group have poured about A$22B into Australia's coal seam gas companies since last year to secure reserves to feed a global rise in LNG demand.
Teck Cominco reported $US63M of positive provisional pricing gains in its copper division in the March quarter. Its copper and zinc divisions returned to profitability after losses in the December quarter.
Nickel prices have rallied strongly since the end of March, rising by over 30% from around USD 9,400/t to USD 12,300/t. The price has exhibited a certain amount of stability since late 2008, reflecting the fact that plunging demand has been offset by a constant stream of production cut announcements. During the past month, the price of nickel on the London Metal Exchange (LME) has risen from about $US9,500/t to $US10,755/t.The International Monetary Fund, IMF, has been authorised by the G-20 leaders to sell gold to assist poor countries, is sitting on reserves of the yellow metal of 3,217T, valued at USD 95B.The IMF, the third-largest official holder of gold in the world, has been directed by the G-20 leaders at their recent summit in London to generate additional resources by selling gold to provide USD6B concessional loans to low-income nations over the next 2 to 3 years. The US has the largest official reserves of gold in the world (over 8,000t), followed by Germany at around 3,400t. According to the IMF, the market value of its 103.4 million ounces (3,217t) of gold was USD95.2B on as on February 20, 2008. The IMF has also been directed by G-20 leaders to come up with concrete proposals for gold sale at the spring meetings to be held in Washington on April 25-26.The proposal to sell 403.3t of the Fund's gold, said IMF Survey online, was agreed on last year as part of a plan to bolster the income of the multilateral organisation.Other activity
A $1.1B contract has been awarded by the Qld Govt to a consortium led by Leighton and the Commonwealth Bank for the design, construction and ongoing maintenance of seven new schools. The work will be carried out by the consortium, called Aspire Schools, as part of the state government’s South East Queensland Public Private Partnership Schools project. Members of the Aspire Schools consortium include Leighton Contractors, Leighton Services, the Commonwealth Bank, finance brokers Broad Group and the National Australia Bank. Lend Lease said last week it had won two contracts totalling $675M for the construction or upgrade of 380 government schools in NSW as part of the federal government’s economic stimulus plan.
SOME of the world’s largest resource companies have backed the Australian government’s research into carbon capture and storage, with Xstrata Coal, Rio Tinto, BHP Billiton and Peabody Energy among those throwing support behind an institute launched this week
From left field 10 US retailers pulled impressive revenue numbers out of this unlikely hat. Amazon, Family Dollar, GameStop and select group of successfully weathered the economic storm and recently reported strong financial performances despite the global recession.
Amazon: The world's biggest online retailer reported sales growth of 18% to $4.89B in its first quarter. Sales of electronics and other general merchandise grew a whopping 38% to $2.05B.
RadioShack: The electronics chain reports net sales increased 5.6% to $1B, for its first quarter ended March 31, 2009, up from $949.0M reported a year ago. Same-store sales increased 5%. The chain attributes strong sales of its digital converter boxes, postpaid wireless and flat-panel televisions.
Jos A. Bank: Menswear retailer saw sales jump 15.2% to $695.9M in its latest fiscal year, while same store sales grew 8.9%. With no outstanding debt, extraordinary management practices and an increased effort to expand its marketing and promotions, Jos A. Bank is currently one of apparel's biggest success stories.
Dollar General: Discount chain reports sales of $2.85B in its fourth quarter, up 11.2% from the year-ago quarter. Same-store sales increased 9.4% in the quarter, with increases in both customer traffic and the average transaction. Dollar General also plans to add 4,000 jobs in 2009 to support its plans to open 450 stores.
Hibbett: The sports chain reports that net sales for its fiscal year ended January 31, 2009, increased 8.4% to $564.2M compared with $520.7M for its fiscal year ended February 2, 2008. The retailer is on tap to open as many as 70 new stores in fiscal year 2010. In fiscal year 2009, Hibbett opened 69 stores.
SalesSometimes prospect tells us things which we feel border on untruths. With that in mind, I thought it would be useful to go over some common lines that customers give us — and give some advice on how to react.
“We don’t have the budget.” This is shorthand for “we have budget money assigned to other projects that are considered higher priority.”
Your best response: Through questioning and conversation, gather information about where money is currently being spent. Once you’ve discovered what’s funded and why, reposition your offering and the value it provides so that it becomes higher priority than the budget items that are currently funded.
“Send me the information/brochure and I promise to read.” They’re either trying to get rid of you, or they’re being nice.
Your best response: Use your brochure to sit down with the customer to explain your positioning. Make FACT sheets to promote your specific product/service relating to that customer/segment. Hit the point early. People tend not to read general blurbs.
“I am the sole decision-maker.” The customer contact wants to hide the fact that he really can’t make a decision without consulting others.
Your best response: Ask about the specific reporting structure and gently probe to find out the “stakeholders” who “influence” the decision. Read between the lines and you’ll probably be able to figure out which people actually have to be “sold” in order for a deal to go through.
“Your competition is offering a better price.” They want you to drop your prices.
Your best response: You do the same as you would if the competitor actual WERE cheaper. You position your offering, and the privilege of working with your company, as being of massively higher value than working with your competitor.
Mining Equipment and Services News
Thoma & Coffey’s Gladstone engineering projects team has been working with SNCLavalin and SKM to upgrade the Boyne Smelter cranes and runways. The SSJV is delivering the work in 3 phases - Crane Assembly Workshop (CAW), Runway Upgrade Platform (RUP) and Runway Upgrade work. Thomas & Coffey’s first portion of the work saw the construction of a new crane assembly area to hold the 12 new cranes. The second phase was to use this workshop for the assembly of the Runway Upgrade Platform (RUP) which was completed in March 2009.This third phase, crane rail replacement and runways upgrade is currently underway. Over seven km of crane rail will be replaced on two one-km long aluminium smelter lines as part of this work.
Sedgman has been awarded a $A50M contract for the design and construction of a new coal handling plant in Chile.
Bluescope Steel is upgrading its sintering plant at Port Kembla. BlueScope Steel, Thomas & Coffey and Hatch are working together to trial assemble a new $1.7M sinter cooler measuring 40m in diameter.
KBR Incorporated has reported a 4th Q 2008 net income of $88M, up 23.9% year over year, on strong revenue across the board, especially in the Services business unit. Net income for the year totaled $319 million, compared with $302 million in 2007. Their largest project is a $12 billion grassroot refinery in Saudi Arabia.
Noja Power has been awarded a contract for the design, manufacture, test and delivery of low-voltage motor control centres for the X50 phase of the Abbot Point Bulk Coal Terminal upgrade, expected to be completed by mid-2010...
Bucyrus International announced 1st Q net income rose 39%.
Marketing
Here is a list of some of the most common and costly marketing mistakes made by companies today.
Putting your operational needs before those of your customers - There are a wide range of choices and options available to customers today. One of the key things customers value is flexibility, and if your operational procedures cannot provide the flexibility to meet changing customer needs, then their business will go elsewhere. Remember, customers are the reason you are in business, and hence your policies and procedures should be designed with the customer's needs in mind, not just the needs of your staff.
Promoting features over benefits - Customers do not buy services, they buy solutions. Tell them what you can do for them and what benefits they will gain.
Assuming your audience understands what you offer - Your customers are not likely to understand the intricacies of one product/services over another. They seek advice from you - and the company (sales personnel) who does a better job of explaining each product/service and the options available is the one most likely to have repeat customers.
Communicating too many messages - You have a lot to communicate about your services. However, too many scattered messages cause confusion. Don't try to tell everything in each brochure or advertisement. Focus on one or two key points each time and then point your prospects and customers to a place where they can get more information (like your web site).
A business that is not properly positioned - I am sure in your mind's eye your own business is different than the other competitors in your market. Understanding this difference and being able to communicate it is at the heart of positioning. How you position your business will have a direct impact on the types of customers you attract.
Regards
Michael Lang
Director Strategic Relationships_______________________________________________
SG Partners SALES & BUSINESS PERFORMANCE IMPROVEMENT STRATEGIC GROWTH
14 Kyabra St, Newstead, Q 4006 GPO Box 2461, Newstead Q 4006
T (07) 3852 5454T 1300 236673F (07) 3852 6282 M 0412 950 972E michael@sgpartners.com.auwww.sgpartners.com.au
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