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Year: 2014

Tax hike, copper prices force Barrick to shutter Zambian mine – by Rachelle Younglai (Globe and Mail – December 19, 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.

Barrick Gold Corp. said it will suspend operations at its Zambian copper mine and record an impairment charge after the African country’s government more than tripled its mining royalties.

The suspension is the latest setback for Barrick, which borrowed heavily to acquire the Lumwana mine in 2011, when copper prices were soaring.

The royalty on open pit mining in Zambia will jump to 20 per cent from the current 6 per cent, under a new law that will go into effect Jan.1.

“The introduction of this royalty has left us with no choice but to initiate the process of suspending operations at Lumwana,” Barrick’s co-president Kelvin Dushnisky said in a statement.

Barrick, which employs 4,000 workers at Lumwana, said it would start cutting jobs in March after giving the Zambian government the mandatory two-months notice. The mine will be idled by the middle of the year.

It is unknown whether Barrick will be able to renegotiate rates with the government before it shutters the mine.

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Western firms reduce Eritrean miners to ‘abject slavery’, UK MPs say – by Mark Anderson (The Guardian – December 19, 2014)

http://www.theguardian.com/uk

Early day motion slams mining companies for using forced labour in collusion with repressive Eritrean government and adding to the country’s human exodus

Western mining companies operating in Eritrea are reducing workers to “abject slavery” at their mines and worsening a human exodus that is driving more than 5,000 people out of the country every month, a group of British MPs has said.

An early day motion, signed by 41 MPs, blasts Eritrea’s poor human rights record, condemning “arbitrary arrest and detention and compulsory military service” carried out by the government.

The bill “notes with concern the collusion between the government of Eritrea and the international mining companies from the UK, Canada and Australia, which is using the forced labour of Eritreans for work in extractive industries in conditions which have been described as abject slavery”.

MPs called on the Eritrean government to allow Sheila Keetharuth, the UN’s special rapporteur on human rights in Eritrea, to travel to the country and assess claims of widespread rights violations. Keetharuth has not been allowed to enter the secretive country since her appointment in 2012.

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Uralkali Gains Most in 5 Years on Output Goal, Share-Deal Delay – by Yuliya Fedorinova (Bloomberg News – December 18, 2014)

http://www.businessweek.com/

OAO Uralkali jumped the most more than five years in Moscow as the largest potash company raised its output goal even after one mine was halted by flooding and it delayed a share deal that would have left it less room to pay dividends.

“With increased capacity utilization at other mines, we intend to produce 12 million tons of potash this year to meet strong demand from our customers,” Chief Executive Officer Dmitry Osipov said in a statement. In August, Uralkali estimated annual output of the fertilizer of 11.5 million metric tons.

The potash producer advanced 14 percent, the biggest gain since May 2009, to 141.50 rubles by the close in Moscow trading, paring its loss for the year to 18 percent.

Uralkali is monitoring the Solikamsk-2 mine in Russia’s Perm region after water poured into the site last month. A sinkhole that has widened to 54 meters (177 feet) by 83 meters opened near the mine, swallowing up summer homes. Uralkali sees a high risk the mine will be completely flooded, forcing it to abandon a site contributing almost 18 percent of its capacity.

“We expect the accident to have an insignificant impact on our 2014 full-year output target,” Osipov said today.

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Vale SA: Overview of the world’s largest iron ore company – by Annie Gilroy (Market Realist – December 17, 2014)

http://marketrealist.com/

Operations

Vale SA (VALE) is a Brazilian multinational diversified metals and mining company. It is the world’s largest producer of iron ore and iron ore pellets and the world’s second-largest producer of nickel. It also produces manganese ore, ferroalloys, coal, copper, PGMs (platinum group metals), gold, silver, cobalt, potash, phosphates, and other fertilizer nutrients.

Vale has mineral exploration operations in 11 countries around the globe. It operates infrastructure systems in Brazil and other regions of the world, including railroads, maritime terminals, and ports that are integrated with its mining operations.

Its main operations are divided into four main lines of business:

  • Bulk materials – iron ore and pellets, manganese, ferroalloys, and coal
  • Base metals – nickel, cobalt, copper, PGMs and other precious metals
  • Fertilizer nutrients – potash, phosphate, and nitrogen fertilizers
  • Logistics infrastructure – railroads, maritime terminals, distribution centers, and ports
  • We’ll discuss these in detail in subsequent parts of this series.

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Will Cliffs Natural Resources Inc (CLF) Go Bankrupt? – by Troy Kuhn (Bidnessetc.com – December 19, 2014)

http://www.bidnessetc.com/

Cliffs Naturals Resources Inc stock has plunged over the last year, and its weak balance sheet points to a grim future

Cliffs Natural Resources Inc (NYSE:CLF) has had a miserable year.

The company has lost around three-quarters of its market capitalization, and Credit Suisse recently downgraded the iron miner’s price target to $1. Cliffs stock has been targeted by investors and traders as a prime candidate for a short sell, as falling iron-ore prices continue to take a toll on the miner’s earnings.

Cliffs generates 83.7% of its revenue from iron-ore sales, and iron-ore assets represent 85.8% of its overall assets. Cliffs has been in trouble for a couple of years now.

Casablanca Capital LLC recently won a proxy fight against Cliffs, which forced several changes to the miner’s board. Cliffs’ CEO and chairman Lourenco Goncalves took over the company’s management after the proxy fight.

Casablanca was of the view Cliffs should sell off its Bloom Lake mine, along with its US coal operations and Australian mines. In August, Mr. Goncalves announced a share repurchase program of $200 million, and sold a minority holding in a graphite mining company.

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‘There will be some blood’: Will Canada’s oilpatch be able to withstand the price onslaught? – by Yadullah Hussain (National Post – December 19, 2014)

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

There will be bloodletting and pain as the impact of low oil prices reverberates through the Canadian oilpatch, but the industry is entering the downturn from a position of strength, according to analysts.

“There will be some blood on the streets, but if companies can keep their cash to debt ratios down below three times or in some cases four times at least they are not facing a bankruptcy-type position,” said Jeremy Kaliel, executive director, institutional equity research at CIBC World Markets Inc.

The dramatic decline in oil prices has caught the industry off guard, leaving companies scrambling to cut capital expenditures and dividends and redrawing their 2015 plans.

The U.S. oil and gas industry is already feeling the heat as much of the shale boom was fuelled by a diet of cheap debt that looked affordable at US$100 per barrel. With U.S. crude now edging towards US$55, investors have fled.

“Some of these companies have up to 75% of their market cap wiped out,” said Rick Chamberlain, managing director at Houston-based Berkeley Research Group. “The ones that leveraged didn’t make the right financial decisions.”

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Canada needs to defend its own security interests in the Pacific, instead of relying on Americans – by Matthew Fisher (National Post – December 19, 2014)

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

The great ditherer, U.S. President Barack Obama, has finally begun his vaunted Asian pivot.

More top-of-the-line American fighter jets are to be based in the western Arctic, Hawaii and Asia. Submarines and surface warships, including an aircraft carrier, are being permanently repositioned right now from the Atlantic to the Pacific.

Australia, Japan, South Korea and half a dozen other Australasian countries have been spooked by Beijing’s territorial claims to just about all of the South China Sea and much of the East China Sea, and by its determination to project power and national prestige into the Pacific by building a vast fleet of new warships, including an aircraft carrier and scores of diesel-electric and nuclear submarines that can be armed with long-range cruise missiles.

The Harper government has not been shy about telling Canadians that they are citizens of a Pacific nation. Yet its response to China’s military priorities, which much of the world considers to be the overriding security dilemma of the 21st century, has been virtually non-existent aside from slightly enhancing the country’s slim contribution to U.S.-led military games in the Pacific.

Security there is not being discussed at any level by the government or by the opposition, although it is a subject of considerable and growing concern to Canada’s admirals and generals. Nor has Canada purchased anything for the military because of security tensions over its western horizon.

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Natural Resources Minister Greg Rickford says Ring of Fire oversight body needs overhaul – by Peter Koven (National Post – December 19, 2014)

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

TORONTO – The Ontario government wants Ottawa to pony up $1 billion for the massive “Ring of Fire” mineral belt, but the federal natural resources minister is warning that key structural challenges still need to be overcome.

Foremost among these is the fact Ontario has stacked the four board seats of the Ring of Fire’s development corporation with nothing but provincial bureaucrats. They are responsible for overseeing infrastructure development in the region.

“We’ve got a problem with that,” Greg Rickford said in an interview. “That’s not a responsible way to deal with taxpayers’ money.”

The Ring of Fire, named after the famous Johnny Cash song, is a vast but very remote mineral belt located in Ontario’s James Bay Lowlands. The region is thought to hold about $60-billion worth of metals, but the federal and provincial governments need to overcome enormous infrastructure challenges to draw investment from the mining sector, especially in an environment of falling commodity prices.

Queen’s Park committed $1 billion to building infrastructure, and has waged a very public campaign asking Ottawa to match it through the federal Building Canada infrastructure fund.

“Your commitment to providing matching federal funding is key to strengthening investor confidence for development of the [Ring],” Ontario mining minister Michael Gravelle said last week in a letter to Mr. Rickford.

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Sherritt International stock soars on U.S.-Cuba deal, but still business as usual for Canadian firms in Cuba – by Peter Koven (National Post – December 18, 2014)

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

TORONTO – In the short-term, the diplomatic breakthrough between the United States and Cuba changes very little for Sherritt International Corp. and the dozens of other Canadian companies active in Cuba. But a potential lifting of the U.S. embargo would have a transformative impact on them.

Sherritt’s stock jumped more than 26% on Wednesday as the two countries re-established diplomatic ties. The reaction was not surprising, as the Toronto-based miner has always had a “Cuban discount” baked into its stock. Sherritt is the biggest foreign investor in the Communist state by a huge margin. Its shares closed at $2.87, up 60¢ in Toronto.

“There’s always been this uncertainty around political risk in Cuba as a result of the Cuba-America relationship,” chief executive David Pathe said in an interview. “And if this can help alleviate that, we think it’s a positive development for Cuba and for us.”

Nonetheless, it is largely irrelevant to the company’s business interests. The U.S embargo, which remains in place, prevents Sherritt from having any business dealings with companies inside the U.S., including banks. And the U.S. Helms-Burton Act prevents some of Sherritt’s directors and officers from entering the country.

Many experts see Wednesday’s news as the first step towards scrapping those policies.

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Nickel boss: ‘Economic benefits of CETA outweigh the criticism’ (EurActiv Germany – December 18, 2014)

http://www.euractiv.com/

The free trade agreement between the EU and Canada (CETA) will provide European companies with long-term access to essential raw materials, Nickel Institute President Tim Aiken says, hoping to create more pro-business EU laws with CETA. EurActiv Germany reports.

Tim Aiken is President of the Nickel Institute, the global association of the world’s primary nickel producers. Aiken took part in the EurActiv Workshop “Europe+Canada”.

He spoke with EurActiv Germany’s Dario Sarmadi.

The CETA Free Trade Agreement between EU and Canada has been criticised especially in Germany and France because of the Institutional State Dispute Settlement clause. Do you think the clause should be removed?

The protection of investors is an important building block of the CETA Agreement, which provides both Canadian companies in Europe and European companies in Canada with a safeguard for their investments. Currently, it represents a hurdle for the debate within Europe. However I am convinced that the hurdle will be overcome given that the economic benefits of the CETA agreement for industry and consumers outweigh the criticism.

What opportunities does the CETA agreement offer to the raw materials industry?

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Vale Loses Bid to Toss Rio Tinto Suit Over Guinea Mining – by Patricia Hurtado (Bloomberg News – December 17, 2014)

http://www.bloomberg.com/

Vale SA lost a bid to dismiss Rio Tinto Plc (RIO)’s suit alleging it conspired with Israeli billionaire Beny Steinmetz and his BSG Resources Ltd. to steal rights to the world’s biggest untapped iron-ore deposit by bribing officials in Guinea.

Rio Tinto accused Vale of passing confidential information it obtained during discussions the two companies had about Vale buying a stake in the Guinea property to Steinmetz and BSGR. Steinmetz, BSGR and Vale used that information to advance their own bid for the mining rights, Rio Tinto said in a complaint filed last year in federal court in New York.

U.S. District Judge Richard Berman in Manhattan today rejected Vale’s argument that the suit should have been brought in the U.K. because the two companies had agreed to take any dispute to an English court.

The judge cited “legitimate reasons” for keeping the case in the U.S., including Rio de Janeiro-based Vale’s alleged conduct in furtherance of the racketeering conspiracy, such as meetings between the company and London-based Rio Tinto that occurred in New York.

Berman also pointed to an existing federal investigation by Manhattan U.S. Attorney Preet Bharara relating to whether there was a scheme to siphon off Guinea’s mineral wealth.

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Northwestern Ont. transmission line may threaten caribou habitat (CBC News Thunder Bay – December 16, 2014)

http://www.cbc.ca/news/canada/thunder-bay

A new report says caribou in Ontario’s boreal forest are facing increasing man-made threats — and specifically points out a proposed transmission line running between Dryden, Ignace and Pickle Lake.

Anna Baggio of the Canadian Parks and Wilderness Society’s Wildlands League said the route would disturb prime caribou habitat.

“Let’s not place permanent infrastructure in these really hammered southern caribou ranges,” she said. “And if you have to build some of this infrastructure — if it’s an absolute imperative — then at least situate it along an existing highway.”

Baggio said the province needs to do a better job of living up to its commitment to protect woodland caribou. “If we can protect woodland caribou habitat, then we can protect the habitat of a whole other suite of species,” she said.

“If we don’t do a good job on Boreal caribou, it’s sort of like a canary in the coal mine for us … It shows us that our practices and our intentions in the Boreal forest are not where they need to be.”

Baggio said the notion of ploughing “a transmission line through some of the best remaining intact caribou habitat … is perplexing.

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Education Report Shows Failures in Federal Education Program – by James Murray (Netnewsledger.com – November 30, 2014)

http://www.netnewsledger.com/

THUNDER BAY – It is a stark indication of the failure of the federal government, and a grim look to the future for Canada’s First Nations young people.

More shocking, is the quiet admission by the Canadian Government that with the grades many of the youth attending schools on Canada’s First Nation reserves, the majority of students are not getting the grades that would allow them to succeed at college or university.

It is the federal government’s dirty little secret.

Timmins James Bay Member of Charlie Angus shares, “We learned the shocking news of the failures of literacy and numeracy in First Nation schools. In the Ontario region, students who participated in provincial standardized testing in 2013-2014 ended up with an average literacy score of 21 per cent for boys and 32 per cent for girls. The numeracy rate was a mere 18 per cent for boys and 20 per cent for girls”.

The results of First Nation student’s on-reserve who participated in provincial standardized testing show that Ontario has a long ways to go to catch up. The literacy rates for elementary school students in Ontario are a very low twenty-one per cent for boys and thirty-two per cent for girls.

That is well below the provincial average for off-reserve schools. It is shockingly low.

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Despite rulemaking ban, US DOI will continue sage grouse fight – by Dorothy Kosich (Mineweb.com – December 18, 2014)

http://www.mineweb.com/

New Consolidated and Further Continuing Appropriations Act gives U.S. miners some breathing room from ESA and “Waters of the U.S.” designations.

RENO (MINEWEB) – After President Obama signed a $1.1 trillion omnibus bill into law, Interior Secretary Sally Jewell Wednesday attacked the rider that prohibits the U.S. Fish & Wildlife Service from writing and issuing rules related to the sage grouse, which could stymie new mining development and expansion of current mining operations in 11 Western states.

The rider for the Consolidated and Further Continuing Appropriations Act of 2015 imposes a one-year ban on new Endangered Species Act protection for the sage grouse. The rider was introduced by Rep. Mark Amodei, R-Nevada, and former president of the Nevada Mining Association, which includes a number of major U.S. gold mines within its membership.

Jewell declared, “It is disappointing that some members of Congress are more interested in political posturing than finding solutions to conserve the sagebrush landscape and the western way of life. Rather than helping the communities they profess to benefit, these members will only create uncertainty, encourage conflict and undermine the unprecedented progress that is happening through the West.”

“The consequence of this rider is that it prevents the Service from finalizing a rule that would provide certainty to landowners, giving them assurance that they can continue economic activities compatible with the conservation of the species, such as properly managed livestock and ranging activities,” said Jewell’s statement.

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