[cid:image001.png@01CFCC06.AAE9E8C0] Tuesday, 09 September 2014 [cid:image006.jpg@01CFCC06.BEC58700]
Snapshot � Company news highlights: Ex-BHP Billiton executive talks down iron ore price, Petra Diamonds recovers a 232ct white diamond from Cullinan, Anglo American names head of iron ore sales � Commodity review highlights: Steel rebar continues plumbing new lows, Gold: Indian festival season starting, China aluminium exports rise as demand at home wanes, India July coal imports rise 9% YoY, Japanese now planning nickel smelter in Indonesia � Other economic news: Yuan climbs to 6m high as fixing set at strongest since 2010 � African resources update: Congo renews push for the worlds largest HEP dam, Todays African Proverb
Company news � Ex-BHP Billiton (BLT LN) Executive talks down iron ore price.

Former BLT executive, Alberto Calderon, has stated that iron ore prices may fall a further 15% and stay at $70-80/t for as long as three years as expansions add to a global surplus.

Calderon, now a board member of Orica (ORI AU), the biggest supplier of chemicals and explosives to the mining industry, stated that "at some point someone has to take a lead and say we are all just heading towards a cliff.

At some point, common sense will have to prevail." Calderon was chief executive of BLTs aluminium and nickel unit from December 2011 until April 2013.

Source: Bloomberg Investec view: Calderons view is just that, a view, but he does make a point that is in stark contrast to the view of the majors when he states that Chinas supply in iron ore will not significantly reduce and that a lot of reduction will come from higher-cost miners in Australia.

As a reminder, following are the spot price levels that the major/mid cap names reportedly need to break even: Rio Tinto (RIO LN) at US$45/t, BHP Billiton (BLT AU) at US$50/t, Fortescue (FMG AU) at US$74/t, Atlas (AGO AU) at US$85/t, Grange Resources (GRR AU) at US$88/t, Arrium (ARI AU) at US$89/t and Gindalbie (GBG AU) at US$100/t. � Petra Diamonds (PDL LN) recovers a 232ct white diamond from Cullinan.

The stone is a D colour Type II diamond of "exceptional size and clarity".

PDL will update the market later on the expected timing for the sale, expected to be in the 2Q of this financial year.

Source: Company Investec view: It is difficult to say what the stone will be worth - it is a white and not a rare blue - but based on comparable sales amongst peers it could be valued in the region of $40k/ct or $9m (�6m or c.1p/share). � Anglo American (AAL LN) names head of iron ore sales.

The company has appointed David Trotter, effective from October.

Trotter has previously worked at BHP Billiton, Fortescue and Cliff Natural Resources (CLF US).

Source: Reuters, SNL.
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Commodities news � Steel Rebar continues plumbing new lows.

Steel reinforcement-bar for January delivery on Shanghai Futures Exchange dropped 1% to 2,806 yuan/mt, a new low for the most-active contract, which started trading in 2009.

Chinese steel exports were up 26% YoY in August, amid domestic oversupply and rising overseas demand.

The difference between Chinese domestic iron ore and seaborne product has now widened to $24.07/mt.

August iron ore imports fell ~9% MoM to a 2-month low of 74.88Mt.

Source: Bloomberg Investec view: While spot iron ore remained at US$83.60/t overnight, the 1mth through to 24mth futures all rose, signalling a potential closing in on the bottom for spot, as talk still remains of potential Chinese stimulus.

However, with better trade data yesterday, it wasnt enough to spark at tick up in spot. � Gold: Indian festival season starting.

The festival season is kicking off in India, a period in which gold sales traditionally spike.

Investors will be watching this key market particularly closely, given how recent constraints on purchasing have impacted (official) demand.

Last year duties were raised to 10%, and an "80-20" rule was introduced (one-fifth of imports must be re-exported).

The new Indian government surprised the market recently by keeping import controls unchanged, in spite an improving trade balance.

At the same time that gold demand has become subdued in India (down 62% YoY in 1H14, albeit 1H13 was an unusually high period), equity markets have risen 25%.

New Delhi expect import restrictions to be dismantled later this year.

Source: FT � China aluminium exports rise as demand at home wanes.

Aluminium shipments from China climbed to the highest in three years, with the country exporting 390,000t in August, up 22% YoY.

Aluminium futures in China have traded at a discount to prices on the LME since June 20, while the arbitrage for exports on a premium-adjusted basis has been the most profitable since 2011.

Source: Bloomberg Investec view: China and its less capital disciplined aluminium industry have long been regarded as having the potential to curb a prolonged recovery in the metal price.

It will be disappointing for the Western producers, which have slimmed down their operations significantly, if Chinese exports continue to rise. � India July Coal Imports Rise 9% YoY to 17.95mt.

India received 14mt of thermal coal and 3.95mt of coking coal in July, with 11.5mt coming from Indonesia, 3.52mt from Australia and 2.54mt from South Africa.

Coal fuels more than 60% of Indias electricity.

Source: Bloomberg � Japanese now planning nickel smelter in Indonesia.

Mitsubishi Corp directors have met the Indonesian President regarding a plan to build a US$4bn nickel smelter in Halmahera Island, North Maluku.

The project will be nested under PT Weda Bay Nickel, whose shares are 66.6% owned by Eramet (ERA FP), 30% by Mitsubishi, 10% by PT Antam (Persero) and 3.4% by PAMCO.

Source: SNL
Other economic news � Yuan climbs to 6m high as fixing set at strongest since 2010.

Chinas yuan rose to a 6m high as the central bank raised its fixing by the most in almost four years after the nation reported a record trade surplus.

The PBoC boosted the currencys daily reference rate by 0.3% to 6.1520 per dollar.

Exports exceeded imports by $49.84bn in August, from the previous record of $47.30bn in July, and more than the median estimate for a $40bn surplus in a Bloomberg survey.

Source: Bloomberg Investec view: The stronger yuan makes exports more expensive, but makes commodities that bit cheaper.
African resources update � Congo renews push for the worlds largest HEP dam.

The planned Grand Inga hydro-electric power complex in the far western extreme of the DRC would deliver 42,000MW, nearly twice the size of the Three Gorges Dam in China.

If built, it would double the electricity production capacity of Africa.

After decades of planning, the project is gaining momentum with an unprecedented offer from China to work alongside the US.

Still, even if Washington and Beijing opt to collaborate, the $50bn project remains hostage to uncertain financing, opposition from environmental groups and high sovereign risk.

There are plans, however, for a seven-phase effort that might lessen the objections of environmentalists and be less daunting to finance, with the first phase at $12bn capex and delivering 4,800MW.

The World Bank and the regional African Development Bank may commit a quarter of the funds, still leaving $9bn to come from other sources.

Source: FT Investec view: Yes, a daunting task, but Randgolds (RRS LN) seamless delivery of the Kibali project shows that these projects can be undertaken, where there is the will and the financial returns. � Todays African Proverb.

"There are no shortcuts to the top of a palm tree".

Source: BBC
Investec Global Natural Resources Research Team: UK South Africa
Hunter Hillcoat Tel: +44 (0) 20 7597 5182
Albert Minassian Tel: +27 (0) 21 416 1454
Marc Elliott Tel: +44 (0) 20 7597 5189
Investec Global Natural Resources Sales Team: UK Hong Kong South Africa Adam Bidwell Tel: +44 (0) 20 7597 5089
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Investec Commodity Hedging Team: http://treasury.investec.co.uk/products-and-services/commodities.html UK Callum Macpherson Tel: +44 (0) 20 7597 5070
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