2012 – Page 16 – Republic of Mining

Don’t play it safe, Deloitte tells mining firms – by Bertrand Marotte (Globe and Mail – November 29, 2012)

November 29, 2012

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Faced with rising costs, falling commodity prices and other challenges in these volatile times, mining companies should avoid the urge to retreat and play it safe, says a new Deloitte report.

“For the second year in a row, mounting costs tops the list of the key issues affecting the mining industry,” says Glenn Ives, Americas mining leader at Deloitte Canada.

“This is expected to worsen in the short term as commodity prices continue to dip, workers demand higher wages and regulatory costs rise. But rather than halting production in the face of shareholder demands for more immediate returns, miners should be making investments today to meet the expected long-term demand for commodities.”

The report, Tracking the Trends 2013, lists the top 10 challenges for the mining sector in 2013:

1. Higher costs

Inmet Mining snubs $4.9-billion takeover bid by First Quantum – by Pav Jordan and Tim Kiladze (Globe and Mail – November 29, 2012)

November 29, 2012

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

First Quantum Minerals Ltd. offered $4.9-billion to acquire Inmet Mining Corp., a bold declaration from one of Canada’s largest copper miners that the commodities supercycle has room to run.

Inmet rejected the bid, describing it as “highly conditional” and not in shareholders’ interests, but analysts said First Quantum could return with a higher offer for one of the world’s largest copper projects in development.

Toronto-based Inmet is developing the $6.2-billion (U.S.) Cobre Panama project that will produce some 300,000 tonnes of copper a year for 30 years, putting it on a scale with major mines in Chile and Peru, the world’s largest producers of the metal.

Inmet revealed that it was the second offer from First Quantum in a month, underscoring global miners’ convictions that copper demand will remain strong into the future, despite slowing growth in China and other major markets. Copper has been one of the most in-demand commodities of the past decade, driven by breakneck development in China as it built power grids and entire cities in its urbanization drive.

Fight to keep power plant far from over – by Bryan Meadows (Thunder Bay Chronicle-Journal – November 29, 2012)

November 29, 2012

The Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Thunder Bay’s Liberal MPPs continue their fight to keep the Thunder Bay Generating Station in the energy mix in Northwestern Ontario. Thunder Bay-Atikokan MPP Bill Mauro said Wednesday that he believes the plant conversion from coal-fired to natural gas can still happen.

“I think it can be salvaged,” he said. That’s despite an Ontario Power Generation decision to cancel a Union Gas contract, at a cost of more than $5 million, that would have tied the power station to the utility’s pipeline system.

Mauro said “if the conversion goes forward, those costs will not be lost, just included as part of the project. “It’s my belief that this will happen. The money will become part of the project. “I feel this is a cost-effective project, for our future it makes a tonne of sense,” he said.

“The cost of conversion is minimal compare to the value of the asset (of the Thunder Bay Generating Station).” Thunder Bay-Superior North MPP Michael Gravelle agreed, noting that Energy Minister Chris Bentley has made it clear that the suspension of the conversion plan is a pause in the process.

Ontario’s Power Trip — The gas bungle: $800M? – by Jan Carr(National Post – November 29, 2012)

November 29, 2012

The National Post is Canada’s second largest national paper.

Jan Carr is a director on several electricity-sector boards and former chief executive of the Ontario Power Authority.

Cancellation costs could have paid for five recent hospital projects

Decisions to relocate two Ontario electricity generating stations from the Toronto suburbs of Mississauga and Oakville to locations further afield in Sarnia and Lennox were driven by partisan political attempts to win at the polls. The relocations have a cost, however.

The exact costs are unknown, mainly because the provincial government has released only limited amounts of information, despite the highly publicized production of 56,000 pages of documents. The documents cover a period of time prior to the end of 2011, while the deals to relocate the plants were finalized in 2012. With the Ontario legislature prorogued, there are no legal channels to force publication of the final numbers.

The government has announced a $40-million “cost to taxpayers” for relocating the TransCanada Energy (TCE) plant from Oakville to Lennox and a “total cost” of $180-million for relocating the Eastern Power (EP) Mississauga plant to Sarnia. The credibility of these figures was first undermined by the discovery of an additional $10-million paid to EP related to a 1998 dispute over a different power plant contract. The long settlement delay indicates that the unannounced $10-million was negotiated as part of the current plant relocation agreement, bringing the total Mississauga cost to $190-million.

Canadian Royalties aims to start shipments from Nunavik Nickel in 2013 – by Jane George (Nunatsiaq News – November 28, 2012)

November 28, 2012

http://www.nunatsiaqonline.ca/

More than 650 people already working on site

A Chinese-owned mine in Nunavik will soon see huge ice-class vessels sailing through Hudson Strait to bring nickel, copper, platinum and palladium to European markets.

After sinking $735 million into infrastructure, Jien Canada Mining Ltd., the owner of Nunavik’s second soon-to-be operating mine, plans to ramp up production in early 2013 and hire more Nunavik workers.

The mine company, which expects to reach full production by 2014, will produce nickel, copper, palladium and platinum for at least 13 years. Located 20 miles from Xstrata Nickel’s Raglan nickel mine, the Nunavik Nickel mine sits in “one of the most inhospitable places in the world,” said its president, John Caldbick in a recent interview.

But the cold, rocky plateau is rich in minerals, and early in 2013 the mine will start processing ore. More than 650 people are now on site, living in its 428-person main camp and other temporary camps. Some workers are excavating ore from the Expo open pit mine, while others complete essential parts of the mine’s infrastructure.

NEWS RELEASE: Canada’s mineral treasures sparkle in new Vale Earth Gallery at Canadian Museum of Nature

November 29, 2012November 28, 2012

(L-R) Vale Canada representatives Cory McPhee, VP, Corporate Affairs; Audrey Leduc, Corporate Affairs Officer; and John Mullally, Director, Corporate Affairs in front of display with rock sample from Sudbury’s Vale mine. (Photo by: Jamie Kronick, Canadian Museum of Nature)

www.vale.com

Ottawa, November 28, 2012─Canada’s mineral treasures and the geological forces that shape the country are featured in a renewed and expanded gallery opening November 30 at the Canadian Museum of Nature.

The Vale Earth Gallery presents a fascinating journey through geological time that relates how the Earth formed, how powerful forces have changed and shaped our planet, and how geology and mineralogy connect with everyday life. The new attraction is the result of two years of planning and three months of renovations to a smaller phase of the Vale Earth Gallery that had opened in 2010.

“This new gallery returns the museum’s best geological and mineral specimens to permanent display in an expanded setting that includes new content and engaging interactives,” says Meg Beckel, President and CEO of the Canadian Museum of Nature. “We are extremely grateful for Vale’s support that has allowed us to complete this project that will inspire and connect visitors with our collections and the mineralogy research of our scientists.”

Instructive panels, interactive games and simulations explore the complexities of geology and the three main types of rock that make up the planet—sedimentary, magmatic and metamorphic.

After Conflict Minerals Comes The Death Metal: Tin. And It’s Apple’s Fault Again.- by Tim Worstall (Forbes Magazine – November 24, 2012)

November 28, 2012

http://www.forbes.com/

Given that the well meaning types have now solved the problem of conflict minerals through the Dodd Frank act and the requirements for companies to report their use there’s obviously a new frontier needed for the well meaning to conquer. And of course the conflict minerals problem has been solved as M-23′s move into Goma shows. Now that people can’t make money out of mining in the area no one at all is fighting for control over the area are they?

The Guardian tells us all about this new frontier being staked out. It’s tin mining in Indonesia now. Much of what they actually say they get right. There is indeed a belt of alluvial tin ore ranging from Burma down to Indonesia. In the poorer countries there it is indeed mined by very primitive methods. Miners are badly paid while they do so and yes, some of them die while they do it. The poor pay and primitive methods are because the places are poor: they’re actually the exact same statement.

Just as a little background, and without too much technical guff. The only ore of tin that we care about is cassiterite. Sometimes we find vast mountains of it as in Peru. Sometimes small mountains of it as in the Erzgebirge/Krusny Hory on the German Czech border (disclosure, I’m currently waiting, rather nervously, to find out whether my application for a mining license there is going to be granted. I’m not looking for tin but for the closely related, in an ore sense, tungsten but tin will be a by-product and it’s the main product of the mine right next door.).

NEWS RELEASE: Canadian mining and metals deal value down 43% as focus on business fundamentals rises: Ernst & Young Macroeconomic issues put damper on M&A, but confidence on the rise

November 28, 2012

For the full report, click here: ey.com/ca

(Vancouver, November 28, 2012) Global mining and metals deal value and volume are down globally, with Canadian numbers falling 43% and 16% year over year in the first nine months of 2012, according to Ernst & Young’s seventh twice-yearly Global Capital Confidence Barometer.

“Our survey results reveal that only 38% of companies, down from 53% in April, are focused on growth in the next 12 months, while 27% are refocusing on business fundamentals, including cost reduction and operational efficiency,” says Bruce Sprague, Ernst & Young’s Canadian mining and metals leader.

Cost inflation, slowing economic growth, heightened geopolitical risk and volatile prices have sparked this shift in mining and metals companies’ mindsets.

“Executives are trading in their ‘growth for growth’s sake’ mentality and refocusing on capital optimization,” says Sprague. “Nearly a third of our survey respondents cited cost reduction and operational efficiencies as key priorities in the next year.”

But confidence in doing deals is improving, with 28% of respondents expecting to pursue an acquisition in the next 12 months. That’s up from 18% in April.

Big miners keep on drilling as juniors freeze up – by Pav Jordan (Globe and Mail – November 28, 2012)

November 28, 2012

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

TORONTO — Big mining companies may be pulling back on major new spending plans, but they haven’t let up on exploration budgets, according to Major Drilling Group International Inc., which has a bird’s-eye view on the mining world as the second-largest resource driller.

Chief executive officer Francis McGuire says the same cannot be said for junior miners, which have been stripped of access to financing amid tumultuous global markets, forcing them to virtually freeze drilling activities.

“The junior market is very dead,” Mr. McGuire said in an interview on Tuesday, adding that most drilling proposals for the 2013 calendar year are coming from senior miners, intermediaries and some very well-funded juniors.

Drilling companies closely shadow price cycles for resource commodities, so it’s no surprise their fortunes have slipped in recent months amid a slowdown in demand for key industrial metals, such as copper and zinc, especially from China.

Moncton, N.B.-based Major Drilling said this week that profit fell 30 per cent in the fiscal second quarter, which ended Oct. 31, and pointed at falling demand from junior miners.

Australia investment in new mine projects at record A$268.4bn – by Reuters (Mineweb.com – November 28, 2012)

November 28, 2012

http://www.mineweb.com/

Recent government figures show that committed investment in major resources and energy projects rose to A$268.4 billion at Oct 31.

SYDNEY (REUTERS) – Investment committed to Australian resource projects rose by nearly A$8 billion in the six months to the end of October, while the number of projects declined, in part underscoring rising construction and labour costs in Australia’s resources sector amid weakening demand.

Committed investment in major resources and energy projects in Australia increased to A$268.4 billion according at Oct 31 from A$260.8 billion recorded at the end of April, government figures released on Wednesday show.

“Looking forward, any substantial net increase to the dollar value of committed projects will require either cost increases to larger, existing projects and/or a new final investment decision on a large project within the coming year,” said Professor Quentin Grafton, Executive Director of Australia’s Bureau of Resources and Energy Economics (BREE).

Power plant costs pile up – by Bryan Meadows (Thunder Bay Chronicle-Journal – November 28, 2012)

November 28, 2012

The Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

The bills are piling up amid failed attempts to convert the coal-fired Thunder Bay Generating Station to alternate fuels. The Chronicle-Journal has learned that Ontario Power Generation has cancelled a contract with Union Gas, at a cost of more than $5 million, that would have tied the power station to the Union Gas pipeline system.

The project was integral to converting the coal-fired plant to burning natural gas as fuel. Timmins-James Bay MPP Gilles Bisson said Tuesday that the Liberal government has now spent $20 million on its on-again, off-again plans to convert the Thunder Bay GS from coal to natural gas.

“If the government’s going to spend $20 million, they should walk away with something more than the bill they hand ratepayers,” Bisson said. “Instead of building responsibly to meet our province’s electricity needs, this Liberal government spends whatever they need to meet their party’s needs at election time.”

Bisson noted that the conversion of the Thunder Bay plant from coal to gas has been started and stopped twice. Conversion of the plant was announced in 2005 but the plan was cancelled in 2006. In August 2011, work started again, but it stopped this month.

Plea for ONTC likely to fall on deaf ears – by Wayne Snider (Timmins Daily Press – November 27, 2012)

November 28, 2012

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – It is one thing for the provincial government to ignore the constant pleas from municipal leaders and opposition MPPs on an issue, but it is a whole new ball game when it disregards the needs of industry.

At Timmins council Monday night, Tom Semadeni asked the city to “help us in terms of lobby efforts” to make sure freight rail service is continued in Northeastern Ontario in the wake of Queen’s Park’s ongoing sell-off of the Ontario Northland Transportation Corporation. Semadeni is the general manager of Kidd Operations in Timmins for Xstrata Copper.

Semadeni told council the divestiture of the ONTC could create possible challenges for the mining company in the future. He said trucking material would be more costly than freight rail and cause more damage to the roads.

The concerns raised by Xstrata echo comments raised by Northern leaders – from mayors and councils across the region to MPPs like Gilles Bisson (NDP – Timmins-James Bay) – since the sell-off was announced in the spring.

Clearly, the mining industry is waving a red flag to warn the provincial government about the effect the sell-off will have on industry in the region.

Africans should reap the benefits of their resource bonanza – by Paul Collier (Globe and Mail – November 26, 2012)

November 28, 2012

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Paul Collier is a professor of economics and public policy at Oxford University. This article is based on the Hagey Lecture, delivered at the University of Waterloo on Nov. 22.

Canada is about to take pole position in a race that will determine the well-being of a billion people. The poorest countries on Earth, many in Africa, are in the throes of massive new resource bonanzas. In the past, such bonanzas have been the path to plunder rather than prosperity. The default option is that this dismal history gets repeated: Corruption and violence remain powerful drivers. But across Africa, many brave people are saying “never again.”

In this momentous struggle, on which the future of a billion poor people hangs, Canadians must now decide where they stand. Although this is a struggle that must be won in Africa, Africans alone do not have the power to win it.

Guinea is a brutal current example of the limitations of what decent African governments can do. For decades, the country was mired in dictatorships, culminating in a military coup so grim that the African Union refused to recognize the regime.