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Eric Ng

IRC, a China-backed East Siberia iron ore miner selling mostly to northeast China, will benefit from the weaker rouble in the wake of toughened sanctions by the Trump administration against Russia and its oligarchs, according to the company’s senior management. 
“As our operating costs are mostly denominated in Russian roubles, the recent deprecation in the currency helps lower our operating costs,” IRC’s chairman Jay Hambro said on Wednesday.
“More unit cost reduction would come from the ramp up of our Kimkanskoye and Sutarskoye mine’s capacity utilisation from 74 per cent currently to 100 per cent by the third quarter this year.” 
Hambro said capacity utilisation last year averaged 50 per cent.
When the Amur River bridge linking northeast China and East Siberia is completed before year-end as part of China’s Belt and Road Initiative, a further US$5 per tonne of logistics savings is expected, he added. 
IRC’s production cost was US$48.4 a tonne last year. Iron ore fetched around US$64.5 a tonne on Wednesday.
The rouble lost as much as 11 per cent of its value against the US dollar after Washington imposed additional sanctions, but it has since rebounded 4.5 per cent to around 61.7 against per dollar.
IRC, which had US$223 million of debt at the end of last year, is primarily funded by Industrial and Commercial Bank of China. 
Washington imposed fresh sanctions against Moscow on April 6, targeting seven Russian oligarchs with ties to President Vladimir Putin along with 12 companies they own or control, over alleged meddling in the 2016 US presidential election.
Russian iron ore miner IRC seeks more penalties from Chinese contractor for project delays
On Monday, the Trump administration said it would decide in the “near future” whether to impose additional sanctions over Moscow’s support for President Bashar al-Assad in civil war-torn Syria.
“We are aware of the global political and economic tensions of late … their impacts to [our Kimkanskoye and Sutarskoye mine] are not felt as the mine continues to sell … to customers in China and Russia as usual,” said chief executive Yury Makarov in a statement on Wednesday. 
Hambro said setbacks caused by railway congestion and “technical issues” last year that hampered its ore-drying facilities are not expected to recur this year.     
IRC has been seeking compensation from contractor China National Electric Engineering Co for missing its original commissioning date by more than two years. The dispute may take another 12 months to reach a conclusion, he added.  
IRC, the first company to list in Hong Kong in 2010 under the local bourse’s “Chapter 18” listing rules that allowed miners without revenue to list, posted an underlying operating loss of US$16.4 million for 2017 when it sold around 1.5 million tonnes of iron ore. 
Hambro said full utilisation of the mine’s 3.2 million tonne annual capacity is expected to be reached by year end, which will help lift IRC’s profitability.
But investors have yet to fully share his optimism amid uncertainties whether there will be more fallout from the US-Russia political and economic upheaval. 
On Wednesday in Hong Kong, IRC’s shares closed 4.7 per cent higher at 15.6 HK cents apiece. They have lost 12.4 per cent since April 6. 
Argonaut Securities analyst Helen Lau said investors have been reluctant to bet on Russia-exposed companies even as valuations have come down, due to uncertainties related to the deepening divide between Moscow and Washington.  
Still, IRC shares have been trending downwards in recent months, shedding two-thirds of their value in 14 months, even as iron ore prices have strengthened.
Among reasons for the disparity in the share price versus the improving business outlook, China Construction Bank has heavily sold down shares of the miner pledged as collateral for loans by General Nice Development, a customer and shareholder of IRC. 
General Nice Development, once China’s largest privately owned steel smelting materials trader, controlled by businessman Cai Suixin, owned 9.2 per cent of IRC in late March, down from a 13.8 per cent stake at the end of last year, according to IRC.  


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Weak rouble and strong dollar are godsends for this Siberian iron ore miner selling to China

Jay Hambro, chairman of IRC, an iron ore miner which sells to smelters in northwest China, says the company is a beneficiary of weakness in the rouble brought about by US sanctions against Russia and its oligarchs last week. Photo: Edmond So

Donald Trump ‘refuses to put new sanctions on Russia’ despite US ambassador already announcing them

US President Donald Trump contradicted remarks made by the American ambassador to the United Nations, Nikki Haley (pictured on Saturday), that the US would impose sanctions on Russia following its support of alleged chemical attacks on Syrian civilians. Photo: AP

US President Donald Trump steps off Air Force One upon arrival at Palm Beach International Airport in West Palm Beach, Florida on April 16, 2018. Trump is heading to his Mar-a-Lago estate in Palm Beach for a summit with Japan's Prime Minister Shinzo Abe on April 17-18. / AFP PHOTO / MANDEL NGAN

FILE - EDS NOTE: GRAPHIC CONTENT - This Sunday, April. 8, 2018 file image released by the Syrian Civil Defense White Helmets, shows a rescue worker carrying a child following an alleged chemical weapons attack in the rebel-held town of Douma, near Damascus, Syria. With the Middle East on edge and many fearing inadvertent triggering of regional war, it is easy to forget that two weeks ago Trump shocked advisers in declaring an intention to withdraw troops from Syria. Now, apparently angered by a suspected chemical attack, Trump is threatening imminent military strikes against the Syrian government forces he blames and rattling a saber at Syria's patron Russia. (Syrian Civil Defense White Helmets via AP, File)

epa06649914 Kremlin spokesman Dmitry Peskov smiles after a ceremony to present presidential awards to young people in arts and awards in the field of literature and art for works for children and youth in the Kremlin in Moscow, Russia, 06 April 2018. EPA-EFE/ALEXANDER ZEMLIANICHENKO / POOL

Damascus skies erupt with surface to air missile fire as the U.S. launches an attack on Syria targeting different parts of the Syrian capital Damascus, Syria, early Saturday, April 14, 2018. Syria's capital has been rocked by loud explosions that lit up the sky with heavy smoke as U.S. President Donald Trump announced airstrikes in retaliation for the country's alleged use of chemical weapons. (AP Photo/Hassan Ammar)

Rusal’s Hong Kong listed stock sinks as US plans to slap fresh round of sanctions on Russia

Aluminium ingots are seen at Rusal’s smelter in Krasnoyarsk. Photo: Reuters

(FILES) In this file photo taken on June 1, 2017 Russian billionaire Oleg Deripaska, who heads aluminium producer Rusal, attends the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg. The United States struck at the heart of President Vladimir Putin's inner circle on April 6, 2018, imposing sanctions on seven of Russia's most influential oligarchs and stoking a diplomatic crisis that some have dubbed a new Cold War. Those hit include metals magnate Oleg Deripaska, described as operating for the Russian government, as well as Alexei Miller, director of state-owned energy giant Gazprom. Any assets they hold in areas under US jurisdiction could now be frozen. / AFP PHOTO / Olga MALTSEVA

Russian iron ore miner IRC seeks more penalties from Chinese contractor for project delays

IRC aims to supply steel mills that currently buy ore from other Russian and Chinese producers or importers via Tianjin and Qingdao ports. Photo: AFP

Cranes unload imported iron ore from a ship at a port in Rizhao, Shandong province, China, December 6, 2015. Picture taken December 6, 2015. REUTERS/Stringer ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY. THIS PICTURE IS DISTRIBUTED EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS. CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA.