Southern Copper Corp. (
),Rio Tinto plc (
),BHP Billiton Ltd. (
),Freeport-McMoRan Copper & Gold Inc. (
), Sterlite Industries (India) Ltd. (
China's lust for oil, copper, aluminum, iron ore and coal will
bounce back during second half of 2011, having been sluggish as
the government's campaign put the brakes on growth and
The current retreat in commodities prices this month, which
saw oil and copper near lows for the year, came on the back of
growing fears of weaker economic growth.
Alcoa, the largest US aluminum producer, expects global demand
for aluminum to hold up into the fourth quarter despite a falling
metal price and fears the global economy may slip back into
China imported 382,175 metric tons of scrap copper in August,
a decline of 12% from July and a drop of 4.1% from the same
period a year ago. During the whole January-August period,
scrap-copper imports had been up 7.3% on year, at 3.01 million
China's Ministry of Environmental Protection introduced new
regulations Aug. 1 for importing scrap goods. The new rules
require importers to have certificates for bringing solid wastes
into the country to ensure they meet environmental standards,
according to a statement on the ministry's website.
The price of copper has fallen sharply since posting a record
high of $10,190 a metric ton on the London Metal Exchange in
February. While the red metal had risen strongly on expectations
of growing demand from developing economies like China, as well
as fears over supply constraints, in recent months the market has
been under heavy pressure from concerns that slowing global
growth would damp interest in the industry-linked
The demand outlook remains strong for 2011 and 2012.
Shayne Heffernan's list of Indonesian listed coal miners have
all been upgraded to Must Owns in 2011 and offer great value
after a sell off in Jakarta stocks. Today the Must Own Status was
extended by Shayne Heffernan to other coal miners in the
The new additions are, Banpu, China Shenhua Energy Company
Limited, HKG:1088, Yanzhou Coal Mining Co. (ADR), NYSE:YZC,
Gloucester Coal Limited , ASX:GCL
Find out more about Investing in Asia,
Rolling blackouts, power shedding because demand outstrips
supply, are commonplace across the country. India often needs 10
per cent more electricity than the country can produce, the
Central Electricity Authority says.
Even in the capital, in the garage or backyard of most homes
sits a generator, which is used to ride out the inevitable cuts.
(During the peak of summer demand, the Herald office backup
rumbles into life three or four times a day.)
Across the country, 40 per cent of Indians get electricity for
fewer than 12 hours a day.
And still the country needs more.
The International Energy Agency says 404 million Indians live
with no access to electricity at all, and the government has set
an ambitious target of electrifying more than 5.2 million
below-poverty-line households this year alone.
Demand for energy in India is nearly insatiable.
And it is coal the country needs.
While India is home to 20 nuclear power plants and has a
staggering 44 under, or slated for, construction, there are
growing concerns - post-Fukushima - over nuclear power and the
regulation of the industry.
Wind and solar energy are growing too, but are still at the
periphery of India's energy needs. Dependence on coal is unlikely
to abate for generations.
Coal, Bami explains to the room of people who know it better
than anyone, provides 50 per cent of India's energy.
There is no shortage of the material. India is the third
largest miner of its indigenous supplies in the world, with
millions of tonnes still to be exploited.
But getting to that coal can often take several years.
Developers must deal with India's famously obstructionist
bureaucracy, comply with new, stricter environmental regulations,
and observe the rights of those who live above the coal,
recognised only recently (many would say, too late).
Several proposed plant developments remain under moratorium
from the Environment Ministry.
For five years, from 2004-05, India's local coal production
increased 7 per cent a year. But it has stagnated in the past
two, barely moving from about 550 million tonnes, hampered by
reasons of politics, land rights, environment, or all three.
Four years ago, the shortfall in India's coal production was
just 59 million tonnes.
This year, the country will produce 554 million tonnes of
coal, but will need 696 million.
By the financial year 2016-17, it will need 1 billion tonnes -
an estimated 300 million tonnes of which it won't be able to
The chairman of the India Energy Forum coal group, N.N.
Gautam, says it is unavoidable the country will become more and
more dependent on imported supplies.
"But we cannot rely to simply buy on the global market,
because there are so many factors we cannot control. Global coal
availability might not come to our rescue. India will have to
acquire coal mines outside India," he says.
Although buying up coal mines overseas was not a panacea for
energy problems "one thing is for sure, acquisition will
continue". He also stresses that domestic production needs to be
increased through more mines being approved, better
infrastructure and efficiency.
The China Iron and Steel Association (CISA) rolled out The
China Iron Ore Price Index on Monday, reports fisen.com.
According to the new index, the domestic price of iron ore has
fallen for four consecutive weeks.
The new index includes data from September and October, which
indicates that the price of domestic iron ore fell 6.58 percent
in September, while the price of iron ore imports was down by
only 1.08 percent.
In the first week of October, the iron ore price index for
imports hit 653.41 points, down 0.13 points week-on-week, while
the average offshore price of imports hit $176.22 per ton, down
US$0.03 from the previous week.
As of end August, major ports in China held iron ore inventory
of 95.21 million tons, an increase of 23.41 million tons
List sorted by projected 5 yr earnings per share *(EPS)
1. Southern Copper Corp. (
): Market cap $31.46B. EPS is expected to grow by 25.17% over the
next 5 yrs. SCCO produces copper, molybdenum, zinc and silver.
All of the its mining, smelting and refining facilities are
located in Peru and in Mexico, and it conducts exploration
activities in those countries and Chile. It operates the
Toquepala and Cuajone mines in the Andes Mountains southeast of
the City of Lima, Peru. It also operates a smelter and refinery
west of the Toquepala and Cuajone mines in the coastal city of
2. Rio Tinto plc (
): Market cap $136.93B. EPS is expected to grow by 16.80% over
the next 5 yrs. RIO is engaged in minerals exploration,
development, production and processing. Its major products are
aluminum, copper, diamonds, coal, iron ore, uranium, molybdenum,
gold, borates, titanium dioxide, salt and talc.
3. BHP Billiton Ltd. (
): Market cap $247.41B. EPS is expected to grow by 16.0% over the
next 5 yrs. BHP is a diversified natural resources company. It
operates nine customer sector groups: petroleum, aluminum, base
metals, including uranium, diamonds and specialty products,
stainless steel materials, iron ore, manganese, metallurgical
coal and energy coal. During the fiscal year ended June 30, 2010,
the Company realized an annual production volume of 158.56M bbls
of Crude Oil equivalent. During F-Y 2010, the Company produced
1.2M tons of aluminum. It also produced 13.9M tons of bauxite and
3.8M tons of alumna.
4. Freeport-McMoRan Copper & Gold Inc. (
): Market cap $51.58B. EPS is expected to grow by 1.15% over the
next 5 yrs. FCX is a copper, gold and molybdenum mining company.
Its portfolio of assets includes the Grasberg minerals district
in Indonesia, mining operations in North and South America, and
the Tenke Fungurume minerals district in the Democratic Republic
of Congo. It operates 7 copper mines in North America: Morenci,
Bagdad, Safford, Sierrita and Miami in Arizona, and Tyrone and
Chino in New Mexico. It operates 4 copper mines in South America:
Cerro Verde in Peru, and El Abra, Candelaria and Ojos del Salado
5. Sterlite Industries (India) Ltd. (
): Market cap $50.45B. EPS is expected to fall by 6.45% over the
next 5 yrs. SLT is a non-ferrous metals and mining company. It is
a subsidiary of Vedanta Resources plc. It is engaged in copper,
zinc, aluminum and commercial power generation. Its copper
business is custom smelting. Its operations also include a copper
smelter, 2 copper refineries, 3 copper rod plants, a dore anode
plant, sulphuric and phosphoric acid plants, and captive power
plants at its facilities in Silvassa and Tuticorin in India, as
well as a precious metals refinery at Fujairah in the United Arab
Shayne Heffernan oversees the management of funds for
institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with
him over 25 years of trading experience in Asia and hands on
experience in Venture Capital, he has been involved in several
start ups that have seen market capitalization over $500m and 1
that reach a peak market cap of $15b. He has managed and overseen
start ups in Mining, Shipping, Technology and Financial Services.