Imports are up 17.1% year-over-year. The strong imports suggest that weak prices have prompted commodity traders to lock in higher volumes.
The manufacturing PMI shows what direction China’s manufacturing sector is taking. Though China’s PMI moved higher compared with September, its sub-indices largely revealed slower growth.
Data show that China’s crude steel production for October was 67.52 million metric tons, which is a decline of 0.2% from October 2013. Average daily crude steel output in China totaled 2.18 million metric tons, down 3.3% month-over-month.
The iron ore port inventory is a key indicator reflecting the supply and demand balance. If steel mills continually demand iron ore, then inventory doesn’t build up at the port.
Exports from Brazil have been strong in previous months, and the outlook is also positive based on Vale SA’s (VALE) plans for higher production. This is negative for iron ore players engaged in seaborne trade.
Shipments from Port Hedland were near record highs in October. Iron ore exports totalled 37.5 million tons, which is an increase of 30% year-over-year.
Goldcorp’s production decisions are made based on generating the appropriate risk-adjusted rates of return and free cash flow. Production decisions aren’t based on “growth for growth’s sake.”
Of all world economies, China’s consumes the most iron ore and constitutes about two-thirds of the seaborne iron ore imports. As a result, whatever affects China affects the iron ore industry.
Currently, Goldcorp (GG) is free cash flow (or FCF) negative. It had a negative FCF of $355 in 3Q14. However, Goldcorp should turn FCF positive in 2015.
Goldcorp’s net debt—total debt less cash and cash equivalents—to equity is the lowest compared to its closest peers. Net debt to equity is a measure of a company’s financial leverage.
In addition to its own exploration programs, Goldcorp seeks exploration partnerships and joint ventures with exploration companies that work in the complementary low-risk jurisdictions.
Goldcorp acquired Cerro Negro in 2010. Since then, its gold resources and reserves nearly doubled. Its proven and probable gold reserves were 5.74 million ounces as of December 2013.
Goldcorp’s (GG) all-in sustaining costs (or AISC) are falling. In 2013, its AISC was $1,031 per ounce. It expects the AISC to be in the range of $950–$1,000 for 2014.
Goldcorp’s (GG) Marlin mine is located in the western highlands of Guatemala. Marlin is a high-grade mine. It had an average of 3.33 grams per ton of gold for 2013.
Alumbrera is an open-pit copper and gold mine in the northwestern province of Catamarca. Catamarca is in the foothills of the Andes. It’s the biggest mine in Argentina.
The Peñasquito mine is located in the northeastern portion of the state of Zacatecas in north-central Mexico. It’s Mexico’s largest open-pit mine. It consists of two open pits.
Los Filos is located in the Nukay mining district in central Guerrero state in southern Mexico. Its estimated mine life is 14 years. It had 7.95 million ounces in gold reserves as of December 2013.
Red Lake is one of Goldcorp’s (GG) mines. It has the highest production. It’s located in Ontario—one of the world’s most prolific gold districts. It covers ~2,335 hectares.
Goldcorp (GG) operates four mines in Canada and the US. The Red Lake, Porcupine, and Musselwhite mines are based in Ontario, Canada. The Wharf mine is in South Dakota.
Exploration activities continue at the Marlin mine. It has the potential to extend it’s mine life. More exploration work at the Alumbrera mine won’t be possible because of limited mineral rights.