Home > Mining Week > Mining Week 43/’11: Uncertainty in Indonesia

Mining Week 43/’11: Uncertainty in Indonesia

October 23, 2011

Top Stories of the Week:

  • Freeport McMoran faces strikes in Indonesia
    • About half of the workers at Freeports’ Grasberg mine went on strike to demand higher pay, forcing the company to shut down operations. Several strikers have been killed by police and unknown gunmen in the past week.
    • Sources: FCX press release; Financial Times; Wall Street Journal
  • Rio Tinto sells aluminium, buys uranium
  • BHP shops for iron ore in Brazil
    • Junior miner Ferrous Resources, worth just over $3bln, is looking for a buyer. BHP Billiton and a Chinese company are talking with management to negotiate a price.
    • Sources: Financial Times; Fox Business

Trends & Implications:

  • Freeport’s social troubles in Indonesia are the latest labor issue in a rise of labor unrest in the latest year after years of relatively peace in the industry. The unrest mainly affects copper producers, which have seen profits rise with high copper prices, but did not want to increase worker’s compensation too much to secure long term competitiveness.
  • The large diversified miners are increasingly focusing their attention on a limited number of extremely large operations, divesting smaller operations. With the spending power of the ‘mining supermajors’ a divide seems to open between the few operators of the world’s key supply areas and the many operators of a range of smaller operations.
  • Rio Tinto might face challenges selling the unwanted aluminium assets in one package. Very few companies are able to do acquisitions worth over $7bln, and many of the companies that have the spending power might face antitrust limitations.

©2011 | Wilfred Visser | thebusinessofmining.com

Advertisements
%d bloggers like this: