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Atlas Iron in Australia delays New Iron Ore Mine

Atlas Iron delays the construction of its new mine due to the dropping prices of the commodity. The development of the Corunna Downs mine was announced when iron ore was trading at around $95 a tonne that is way back early this year. 

Since oversupply and weak demand from steelmakers around the world, prices have retreated to under $60 a tonne.

 

According to the company, they will proceed with the development when commodity market conditions improves as Corunna Downs remains an important project for Atlas to sustain its production base.

The mine was a key plank in efforts to rebuild the company's yearly production rate to 12 million tonnes, after the firm almost collapsed during a previous down cycle before being rescued by creditors.

Atlas was forced to suspend mining in April 2015 when it was losing $15 for each tonne mined. It faces higher costs than some other Australian producers because it uses road, not rail, to ship ore up to 230 kilometers (140 miles) to port. 

Within a year, the mines were back running, after 70% of Atlas was transferred to creditors in exchange for a 48% reduction in debt. Inventories of imported iron ore at Chinese ports last stood at 138.95 million tonnes. 

 

 

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Ethereum Plummeted 15% as Demand Rapidly Growing

Ethereum a new generation currency rival of bitcoin plummeted more than 15% overnight due to the growing demand and increased worries it may face a divisive debate on how to upgrade its network. 

It dropped as low as $303 before steadying at $328. Earlier this month the digital currency reached a record $402. 

 

The sharp fall comes after Ethereum shot up more than 3,000% this year, far surpassing bitcoin's already stellar 180% gain and coming close to beating bitcoin as the digital currency with the greatest market value.

It has grown in popularity for its ability to support applications, potentially becoming a structure for a decentralized, next generation internet.

Investors demand at the funding launch for Status clogged the Ethereum network. Online investors were also reportedly unable to withdraw funds from digital currency depositories known as Wallets.

Ethereum trading on Wednesday was also affected by an outage of the GDAX exchange run by Coinbase. Some traders online noted orders for ethereum being placed this afternoon at far below the $300 price. 

 

In the last several weeks, a surge in digital currency prices has contributed to a flood of investor demand, which has overwhelmed websites and attracted cyber attacks. Growing pains have affected both as well. Bitcoin's price fluctuated in the last few months as developers debated the best way to upgrade the network. 

News last week that two upgrade methods, BIP148 and SegWit2x, may be able to work together helped bitcoin recover from its lows of the month. Now, a flood of demand for Ethereum has increased similar concerns.

 

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Wall Street edges Lower as Energy and Financials Slump with Oil

Wall Street was weighed down by falling energy shares as oil prices fell and added to investor concerns about low inflation, while healthcare and technology stocks helped lift the Nasdaq Composite index.

Energy was the weakest S&P sector with a 1.6% decline after oil prices reversed course during the morning session and US crude touched its lowest point since August despite larger than expected declines in inventories.

Continued weakness in oil futures added to investor worries about inflation and as a result hurt cyclical such as banks and industrial.

The Dow Jones Industrial Average 57.11 points, or 0.27%, to close at 21,410.03, the S&P 500 lost 1.42 points, or 0.06%, dropping to 2,435.61 and the Nasdaq Composite added 45.92 points, or 0.74%, rising to 6,233.95.

The energy index has fallen 14.9% so far this year compared with an 8.9% rise for the S&P 500. Oil futures have fallen about 21% so far this year.

Investors looking for growth opportunities turned to Nasdaq, which contains many technology and biotechnology companies. Biotech and pharmaceutical investors have taken note. The Nasdaq Biotech Index is up 8% since Friday's close, its best three day run since November.

 

 

 

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Domestic Equities in China will Join MSCI's Global Benchmark Indices

Domestic equities in China will join MSCI’s benchmark indices. The decision, announced by the New York based index compiler. A move that should help the capital market of the world’s second largest economy edge towards becoming more globally integrated. 

After three failed attempts, it has finally succeeded and it will give China’s $6.9 trillion stock market a bigger role in everything. The Emerging Markets Index previously excluded mainland traded stocks due to concerns about restrictions on purchases by overseas investors and flawed rules in listed companies trading suspension. The gauge currently only includes shares of Chinese companies listed in Hong Kong or the US.

 

According to the index compiler, China’s A shares will initially represent a 0.73% weighting in the MSCI Emerging Markets Index and the weighting could increase further over time if China implements more changes in its market reform. 

The full inclusion of domestic Chinese stocks in the widely tracked MSCI Emerging Markets Index could pull more than $400 billion of funds from asset managers, pension funds and insurers into mainland China’s equity markets over the next decade.

MSCI made its decision after the Chinese regulators made it easier for foreign investors to access mainland equities through the two Stock Connect trading links between Hong Kong and Shanghai/Shenzhen and restricted the number of trading suspensions by listed companies. 

It had ejected inclusions over the past three years, citing concerns including capital controls and listed company abuse of the trading halt rules. 

 

However, months ago the MSCI moved to relax its investment criteria by cutting the number of stocks to 169 from 448 in a bid to address curbs on repatriating capital from China and concerns over the country’s high number of suspended stocks.

The revised proposal helped address these issues because the 169 stocks can be easily accessed by foreigners through the “Stock Connect” link launched in 2014 and significantly expanded in December.

MSCI said it planned to add the 222 stocks and will begin a review of the A-shares and include them in provisional indices beginning in August.

 

 

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Rio Tinto declined Glencore’s Bid to Buy its Thermal Coal Asset

Rio Tinto has rejected a bid from FTSE 100 rival Glencore to buy its coal mines in Australia, opting to stick with its initial buyer, Chinese-backed Yancoal.

The Anglo Australian group said that Yancoal was the preferred bidder because unlike Glencore it had already achieved regulatory clearances for the deal, meaning it could complete sooner.

Rio said it had received “additional information and confirmations” about how Yancoal would fund the acquisition, amid speculation that the company had yet to raise financing. Australia-listed Yancoal is majority owned by China’s Yanzhou, which is in turn owned by state-backed entities.  

 

Yancoal has revised its payment terms so that it will now make one single payment for the Coal & Allied business in New South Wales instead of a number of deferred payments, Rio said. They also revealed it had financial backing from Yankuang Group, its parent company's biggest shareholder, although this has yet to be approved by Yancoal's independent directors.

A bidding war broke out over the coal mines earlier this month when Glencore revealed it had tabled a $2.55bn offer for the assets, $100m more than the initial bid by Yancoal, which was announced in January.

 

Rio is backing out of coal mining to focus on iron ore and steel while China is looking to shore up its energy supply. Although the country is trying to cut back pollution from coal-fired plants, the commodity is expected to remain in long-term demand across Asia for the next two decades prompting Glencore’s interest in gatecrashing the deal.

In its offer earlier this month, Switzerland-based Glencore pointed out it already had mines adjacent to Rio’s operations in the Hunter Valley, offering potential savings if the two businesses were combined. It also has regulatory approval from Japan, which imports the bulk of the area’s coal.

 

Yancoal’s offer was the most attractive because it removes the deferred payment structure, can meet the timeline we have set for the transaction and has given us certainty regarding the outstanding regulatory approvals required.

Because Rio Tinto is 10pc owned by Chinalco, which is also backed by the Chinese government, the sale will count as a related party transaction. As such the deal must go before a vote by Rio Tinto shareholders in the UK and Australia next week.  

 

 

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