The Mining Blog

Bucyrus International, Inc. of Wisconsin, USA has announced that it has signed a definitive agreement to acquire DBT GmbH. DBT is based in Lunen, Germany. Bucyrus will pay $710 million in cash and issue to RAG 471,476 shares with a market value of $21 million (based on Bucyrus average closing price for the 20-day trading period ended December 14, 2006).

The transaction is expected to be completed at the end of the first quarter of 2007 and is subject to customary closing conditions and regulatory approvals.

Bucyrus is a global leader in the design and manufacture of walking draglines, electric rope mining shovels and rotary blasthole drills used by the world’s surface mining industry.

DBT is a leading worldwide supplier of complete system solutions for underground coal mining. DBT manufactures equipment including roof support systems, armored face conveyers, plows, shearers and continuous miners used primarily by customers who mine coal.

The combined company, now serving both the surface and underground mining industries and with over 100 years of experience, will have a consolidated installed base of equipment of over $20 billion.

Tim Sullivan, President & Chief Executive Officer of Bucyrus said, “We are extremely excited about combining Bucyrus with DBT and we believe that this is a unique opportunity to jointly build a stronger company for our customers, employees and shareholders. Both companies share a similar culture and history with a focus on technology, delivering high quality products, valued employee relationships and providing first class service to our customers.”

Bucyrus will acquire DBT in a two-stage transaction. Bucyrus and the Hamburg Trust, a private German investor, have formed a holding company which will acquire DBT. Bucyrus owns 100% of the voting shares (representing 49.9% of the registered share capital) of the holding company, and the Hamburg Trust owns 100% of the non-voting shares (representing 50.1% of the registered share capital) of the holding company. Bucyrus is funding the purchase price and will be entitled to 100% of the dividends and cash flow of DBT. The parties have also entered into an irrevocable purchase agreement pursuant to which Bucyrus will acquire all of the holding company shares held by the Hamburg Trust by no later than 2009 for €8mm (half of which has been paid by RAG). Bucyrus and the Hamburg Trust will honor the prior commitments made by DBT with its German workers regarding facility and employee matters.

Bucyrus’ corporate headquarters and primary manufacturing facility is located in South Milwaukee, Wisconsin, USA.

Calvin Close
Managing Director
miningreference.com

A Parliamentary Committee has given the green light to the sale of Australian uranium to China. The committee has concluded that the sale would be in the national interest of Australia. IT was convinced that there are suitable measures in place to ensure that Australia’s uranium would only be used for peaceful processes.

Committee chairman Andrew Southcott said, “Both Government and opposition members of the committee have concluded that the sale of uranium to China, protected by these safeguards, is in the national interest”.

One of the so-called “measures” in place include China’s membership of the International Atomic Energy Agency (IAEA).

Australian Democrats Deputy Leader, Andrew Bartlett has said, “Australia’s bilateral safeguards are inadequate because they rely on the monitoring of the International Atomic Energy Agency, which the agency’s own director says is flawed.”

Even the Committee Deputy Chairman Kim Wilkie admitted that there were legitimate concerns about the effectiveness of the IAEA to monitor nuclear activity.

It is well known that China is increasing its nuclear capability. I cannot believe that we can adequately monitor what happens with the uranium once it leaves the Australian shores.

Don’t take my word for it, though.

Each year, the US Department of Defense releases a report on the military power of the People’s Republic of China. I will quote a few statements in their latest annual report to Congress, “Military Power of the People’s Republic of China 2006″:

Estimates place Chinese defense expenditure at two to three times officially disclosed figures. The outside world has little knowledge of Chinese motivations and decision-making or of key capabilities supporting PLA modernization.

DIA estimates that China’s total military-related spending will amount to between $70 billion and $105 billion in 2006—two to three times the announced budget.

If the Chinese government will not even be transparent about how much it spends on military-related spending, how can they be trusted about what they will use the uranium for?

I do not think that the estimated $250 million per year from uranium sales is worth the risk of Australia’s uranium powering China’s nuclear weapons.

What are your thoughts?

Calvin Close
Managing Director
Australia’s Mining Reference

Centennial Coal’s announcement last week of the results of its Strategic Review certainly sent its share price plummeting, losing over 25% of its value since the announcement. The main “shock” in the announcement was the news that Centennial was closing Newstan Colliery after years of struggling with geological issues.

Centennial have likened the Newstan closure to the closure and subsequent re-opening of Clarence Colliery a few years ago. I was employed at Clarence Colliery when it was closed. I have also worked at Newstan and at other mines within the Centennial group, so I would like to comment on this analogy.

Before I do, I want to note that these comments are my own personal comments and do not reflect the opinion of my former employer, Centennial Coal.

In many ways, I see very good parallels between Clarence and Newstan.

Clarence, like Newstan, had geological problems with their longwall.The other likeness was that both mines, because of their cost structures, had to produce a lot of coal to break even. Clarence and Newstan both had the potential to produce a lot of coal and be profitable, but the physical issues were against them.

When I was working at Clarence, we were always optimistic that we had finally overcome the problems and that we would make a profit, but it never came. The hard decision had to be made to close the mine, and in hind sight, it was the best decision for Clarence. Centennial bought the mine from Cyprus / Oakbridge and re-opened it as a bord and pillar mining operation. The subsequent positive results from Clarence speak for themselves.

The hard decision with Newstan had to be made, and has been made. The mine will no longer be dragging down the good results from the other mines. Even more positive is that some of the equipment from Newstan is to be transferred to Mandalong, which will result in further improvements in production at Mandalong.

Centennial has said that they will be assessing options for Newstan, including re-birthing it as a bord and pillar operation like they did with Clarence. Centennial have a very good track record of converting mines like Clarence into smaller but very successful bord and pillar operations. I look forward to the results of Centennial’s review of options for Newstan.

Now that Newstan’s problems are behind Centennial, I believe that the future will be brighter for Centennial.

Calvin Close
Managing Director
miningreference.com

Disclaimer: Please note that the above information only represents a personal opinion of the author and is not intended to represent any advice for existing or potential share holders

Are trying to market your mining equipment, product or service to the mining industry? Well, you definitely need to get your hand on this free report,

This report will change the way you promote your company, products and services to the mining industry.

For more information, go to the Mining Marketing website.

If you have any questions about marketing to the mining industry, please post a comment by clicking on the “Post a Comment” link below. We have already been asked questions about marketing to the mining industry. We are endeavouring to answer as many questions as possible. Get in early to make sure your question in answered in this must-have guide.

No matter where you go in the mining industry, people have stories to tell about their experiences while working at a mine somewhere. Tell us your story by using the “Post a Comment” link below.

I have a few, but I will post them one at a time, so let’s get started…

One night, I was the Maintenance Engineer in charge of the shift. I received a phone call sometime in the middle of the shift, “can you come to the coal plant - I think we have a problem”. You know the type - don’t bother asking any questions on the phone, just get up there now. When I arrived, the plant was in full operation, but that was the only good news.

The operator told me that the gantry conveyor tripper wouldn’t move, so he was limited to placing the coal where the tripper was currently located. I checked the status of the ROM (run of mine) system. The longwall was busily producing coal at top rate, with very little spare capacity between the longwall and where this tripper was located.

To cut a long story short…

It turned out that the tripper motor had burned out, so we had to change it. We got the replacement motor and headed up to the tripper. I had better explain…

The temperature outside was below freezing, the sleet was blowing almost horizontal, and we had to manually carry the motor up the gantry. We slung the motor on a pole with one person at each end of the pole.

Once we isolated the whole system and got the old motor off (with the sleet still hitting us in the face), we all agreed that we were not going to manually carry the faulty motor back down the gantry. We discussed a few options, then decided on a plan. Because the coal had already completely filled up below us, we decided that we would just drop the motor on to the coal “hill” just a few metres below us. It should hit the coal stack, then roll down another few metres into a gully in the coal pile. We could then retrieve it with one of the CAT loaders. Simple, right?

Well, it didn’t hit the coal stack and roll down. It just hit the stack and went straight down and disappeared from sight!

Funny? We didn’t think so at the time, but things do seem to get funnier with time.

Now, what about your story? There are just a few rules:

1. The story must be true
2. It must not promote an unsafe situation
3. Either it must have happened on a mining site or it must have something to do with the mining industry (ie mining equipment in an overhaul workshop, etc)
4. We reserve the right to not publish a story

I’m looking forward to hearing from you - get those keyboards going. Tell us your story by using the “Post a Comment” link below.

Calvin Close
Managing Director
miningreference.com - Australia’s Premier Mining Directory

ps We did manage to retrieve the faulty motor later.

miningreference.com is pleased to announce the upcoming launch of The Mining Showcase on 1 September 2006.

The Mining Showcase is the place for companies to showcase their products and services to the mining industry.

The idea for The Mining Showcase began because we had so many companies approach us asking how they could promote their products and services to the mining industry. Many of these products and services were unique and very beneficial to the industry.

All of these companies were facing similar problems of getting their products / services known to the mining industry.

On the other hand, the team at miningreference.com had experience in promoting to the mining industry.

The match was obvious. These companies had the great products and services; the miningreference.com team had the experience and appropriate channels to promote these to the mining industry.

What’s more, we did not stop there with product listings on The Mining Showcase. We surveyed all the requests we had received for assistance in promoting to the mining industry.

We realised that some companies not only wanted to be able to “showcase” their products on the internet; they also wanted a higher-profile promotion of their products and services.

We tailored several “Mining Promotion Packages” that specifically addressed the needs of these companies. There are packages to suit every budget. All the packages include listings in The Mining Showcase, but the higher-end packages include other means of promotion to the mining industry.

The top-end package, “Platinum”, includes an incredible range of services that provide an un-precedented promotion into the mining industry and beyond.

We have received a great response from our existing advertisers, so we are really excited about this latest service provided by miningreference.com.

For further information about promoting your product / service to the mining industry, or to request a sneak preview of The Mining Showcase, please contact advertising@miningreference.com.

Calvin Close
miningreference.com - Australia’s Premier Mining Directory, plus a whole lot more

BHP Billiton has posted an Australian corporate record profit of US$15.3 billion (Underlying EBIT) for the financial year ending 30 June 2006. This profit comes on the back of the booming resources sector.

Although this profit is great news for BHP Billiton shareholders, their record profit has also allowed them to invest a significant amount of money into new growth projects. This investment is good news for the Australian economy and employment.

BHP Billiton also announced a share buy-back program of US$3.0 billion over the next 18 months.

A summary of the results for the full financial year ending 30 June 2006 are as follows:

• Commodity markets remain strong underpinned by supply restrictions and a generally constructive global economy.
• Annual records for all key earnings measures including Underlying EBITDA up 50% to US$18.1 billion and Underlying EBIT up 54% to US$15.3 billion.
• Attributable profit up 63% to US$10.5 billion, including exceptionals, and up 58% to US$10.2 billion, excluding exceptionals.
• EPS up 66%, including exceptionals, and 60%, excluding exceptionals, benefiting from recent buy-backs.
• Underlying EBIT margin and Return on Capital Employed increased to 44% and 35% respectively.
• Record annual production volumes for aluminium, copper, iron ore, nickel and natural gas in a strong demand environment.
• Four major growth projects completed and seven major growth projects approved. 23 projects in execution or feasibility, representing US$13.8 billion of investment.
• Final dividend of 18.5 US cents per share, an increase of 27.6% on last year’s final dividend. This brings the full year dividend to 36.0 US cents per share, up 28.6%.
• Further capital return of US$3.0 billion, bringing total for FY2006 to US$5.0 billion.

(Source: BHP Billiton News Release Number 26/06, 23 Aug 2006)

Further details can be obtained by viewing their full news release.

Please note that this post does not represent financial advice of any sort.

Calvin Close
miningreference.com - Australia’s Premier Mining Directory

We have all heard it… BANG! goes the water pipes in your home when the water supply is turned off by the washing machine, dishwasher, or even when you turn off some taps in your home. This effect is known as “water hammer” or “hydraulic shock”, and apart from the irritating noise it makes, actually causes damage to the pipes in your home.

Now, imagine what would happen if the pipes were 30 - 40 cm diameter pipes. Well, I have seen what happens. In one mine that I worked, I saw where about a dozen 1″ roof bolts were broken because of water hammer in the pipe that was hanging from them. It is absolutely amazing to see!

There have been many companies try to solve this problem. Some try to dampen the effect. Their solutions only partly solve the problem, and some of them come with some big adverse side-effects. Another (very expensive way) of solving this problem is by installing “soft-start” pumps that ramp up / ramp down the speed of the pump. Again, this only covers some of the times where water hammer occurs.

Now, a company in Australia has developed a water hammer arrestor that eliminates (positive and negative) hydraulic shock 100% effectively.

Not only can the device eliminate water hammer in pipes containing water at any pipe size and pressure, it can also combat this shock in steam, gas, air, sludge or just about any other fluid. The applications cover both residential installations and industries such as mining, oil/gas, etc.

The arrestor is not presently available for sale, but more information will be available on a website currently being prepared by the developers of the arrestor. I will post further details as they become available.

What are your experiences with water hammer? Has water hammer been a real headache to you? Let us know by posting a comment.

Calvin Close
Managing Director
miningreference.com - Australia’s Premier Mining Directory

The Queensland Mining and Engineering Exhibition was opened in Mackay yesterday by the Queensland Deputy Premier, Anna Bligh.

Ms Bligh said that mining is the powerhouse behind Queensland’s current economic success story, with economic growth in Queensland this financial year forecast to be well ahead of the 2.5 percent forecast for the nation.

Ms Bligh said that “a big factor in this has been due to our booming resources sector. The global appetite for our coal and mining is at an all time high and prices are continuing at a high level.”

“Fuelled by massive demand from China, India and an economically resurgent Japan, Queensland’s crude metals, including coal, metalliferous ores, petroleum and other crude minerals, and processed minerals and metals totalled to $24 billion in 2004/05, which is 31 percent of the nation’s total mining exports.”

Ms Bligh said of this $24 billion, $9.5 billion was in coal exports and Queensland is the largest single coal-exporting province in the world, supplying more than 20 percent of the world’s seaborne coal to 34 countries.

“But it’s not all just about the resources we pull out from the ground and export around the world - Queensland is also emerging as a major player in mining services,” she said.

“Queensland has developed world-class equipment and services around mining that deliver process improvement and reduced costs in an industry, which by its very nature, is resource-intensive.

“The Queensland’s market for mining services generates revenue of about $1.1 billion a year in turnover.”

There will be 460 exhibitors at the Exhibition. The last time this event was held in 2004, almost 8,000 people visited the exhibition.

This year, there is also a live webcam at the show.

For those of us that are not able to visit this year, post a comment to let us know your experience at the exhibition. Tell us what you liked or didn’t like.

Calvin Close
miningreference.com - Australia’s Premier Mining Directory

How many of you read the article in The Australian where plumbers are in such short supply in Port Hedland that they are being flown in from Perth?

Apparently, the mining boom in the far north of Western Australia has left the town short of plumbers, mechanics and other trades personnel. The local trades people are taking up mining jobs with the big mining companies who are struggling to keep up with the world demand for iron ore and other mining products.

Even though plumbers are being paid $90,000 per year to fix household plumbing problems, plumbing contractors just are not able to compete with the $120,000+ per year paid by the mining companies.

It will be interesting to see how long this resources boom can last. If you look at the share market this week, the mining stock prices have certainly been up and down all week. Metal prices have also been up and down over the last few weeks. Not even the traders seem to know what is going to happen.

If you are looking for employment (of any kind) in the mining industry, check out the latest mining jobs on The Mining Jobsite. Also, even if you do not find the job you are looking for, make sure you register as a jobseeker so you can be notified of new mining positions as they are posted by our recruiters.

Calvin Close
Managing Director
miningreference.com - Australia’s Premier Mining Directory