Where has the resources boom gone? I don’t mean the one driven by iron ore or coal, nor oil, but by surging demand from China, India and the rest of the emerging world? Warning bells are sounding in metals markets and there is every indication that even in China, there are some rough times ahead. The shares prices of some Australian producers are reflecting the emerging weakness. last week we reported on Fox Resources, a small Australian miner deferring work on copper and nickel prospects and mine. Power shortages and a looming oversupply of some metals and weakening prices make for interesting decision making for some companies, especially if they are in China. And when a weakening market price happens to emerge as this power crunch happens, China seems to act as one to try and modify the market weakness and correct the imbalance in power demand. Take ...

Mining will keep economy growing Need to increase production Prices may fall but demand will be strong

 

THE mining boom will help keep Australia’s economy from falling into a hole until at least 2013, a report suggests.

Economic forecaster BIS Shrapnel said record levels of mining investment together with a ramp-up in production will insulate the economy from recession for the next five years - even with commodity prices tipped to fall.

“We didn’t really do enough investment, with the benefit of hindsight, through the 1990s to gear ourselves up for maintaining strong growth in mineral output and what we’re trying to do now is catch up,” said Adrian Hart, senior manager of BIS Shrapnel’s mining unit.

“The next five years will all be about increasing production to meet demand from China and other emerging economies . . . and once that production comes on stream that will drive weaker prices for a lot of commodities.”

The

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CHINA’S Sinosteel has all but won control of iron ore miner Midwest after four of the takeover target’s directors agreed to sell their shares.

Midwest chairman Jesse Taylor and directors Francis Ng, Steven Chong and Stephen de Belle said they would accept the $6.38 cash a share offer from Sinosteel for their collective 4.1 per cent holding in the company.

This will give Sinosteel, China’s second largest iron ore trader, a 49.68 per cent stake in Midwest.

The Chinese metals trader was also rumoured to have bought an additional 1 per cent of Midwest on market, taking it close to controlling more than 50 per cent of the company.

However, a compulsory takeover may still be a battle with Murchison Metals vowing to hang on to its 10 per cent stake in Midwest.

Murchison’s largest shareholder – Harbinger Capital Partners – also holds 9.11 per cent of Midwest’s share register, while two Midwest directors remain

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I actually expect dividend payment to become part of the rule for other commodity makers, especially the fertilizers as they turn into cash flow machines. Cleveland Cliffs (CLF) trading up 15% this AM on this line item along with raised 2008 guidance and preliminary 2009. Boo and Yah. Unfortunately some sucker sold a partial position at $99, citing market conditions earlier this week. (hand in the air) None of the 2008 guidance is "news" to blog readers but I guess it was "news" to the market. If only the market could stay upright for more than 3 hours at a time. Blah.As a result of the recently announced iron ore settlements between major Asia-Pacific iron ore producers and consumers, as well as the rising ...

Confidence levels among the top end of Japanese business is at a four year low as companies forecast lower earnings for the first time in seven years. At the same time big companies say they will lift capital expenditure 2.4% over the coming financial year (which ends March 31, 2009 in Japan), compared to a forecast three months ago of a decline. But that was about the only crumb of comfort from the latest quarterly Tankan survey of manufacturer sentiment from the Bank of Japan yesterday. As with industrial production figures, the Tankan survey is considered to be perhaps the best guide to Japanese business confidence and conditions because of the way manufacturing still dominates the economy, unlike the US and Europe where services are now the main driving sector. That’s why the 5 points slide in sentiment in June from 11 in March, (the third quarterly decline in a ...

Baosteel Group, the largest steelmaker in China, cut a supply deal with Rio Tinto and agreed to an 80% price increase for iron ore. Baosteel will pay Rio Tinto $144.66 a metric ton for iron ore.Demand for iron ore is still very strong and Baosteel must expect it to stay strong for a long time or it wouldn't agree to such a huge price increase.

By Mike Caggeso Associate Editor Baosteel Group Corp., China’s largest steel producer, will pay $4.2 billion in cash for an 80% stake in a new Guangzhou-based steel mill that will merge two rivals, Shaoguan Iron & Steel Group and Guangzhou Iron & Steel Group. China is already the world’s top steel consumer and producer, churning out one-third of the global supply. This newly formed company, Guangdong Iron & Steel Group Corp., will boost Baosteel’s capacity by 33% to 40 million tons. Specifically, it will help supply steel-hungry Toyota Motor Corp. (ADR: TM) and Honda Motor Co. (ADR: HMC), both of which have plants in the city of Guangzhou. Baosteel also wants to build a new 10 million ton-capacity mill in Zhanjiang, Reuters reported. Story continues below…...

Fortune asks - is it too late to invest in commodities? We’ve touched on this theme many times in the blog [Mar 22: Alert - Commodities are Dead] and my thesis is we’ll have a long term upward move as too many humans want to live like Americans (”World of Shortages”), but it will be punctuated by moves (sometimes viciously) downward from time to time due to various factors. The most common one over the past year is the “strong dollar” myth. Another could be “China will implode post Olympics” or “crude is heading back to $60″ or any number of reasons. Most of it is nonsense; unless the globe goes back to 90% of people living in abject poverty we are headed down this path, one way or the other. And Americans, ill prepared and still in denial, will be competing with …