Canada’s mining executives hope for better after a dismal 2013 – by Rachelle Younglai (Globe and Mail – January 1 2014)

The 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.

2013 was a bad year for mining companies in Canada and around the world. Metal prices fell, companies slashed costs, projects were suspended and executives continued to lose their jobs. To top it off, China’s slowing economy cast a pall over the sector.

Below are the mining industry’s pivotal moments from its dismal year.

1. Russian potash producer OAO Uralkali sent the crop nutrient industry into a tailspin when it broke up one of the world’s two marketing alliances that sold potash to global markets. Before the breakup, Uralkali and its Belarus potash rival and a North American alliance (which includes Canada’s Potash Corp. of Saskatchewan) controlled 70 per cent of the potash market and had enormous sway over prices. Now fertilizer prices are depressed and buyers have delayed making potash purchases as they wait for prices to fall further.

2. Too much nickel in the market and not enough demand sent prices of the silvery-white metal down about 20 per cent in 2013.

Now, Indonesia’s coming ban on raw mineral exports has the potential to be a game changer. The Southeast Asian country is a major nickel producer and wants to process more of the raw material to boost the value of its exports. But Indonesia does not have the infrastructure needed to process all the ore it produces, and how it will implement its ban, due to start in 2014, remains unclear.

“There will be a cutback in ore exports. But the question is by how much,” said Andrew Mitchell, nickel analyst with the U.K.-based Wood Mackenzie energy and mining research firm.

3. Gold plummeted nearly 30 per cent over the past year to close around $1,202 (U.S.) an ounce, the biggest annual decline in three decades.

The drop in bullion prices reinforced a new-found religion at gold companies – financial discipline – a stark contrast to the motto of earlier years: “growth, growth, growth.” Canada’s three largest gold producers, Barrick Gold Corp., Kinross Gold Corp. and Goldcorp Inc., overhauled operations to preserve cash.

But the bad news is not over yet. The substantially weaker gold price will likely trigger companies to reduce the value of reserves that were calculated using a higher bullion price.

“The swamp is still draining,” said Maison Placements Canada president John Ing.

4. After a difficult year, Barrick announced that its 86-year-old founder and chairman Peter Munk will resign and it handed over the top job to former Goldman Sachs president John Thornton at the company’s 2014 annual meeting of shareholders.

Mr. Munk, a philanthropist and Canadian business icon, started Barrick in 1983 and built it into the largest gold producer in the world.

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