India gives diamond exporters a breather

Heeding frantic calls of the diamond industry, the Indian government has announced it will allow the export of small sized cut and polished diamonds for certification and for their re-import completely duty free.

The new ruling applies to small sized cut and polished diamonds. The earlier exemption used to only apply to stones weighing 0.25 carats and above. However, now it will apply to all stones weighing a minimum of 0.10 carats.

Acceding to a major demand of the domestic industry, in a notification, the Directorate General of Foreign Trade said cut and polished diamonds of 0.10 carat or above can be exported and thereafter re-imported duty free after certification by authorised laboratories.

The diamond industry has been beseeching the government to exempt the small carat stones, given the huge demand from the watch industry.

Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council said the step would help boost exports of small sized diamonds.

``Several international players from the watch industry have regularly been asking for certified small sized diamonds. This was not allowed earlier. Now, Indian small sized diamonds will get space in the international market,'' he said.

The action assumes greater importance in the light of the fact that in June, a survey conducted by the Council noted that for the first time in a decade, India's polished diamond exports were expected to fall by around 37% to $17 billion in 2012-13.

However, Indian consumers are not biting, and diamonds encased in gold have no consumers, though gold has slid in the local market. As bullion retailer Jetha Mangat said, ``If gold is added to the mix, sales become unappetising for local consumers too.''

Mangat added that the precious metal has dropped 23% this quarter, but the gain for Indian consumers has been limited as the rupee fell about 10% during the same period. Both diamonds and gold are quoted in dollar rates in the local market.

For instance, a 3-carat polished diamond valued at $400 per carat was available for less than $1,079 (Rs 65,000) early June, when the rupee was at Rs 55 against the dollar. Currently, the same piece commands a price of $1,179 (Rs 71,000) in jewellery stores.

Added Mahesh Solanki, of Diamond House in Mumbai's Zaveri Bazaar said, ``If the diamonds are studded in gold jewellery, they tend to cost even more these days due to the 8% import duty on gold''.

Though the strengthening of the US dollar against the Indian rupee has come to the aid of exporters, with exports in value terms rising 44% during April, imports of rough diamonds have become costlier, reducing margins for diamond polishing units.

The government's recent action is meant to stem this tide, say traders.

With India poised to become the leading international trading hub for rough diamonds, the government set up a task group in May this year, to make recommendations to help India retain its primacy as a trading hub.

"With the Indian gems and jewellery sector expected to grow at a compound annual growth rate of around 16.26% during 2013-14 to 2016-17, the government is keen to incentivise the private sector,'' said an official of the ministry of commerce and industry.

Shipments of gems and jewellery make up about 14% of India's total exports, and the sector employs about 3.4 million workers.

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MTEC KEY PERFORMANCE MEASURES REPORT 2013

EXECUTIVE SUMMARY

In 2013, enrolments across the minerals industry core disciplines of Earth Science, Mining Engineering and Metallurgy indicate some clear emerging trends.

Mining Engineering enrolments are dramatically higher across all years of study, which will result in increased graduates in coming years. Earth Science enrolments are higher in the first and second years of study but are plateauing in the third year of study which is the pool from where honours students are drawn. Metallurgy enrolments are up in the second and third years of study, continuing a reversal of trend from a few years ago. It would also appear that the effects of the financial correction in 2008-9 no longer impacts on students considering professional careers in the minerals industry.

MTEC modelling for 2016 forecast levels indicates a plateauing of final year enrolments in Earth Science, a significant decline in Metallurgy and a dramatic increase in Mining Engineering.

Summary of Enrolments (MTEC universities only)

• Earth Science enrolments have increased in the 1st and 2nd years of study with a levelling off for the 3rd and 4th years. Overall there is a greater retention of students progressing into later years of study, with a dramatic increase in the 2nd year noted. Diversity statistics for all years of study show a combined average of 66% being male, 34% female, with 31 Indigenous Australian students across all years of study.
• Metallurgy enrolments have increased significantly in the 2nd and 3rd years of study. An increased number of students have either graduated with a BSc at the end of three years or are completing a double degree (after 5 years). These do not appear in the summary compilation above, but are still skilled to work as metallurgists. Diversity statistics for all years of study show a combined average of 77% being male, 23% female, with no Indigenous Australian students in any year of study.
• Mining Engineering enrolments have returned and exceeded levels pre-financial correction and have increased significantly for 2nd, 3rd and 4th years. This year’s output is well above the long-term average which includes 5th year double degree students. The long-term trend for final year students appears to be growing linearly, a reversal of the previous trend. Diversity statistics for all years of study show a combined average of 87% being male, 13% female, with 1 Indigenous Australian student across all years of study.

Summary of Graduate Destinations (MTEC universities only)

• 37% of graduates from the MTEC Earth Science universities joined the minerals industry in 2012. This is down on last year’s cohort of 53% and a significant reversal of the recent upward trend now similar to 2009 (GFC) levels. 26% of Earth Science graduates went on to further study or research (a common trend) and 30% joined either big or small mining companies.
• 79% of all Metallurgy graduates from 2012 joined the minerals industry, which is up from last year’s 74%. 68% of the overall cohort joined big or small mining companies, 12% joined consultants or contractors and none joined the extractive industry. The data collected from 2012 reflects a return to long-term trends for graduate destinations in Metallurgy.
• At the time the data was collected, 62% of the Mining Engineering graduates surveyed in 2012 had entered the minerals industry, with 47% having joined big or small mining companies and 12% taking roles with contractors or consultants. Anecdotal evidence (supported by Graduate Careers Australia data) shows that almost ALL Mining Engineering graduates were employed six months after graduating. Graduates taking roles with small mining companies were 2%, down from 7% in 2011. This indicates a return to historical average levels of 4% from 2008, and 2% from 2007. The data received from the 2010 graduates for this report includes graduate destination information for the third graduating class from The University of Adelaide.

NEW CHAIRMAN: MINERALS COUNCIL OF AUSTRALIA

Mr Andrew Michelmore was today elected Chairman of the Minerals Council of Australia Board.

Andrew is a long-standing member of the MCA Board and commences as Chairman immediately. He has been on the MCA Board since 2008.

The outgoing Chairman Mr Peter Johnston is standing down after three years in the role and has also stepped down from the Board after seven years to concentrate on his new role with Glencore.

Andrew is the Managing Director and Chief Executive Officer of MMG and has more than 30 years’ experience in the metals and mining industry including 12 years at WMC Resources Limited, where he was Chief Executive Officer. Prior to that, he held senior roles in the company’s nickel, gold, alumina, copper, uranium and fertiliser businesses.

In today’s Board meeting following yesterday’s Annual General Meeting, Mr David Peever, Managing Director, Australia, Rio Tinto was also elected as Senior Vice Chairman and Mr Seamus French, Chief Executive Officer of Anglo American's Metallurgical Coal business was elected Vice Chairman.

The Board expressed its deep gratitude to Peter Johnston for his outstanding service and commitment to the MCA and the industry throughout some of the sector’s most challenging times.

Spain: Port of Valencia Modernization Underway

TCV Stevedoring Company, a Grup TCB company managing the transport of goods at the Levante and Llovera docks in the Port of Valencia, has received its fourth Super Post Panamax crane for operating large vessels up to 22 containers wide.

Developed by Shanghai Zhenhua Port Machinery (ZMPC), the acquired gantry crane weighs 1,600 tonnes, is capable of lifting 65 tonnes and is 44 metres high under the spreader. Its speed is 180 metres per minute hoisting empty containers and 90 metres per minute in the case of fully loaded containers. The new crane has a reach of 62.5 metres on the sea side and 20 metres on the land side, while the distance between rails ascends to 30.48 metres.

Acquisition of the new Super Post Panamax crane forms part of an ambitious investment programme developed by TCV Stevedoring to consolidate the Valencian facilities as a point of reference for productivity and efficiency in western Mediterranean ports. Four new RTGs will be added in the coming months, allowing TCV to increase and improve its service to its customers.

The operational capability of TCV has also been boosted by the 20-hectare expansion of the container yard area, which has been carried out this year and raises the current surface area of the terminal to 65 hectares.

The TCV terminal has a 1,660-metre dock and a depth of 16 metres. In addition to the Super Post Panamax cranes, its equipment includes four Post Panamax cranes, two Panamax cranes, 22 RTG cranes and seven reachstackers, among others. The company’s machinery is set to operate with all types of container ships.

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Corps Introduces Details on Little Wicomico River Dredging Plan

U.S. Army Corps of Engineers, Baltimore District, has announced a plan for the Little Wicomico River maintenance dredging project, located in Northumberland County, Virginia.

The estimated value of this deepening program is between $1 mln and $5 mln, and the solicitation will be posted on or about July 25, 2013.

The maintenance dredging of the Little Wicomico River will be performed by using a hydraulic pipeline dredger.

During this dredging project, approximately 20,000 cubic yards of material, which consists primarily of sand, silt, mud, shell and combinations thereof, will be removed.

Kazakhmys approves US$4.7 billion bid for ENRC

A key shareholder in Eurasian Natural Resources Corporation plc (ENRC) said it would accept a proposed £3.04 billion (US$4.7 billion) buyout, even though ENRC’s independent directors rejected it.

The offer, unchanged in structure from an initial proposal that ENRC’s three founders and the Kazakh government tabled in May, was made in cash and shares. It valued Lonon-listed ENRC at roughly £2.34/share.

Kazakhmys, which holds 26% of ENRC, said it would accept the terms. 

As long as Kazakhmys shareholders vote to approve the offer, the bidding consortium will break through the 75% threshold it needs to secure control. The consortium already owns 53.9% of the company.

But ENRC, a Kazakh-based producer of ferro-alloys, said it cannot recommend the offer at the current level.

The chairman of the independent committee, Dr Mohsen Khalil, said: "[We are] very disappointed by the value of the Offer, which it [the committee] believes materially undervalues ENRC, its fundamentals, the intrinsic value of its underlying assets and its growth prospects.”

But a statement from Kazakhmys said: “The offer may undervalue ENRC and its assets but after seeking to engage with the…consortium and its constituent members, has concluded that there is no prospect of obtaining improved terms.”

It added that it had a number of concerns about on-going investment in ENRC should the offer not proceed.

“These include corporate governance concerns and the ongoing Serious Fraud Office investigation into certain allegations involving ENRC.” 

When details of the initial proposal were revealed last month ENRC said the bid “materially undervalues ENRC”. 

Kazakhmys shares were trading around £2.19/share in early morning trading in London

Makhado coking coal project to cost US$406m

Coal of Africa Ltd has released a feasibility study for the Makhado coking coal project in South Africa’s Limpopo province, estimating US$406.3 million in capital expenditure.

Located on the Soutpansberg coalfield, the project would produce 2.3Mt/y of hard coking coal and 3.2Mt/y of thermal coal over the 16 year mine life at an estimated cost of US$88.71/t of coking coal net of thermal credits.

Coal of Africa chairman, David Brown said: Makhado further provides South Africa with a new coking coal producing asset in the region, utilising established infrastructure for domestic and international markets.

Regulatory approval and funding requirements are targeted to be completed by the first half of calendar 2014.