March 14, 2014 – Republic of Mining

Why building a mine on budget is so rare – by Alisha Hiyate (Mining Markets – March 14, 2014)

March 14, 2014

http://www.miningmarkets.ca/

There is a well-established history of capital cost overruns in the mining industry stretching back at least 50 years, mining analyst Christopher Haubrich told the Prospectors and Developers Association of Canada (PDAC) conference in Toronto in early March.

In fact, since 1965, capital cost overruns in the sector have averaged between 20% and 60%. Even so, there has been little investigation into the cause of the problem, said Haubrich.

“Retrospectively looking at capital cost overruns has obviously not helped at all,” Haubrick noted. “We still have a problem, we have for at least 50 years as I’ve mentioned, and all reports suggest that we will continue having a problem.”

Haubrich, however, came to the PDAC armed with some new insight into the cause of capital cost overruns, a topic he researched while interning at Colorado-based Resource Capital Funds (RCF) on a fellowship arranged through the Colorado School of Mines for eight months last year. Haubrich noted that the research he presented belonged to RCF, but that the conclusions were his own.

In a statistical analysis of 50 mines built between 2005 and 2013 that were representative of the industry, Haubrich said that only two of the many factors that are often given for capex overruns — including poor execution or engineering, poor weather, inflation and currency fluctuations — had a statistically significant association with capital cost overruns.

Half-mln tonne zinc position sparks jitters about hidden stocks – by Eric Onstad (Reuters India – March 14, 2014)

March 14, 2014

http://in.reuters.com/

LONDON, March 14 (Reuters) – Metals markets are nervous that nearly half a million tonnes of hidden zinc may be delivered on the London Metal Exchange next week, shaking a market unsure about the extent of further concealed stocks.

Investors who had bought into a bullish story about zinc may be particularly concerned since the appearance of the unforeseen inventories could weigh on prices of zinc, the top LME performer last year.

LME zinc stocks MZNSTX-TOTAL have declined by a third over the past 12 months, encouraging bullish investors, but analysts are uncertain about how much more inventory is stashed away in off-exchange depots in financing deals.

“It’s a very real risk that we do see a very big physical delivery onto the LME at some point over the next week,” said analyst Gayle Berry at Barclays in London. “There has been, we think, a large accumulation of unreported zinc inventories, which could be mobilised to deliver against a large short futures position.”

Quebec and Ontario: Different Mining Acts for Similar Issues – by Herb Shields and Raymond Goulet – (Stantec Blog -March 14, 2014)

March 14, 2014

http://stantecinc.blogspot.ca/

Herb Shields is an Aboriginal Relations Specialist with Stantec. Raymond Goulet is a Principal, Environment Services with Stantec.

In the 2012-2013 Fraser Institute Mining Survey, Ontario and Quebec virtually tied for 8-9th position in a global ranking of mining jurisdictions. Both Canadian provinces have taken a serious look at their respective Mining Acts and made significant amendments to address concerns and pressures from their constituents. What are the chief reasons for these changes and what do they mean for mineral exploration and development in each province?

1. Aboriginal communities. Quebec’s Act now contains three provisions that relate specifically to Aboriginal communities. First, Quebec is to draw up an Aboriginal community consultation policy specific to the mining sector; second, the Act states that it is to be construed in a manner consistent with the obligation to consult Aboriginal communities; and third, the Act requires Quebec to consult them separately (Chapter 1 – Application, Interpretation).

Driving the Ontario Mining Act amendments was a need to enhance Aboriginal consultation approaches. Ontario’s modernized Mining Act included several regulations and subsequent policies whose objective is to implement effective consultation protocols and foster positive Aboriginal-government-industry relations.

Agencies Dodge Responsibility for Human Cost of Mountaintop-Removal Coal Mining – by Mary Anne Hitt (Huffington Post – March 14, 2014)

March 14, 2014

http://www.huffingtonpost.ca/

Mary Anne Hitt is director of the Sierra Club’s Beyond Coal Campaign.

This week, we got some disappointing news – a judge ruled that the Army Corps of Engineers isn’t responsible for considering the health effects of coal pollution when it issues permits to fill valleys with rubble from mountaintop-removal coal mines. As Appalachian residents continue to suffer every year from well-documented health problems linked to mountaintop removal, this decision highlights a deadly loophole that requires long-overdue action from the White House and Congress.

Responsibility is a tricky thing. In our daily lives we work to be conscientious of our bills, our taxes, our family lives and a myriad of other duties that come up every day. But what happens when say, no one in the house takes responsibility for the dirty dishes? They keep piling up and things get pretty nasty.

Now, instead of dishes, think about what happens when no one chooses to take responsibility for the terrible effects coal pollution has on public health. From soot and smog to asthma, cancer and heart attacks, things go from nasty to life-threatening.

Building the platinum demand of tomorrow – by David McKay (Miningmx.com – March 14 2014)

March 14, 2014

http://www.miningmx.com/

[miningmx.com] – TRYING to understand just how much platinum metal sits in investor hoards or mining company inventories is something of a dark art. GFMS Thomson Reuters, a UK-based market consultancy, estimated in 2012 platinum stocks at 4.5 million ounces.

The thinking is that there’s been drawn-down on those stocks, but the market is not sufficiently relieved. It also supposes 900,000 of platinum ounces held in Absa Capital’s exchange traded fund (ETF) is not actually an inventory.
Derek Engelbrecht, the outgoing marketing director of Impala Platinum (Implats), says these ounces are unlikely to be liquidated, although the track-record of ETFs shows they can be counted as ‘hot money’; in other words, investors will sell the metal – release it into the market – when there’s a profit to realise.

In any event, the inventories of platinum which have been amassed over the years is dampening the ‘fundamental deficit’ in the platinum market. Platinum producers aren’t mining enough metal to meet market demand such as autocatalysis.

That’s why Engelbrecht is hoping the South African Reserve Bank (Sarb) accept his idea for a Mandela platinum coin.

POSCO to revamp non-steel ops, shun major steel investment – new CEO – by Hyunjoo Jin (Reuters India – March 14, 2014)

March 14, 2014

http://in.reuters.com/

SEOUL – (Reuters) – POSCO’s (005940.KS) new chief executive said the South Korean steelmaker will restructure non-steel businesses and not make any major investment in increasing steelmaking capacity, in a marked break from the strategy of his predecessor.

Incoming CEO Kwon Oh-joon, a former POSCO chief technology officer, will sell non-core assets and list affiliates after a wave of investment and acquisitions left the world’s fifth-biggest steelmaker with high debt and credit-rating downgrades.

POSCO, once one of the industry’s star performers, posted its third straight year of profit decline last year as it continued to grapple with steel oversupply and reduced customer demand brought about by recent global economic downturn.

“POSCO’s biggest task is to improve its financial structure,” Kwon said at a news briefing after starting a three-year term as chief executive and chairman. “First of all, we have to improve our core competitiveness in steel and generate profit.”

To that end, POSCO will restructure its materials and energy businesses, and focus on lithium, nickel, fuel cells and clean coal, Kwon said.

Canada in Afghanistan: From digging trenches to digging mines? – by Murray Brewster (Canadian Press/CTV News – March 14, 2014)

March 14, 2014

http://kitchener.ctvnews.ca/

KABUL, Afghanistan – Canadians could go from digging trenches to helping dig gold and copper mines in Afghanistan if the Harper government has its way.

The country’s ambassador to Kabul signalled this week that the moribund Afghan economy will be a principal focus for Canada, which has formally ended its military mission.

The hope is to turn the page on a decade of military involvement and aid handouts in the desperately poor, war-torn nation. Standards which Canada has long promoted, education, good governance and women’s rights, will still be there, with an additional emphasis on business.

“Our diplomatic focus will also be on economic development,” said Deborah Lyons, who took over as Canada’s first woman ambassador to Afghanistan six months ago. The approach has the enthusiastic endorsement of Shamial Bantija, Afghanistan’s ambassador-designate to Canada and an economic adviser to President Hamid Karzai.

Rio Tinto unveils its Processing Centre of Excellence – by Cole Latimer (Mining Australia – March 13, 2014)

March 14, 2014

http://www.miningaustralia.com.au/home

Rio Tinto has unveiled the latest component of its Mine of the Future program – the Processing Centre of Excellence.

Based in Brisbane, Rio says this “is a world first, state-of-the-art facility that ehances monitoring and operational performance by examining in real time processing data from several Rio Tinto operations spread across the globe”.

Known by some colloquially as ‘the excellent centre for excellent excellence’, it will be operated by a team in Brisbane, that will provide processing solutions and initiatives to mine sites in Mongolia (at Oyu Tolgoi), the US (at Kennecott), and across Australia (at five different sites).

A massive interactive screen while show, and analyse, technical data in real time, “allowing processing improvements ot be immediately introduced and operational performance to be optimised,” the miner said in a statement.

Early trials have already led to improvements such as adjusting the flotation process for gold and copper recovery at Oyu Tolgoi in Mongolia.

Barrick transformed under steady hand – by Lisa Wright (Toronto Star – March 14, 2014)

March 14, 2014

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

CEO Jamie Sokalsky has overseen ‘most radical change’ in gold miner’s history

Jamie Sokalsky is the first to admit he’s not the flashiest guy in the rough and tumble gold mining game. “I’m an accountant, my wife is an accountant, my oldest daughter is an accountant and my youngest daughter is studying to be an accountant,” says the chief executive of Barrick Gold Corp. with a chuckle.

While the mild-mannered 56-year-old likes to downplay his management style as rather dull, Sokalsky has ironically overseen the wildest times in the history of the world’s largest gold miner after taking the helm nearly two years ago.

“Barrick is quite a changed company in the last couple years. We’ve radically changed how we’re running it,” he says in his first sit-down interview since his surprise promotion to CEO in June, 2012.

Indeed, the bullion behemoth – whose mantra for years had been ‘bigger is better’ and growth at all costs – is almost a shadow of itself, having gone from 27 mines across the world to 19 in the last six months alone as it shed almost $1 billion of money-losing assets amid the plummeting gold price.

Cameco finally starts up production at Cigar Lake after years of delays – by Peter Koven (National Post – March 14, 2014)

March 14, 2014

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

Thirty-three years after it was discovered, and nine years after construction began, Cameco Corp. has finally brought the much-anticipated Cigar Lake uranium mine into production.

The company made the landmark announcement on Thursday. And after a seemingly endless string of delays and setbacks at the giant Saskatchewan-based project, it must have come as a relief.

“There were a lot of doubters who said it would never be done,” chief executive Tim Gitzel said in a phone interview from the mine site. “But I never gave up on the creativity and the perseverance of our workforce.”

When Cameco’s board approved construction of Cigar Lake in 2004, the expected capital cost was $450-million and first production was planned for 2007. By the end of last year, the cost was a staggering $2.6-billion and it still wasn’t in production. Needless to say, it has been a much tougher process than Cameco ever imagined.

ANALYSIS-Eyeing Brazil and Africa, potash juniors defy industry slowdown – by Rod Nickel (Reuters/CNBC – March 13, 2014)

March 14, 2014

http://www.cnbc.com/

WINNIPEG, Manitoba, March 13 (Reuters) – Two junior potash producers working in unusual locations look set to shake off the most bearish industry conditions in five years and open new mines, helped by their proximity to Brazil and Africa, two of the world’s most promising but under-served fertilizer markets.

Tepid global demand for the crop nutrient and sagging prices have crimped profits for producers across the industry and hurt prospects of many of the exploration companies aiming to develop new mines for the already-oversupplied industry.

The world’s biggest fertilizer company, Potash Corp of Saskatchewan , slashed 1,000 jobs in December, while Mosaic Co, a major U.S.-based producer, last year suspended part of its expansion plans.

Yet prospects are bright for Allana Potash Corp and Verde Potash PLC, two small producers developing low-cost potash mines in Ethiopia and Brazil respectively, far from the world’s main potash regions of Western Canada and eastern Europe.

Each promises a shortcut to fertilizer-hungry markets and has attracted strategic or government backing, removing some of the risk.

Canadian securities regulators ease financing rules – by Kip Keen (Mineweb.com – March 13, 2014)

March 14, 2014

http://www.mineweb.com/

Reshaping the financing landscape for Canadian public companies, the CSA outlines a major new exemption.

HALIFAX, NS (MINEWEB) – It is just got a whole lot easier for Canadian companies – juniors most notably – to raise money issuing new shares to existing shareholders.

Today the Canadian Securities Administrators (CSA) outlined a new exemption – effective immediately in most provinces in Canada – that lets any shareholder, regardless of net worth or professional background, individually commit up to $15,000 a year to a financing.

Prior exemptions that let people take part in financings were more stringent and limited to people, for example, with net worths over a C$1 million. The new exemption was proposed last year by the TSX Venture Exchange largely in response to tight financing markets for smaller junior exploration companies which mostly depend on financings to fund their activities.

The new exemption will widen the pool of potential investors for juniors and other public companies in Canada.

Indeed, in this, the rule, published Thursday, went further than a proposal floated last year which was limited to TSX Venture companies.The CSA said it would open door for all companies on the TSX Venture, TSX and CSE to use the exemption.

Estimate of Undiscovered Copper Resources of the World, 2013 (U.S. Geological Survey Fact Sheet – January 2013)

March 14, 2014

http://www.usgs.gov/

Using a geology-based assessment methodology, the U.S. Geological Survey estimated a mean of 3,500 million metric tons of undiscovered copper among 225 tracts around the world.

Introduction

Informed planning and decisions concerning future mineral supplies, sustainability, and resource development require a long-term global perspective and an integrated approach to land use and to resource and environmental management. This integrated approach further requires unbiased information on the global distribution of identified and undiscovered mineral resources, the economic factors influencing their development, and the environmental consequences of their exploitation.

The U.S. Geological Survey (USGS), the principal Federal provider of research and information on nonfuel mineral resources, has completed a geology-based, cooperative international assessment of copper resources of the world. Collaborators in this assessment include mineral resource experts from national geological surveys and from industry and academia worldwide.

‘Future mine’ research [South Africa] needs to begin now – Wits – by Martin Creamer (MiningWeekly.com – March 13, 2014)

March 14, 2014

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – Research into South Africa’s ‘mine of the future’ needs to begin immediately, says University of the Witwatersrand (Wits) School of Mining Engineering head Fred Cawood.

The programme for the mine of the future needs to be broken into various phases, with the immediate goal being to mine more for less in order to provide cash flow for more intensive research.

The underground mining environment needs to be better understood and technology already widely used on surface, including satellite technology, needs to be migrated underground.

For that purpose, a digital mine mock-up is being established at the Wits School of Mining Engineering to assure safety and generate the cash for more profound longer-term research. Cawood’s view is that mechanisation should follow optimisation and be accompanied by the introduction of a new mining layout.

Floating hotel draws workers to NW Canada boom town – by Julie Gordon (Reuters U.K. – March 12, 2014)

March 14, 2014

http://uk.reuters.com/

VANCOUVER – (Reuters) – Hundreds of construction workers in booming northern British Columbia will take up residence this week in unique digs on board a cruise ferry revamped into a floating luxury hotel.

The aging ship will help relieve a housing shortage in one busy Canadian port town already bursting ahead of a promised energy boom that could last more than a decade.

The Silja Festival – a Baltic ferry made over as the Delta Spirit Lodge – will spend at least a year docked outside Kitimat, British Columbia, where it will provide housing for about 600 workers in town for Rio Tinto Alcan’s $3.3 billion smelter-upgrade project, which is expected to wrap up in 2015.

After that, the ship’s owners hope more contracts will float their way as major energy companies like Chevron Corp, Petronas and Royal Dutch Shell push ahead with proposed liquefied natural gas export (LNG) projects along Canada’s Pacific coast.

“This kind of investment would never occur without the kind of mega-opportunities that are growing in the Pacific Northwest,” said Andrew Purdy, vice president of Bridgemans Services Ltd, the privately held company behind the hotel.