Some of the world’s biggest iron ore miners are slashing ambitious production targets, a move likely to restore balance to the commodity’s skewed fundamentals and fuel price gains ahead.
On Wednesday, BHP Billiton, the world’s third-largest producer,lowered its 2016 output guidance by 10 million tonnes. The news comes a day after number two producer Rio Tinto cut its 2017 forecast by 20 million tonnes and left its 2016 global shipments estimate unchanged at 350 million tonnes.
Weather-related issues were broadly at fault after a cyclone hit Western Australia’s iron ore mining belt, called the Pilbara, earlier this year. Stalled production at Samarco, a company joint-owned by BHP and Brazilian miner Vale, following a deadly dam collapse last year also weighed on BHP’s results while Rio’s performance was hampered by a delay in the deployment of its driverless train technology.
“This is quite positive for the spot price. As more major miners cut production, concerns about oversupply could finally be cooling down,” Angus Nicholson, market strategist at IG, said.
The price of iron ore, a key steel-making ingredient, dropped nearly 40 percent in 2015 on the back of an enormous supply glut, but the mineral substance has since recovered most of those losses. Year-to-date, iron ore is more than 40 percent higher, having recently breached the psychologically important $60 level, on the back of improved demand from China, reflected by a 6.5 percent rise of iron ore imports in the first three months of the year.
Beijing is channeling its massive monetary and fiscal resources to stimulate a nation experiencing its slowest pace of economic growth in over two decades—stimulus that has yielded a noticeable recovery in property investment, industrial production and fixed asset investment. Data last week showed all three indicators logging robust gains in the first quarter of the year.
Because these sectors consume massive amounts of industrial metals such steel, the commodity market benefits.
With the added support of lower production from major miners, iron ore should be able to stay above $60 a tonne in the near-term, Nicholson said. Prices jumped to a six-week peak of $62.85 a tonne on Tuesday, according to the Metal Bulletin’s benchmark index.
“The price rise is sustainable. We probably will not see the lows of $30-$35 for a while and if we do see a correction, it would be a correction that I’d buy into,” said Jonathan Barratt, chief investment officer of Ayers Alliance Securities.
From a global supply-and-demand perspective, lower output targets were positive for the market because it created a sense of better balance, explained Shaw and Partners’ metals and mining analyst Peter O’Connor.
BHP and Rio’s combined lowered output will prevent 30 million tons of new supply from hitting the market. While that number may seem like a tiny drop in iron ore’s estimated 1.5 billion-tonne seaborne market, it could lead to a tighter market in 2017, O’Connor explained.
Another factor supporting the commodity’s price recovery was delayed spending on new projects, Nicholson noted. Rio has yet to make a investment in its Silvergrass mine in the Pilbara, which further limits the amount of new supply.
Only 3.3% of SA’s urban population regularly recycles, choosing instead to dump everything and leave it to the bin pickers, writes Georgina Crouth.
Only 3.3 percent of South Africa’s urban population regularly recycles, choosing instead to dump everything in a general bin and leaving it to the bin pickers
In our consumerist, throw-away society, we buy products, use them and discard them without giving it a second thought until the bin pickers arrive on garbage collection day. We complain about litter and pollution in our cities, but don’t give limited landfill space a second thought.
According to the Department of Environmental Affairs, South Africa generated 108 million tons of waste in 2011, with 98 million tons of that going to landfills. A study by the Council for Scientific and Industrial Research (CSIR) found we generated 19 million tons of municipal waste, of which a quarter included glass, paper, tins and plastic. Much of the country’s current recycling activity is focused on paper and packaging waste (paper, plastic, glass, tins), and we’re doing a pretty good job currently with that, recycling around 52 percent.
Yet this is a relatively small component of the recyclable waste streams. A large proportion (about 30 to 40 percent) is organic waste and building rubble – both problematic waste streams in terms of illegal dumping but with potential for recycling, yet we don’t currently do enough with these.
Gauteng contributes 45 percent of the municipal waste and they’re filling up quickly. Only a few of the province’s landfills will still be around in 10 years. Cape Town, which contributes 70 percent of the municipal waste in the Western Cape, is also running out of landfill space.
Pikitup chief executive Amanda Nair was recently quoted as saying it costs R1 billion to build a new landfill, which takes into account engineering, lining, drainage and road networks.
As much as 65 percent of the general waste that we generate could be recycled, yet we only currently recycle about 10 percent of our waste (as at 2011). This despite the fact that recycling not only saves landfill space, but can also reduce environmental impacts caused by waste, such as reducing carbon emissions. Recycling also creates jobs.
As Wilma Strydom, a researcher at the CSIR, explained in a 2010 study about post-consumer recycling behaviour in South Africa: “It is alarming that two-thirds of the more than 2 000 urban South African households surveyed do not know where to dispose of their household recyclables.
“Furthermore, the majority of the participants in the study said that they do not know how nor what to recycle.”
This survey found more than 73 percent of people living in urban areas do not recycle at all. About 27 percent of urban South Africans recycle a little and only 3.3 percent sort their recyclables from their household waste and recycle it on a frequent basis.
While the CSIR is currently finalising last year’s “recycling behaviour” survey to gauge whether household recycling has improved over the past five years, the 2010 survey highlighted poor attitudes towards recycling. Some of the reasons given by South Africans as to why they don’t recycle include a lack of space and time, it’s a dirty job, they don’t know what can be recycled, and recycling facilities are often inconvenient.
One positive initiative is from the glass industry body, The Glass Recycling Company, a private sector initiative that works with the Department of Environmental Affairs. Glass recycling rates have increased dramatically since 2005 due to the work of the initiative. Their statistics show glass recycling stood at 18 percent in 2005, rising to 40.9 percent in 2014 (latest stats only out in May). Today, all new glass produced in South Africa consists of at least 40 percent recycled content.
Their success is attributed to their public awareness campaigns, especially on radio, their installation of glass banks in suburbs to make recycling convenient, and assistance they offer to recycling entrepreneurs. Their contribution to glass collection infrastructure has been vital, providing collectors with large volume bags, gloves, goggles and scales as well as drop-off facilities where they can sell the glass.
Another hugely successful industry initiative is the plastics body Petco – it has done even better than glass recycling, seeing an increase from 16 percent in 2005 to 49 percent in 2014.
The CSIR’s 2010 survey results indicate people are more likely to recycle and continue to do so if it is convenient.
“The results show that a two-bag system – simply separating dry waste from wet waste like food scraps – combined with a regular kerbside collection service, would create the best opportunity to mobilise South Africans to start recycling,” Strydom said.
With landfill space running out, the solution is obvious: people need to reduce the amount of waste they produce and start recycling.
Professor Linda Godfrey, principal scientist in the CSIR’s pollution and waste department, said while household recycling rates were low, the country doesn’t fare badly by global standards when it comes to the recycling of paper and packaging waste.
But mindsets need to be changed because it’s generally not the consumer contributing towards this recycling: we rely on others to do this work. “Our very active informal sector recovers recyclables by sorting through bins at the kerbside, or at landfill. An estimated 80.9 percent of the packaging waste that we currently recycle is collected by the informal sector.”
The South African Waste Pickers’ Association estimates there are about 60 000 waste pickers in the country who are making a living from recycling while also providing this service.
“Improved consumer awareness would benefit South Africa, both in terms of reducing littering, which is a major problem and requires that municipalities spend a considerable percentage of their budgets clearing up litter and illegal dumping, but also by increasing household recycling, thereby supporting secondary resources economy, including job creation,” Godfrey says.
It starts with individuals: people must stop littering and dumping, recycle as much as they can in the home and think about what they’re buying.
Godfrey concludes: “There is an opportunity to educate consumers on ‘what’ they buy, in an attempt to drive sustainability and the circular economy agenda, and to reduce consumption. It’s about making smarter choices when buying products, (basing our) choices not only on price, but on issues such as packing type, and quantity. It’s about creating environmentally conscious consumers who understand the impact of their decisions.”
Wise up. Here’s how
Metals: beverage cans, food tins, metal lids, aluminium foil, paint, sheet metal, metal toys, oil and aerosol cans.
Glass: all glass except drinking glasses and light bulbs (some retailers have special bins for light bulbs and batteries, which should not go into general waste).
Paper: except for laminated/plasticised or waxy paper. Most plastics, including cling film (check for a recycling logo).
These cannot be recycled: pyrex, tableware (unless you put them to creative use in mosaics), ordinary batteries, light bulbs, medicines, crystal, spectacles, windowpane glass, windshields and mirrors.
Separate at home: recyclables must be separated from general waste.
Get everyone involved as it teaches children to be conscious about consumption and to care for the environment.
Use bins, bags or other containers to separate the following: glass, plastic, cans and metal, paper and general waste (not for recycling).
If you have a compost heap, use it for vegetable peels, table scraps, egg shells and suitable organic material.
Do not compost meat, bones or fish scraps (they will attract pests), weeds or diseased plants.
Pet manure, banana peels and orange rinds are unsuitable for composting.
What to do: separate your rubbish into special bins or bags and either leave them on the pavement or take them to collection points or municipal drop-off sites or buy-back centres.
You can also organise a collection service to pick up your waste from your home or office.
E-Waste: electronic waste is a growing problem and the goods should never be thrown into general waste. Most municipal sites have e-waste facilities.
In Cape Town, Clearer Conscience collects in the City Bowl, Atlantic seaboard and southern suburbs.
You can have your recyclables collected once a month or twice a week.
They also take clothes, plants, e-waste and green waste by prior arrangement.
Recycle 1st is a new business collecting recyclables from homes and businesses in Cape Town’s northern suburbs. Collections are twice a month.