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Africa Mining

Mining industry needs to look in the mirror, says Cutifani – by Allan Seccombe (South Africa Business Day – August 27, 2013)

http://www.bdlive.co.za/

THE entire South African mining industry needs to “look in a mirror” and take accountability for the sector, Anglo American CEO Mark Cutifani said at the Mining Lekgotla on Monday.

Mr Cutifani, who is also president of the Chamber of Mines, said the mining sector had faced a “tumultuous” year in 2012 and it remained the industry’s intention to “face with brutal honesty” what needed to be done to improve situations that had led to the unsettled sector.

“The Marikana tragedy was a stark reminder that we as an industry need to do more,” Mr Cutifani said at the second Mining Lekgotla, which draws together participants from labour, the government and the mining sector, as well as community and youth representatives.

The mining companies had looked in the mirror and taken full accountability for the state of the industry, Mr Cutifani said. “We ask our partners to also look in the mirror,” he said. “It remains our absolute intention to address the issues we have faced with brutal honesty and as a sector confronted with myriad challenges, we need to chart a path towards future growth and prosperity.

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The Great Potash Power Play – by Gabe Collins (The Diplomat – August 23, 2013)

http://thediplomat.com/

Potash is perhaps the world’s most strategic fertilizer. Mineable deposits are concentrated in a handful of countries, it cannot be synthesized, and crop yields suffer badly without it.

Russia-based Uralkali, the world’s largest potash producer, turned the global potash market on its head when it announced in late July 2013 it would market potash independently and stop selling through the Belarus Potash Company (“BPC”) marketing structure it previously used to coordinate exports and production.

Prior to Uralkali’s move, two major global marketers—BPC and Canada’s Canpotex—controlled around 70% of potash volume traded worldwide, which helped constrain supply and keep prices high.

Uralkali aims to boost its market share in China, where it is estimated that each 10 kilos of pork consumed requires 1 kilo of potash to produce, since Chinese pigs are increasingly fed with potash-hungry corn and soybeans. Similarly, every 44kg of rice eaten in China is thought to require 1 kg of potash to grow, with application intensity likely to rise in the year to come as China runs short of arable land and seeks to produce more grain from a static land area. Uralkali exported approximately 2 million tons of potash to China in 2012—primarily by rail—and now wants to increase this to 2.5 million tons per year, approximately 22% of China’s forecast 2013 potash demand.

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Resource Nationalism Speech – by Gold Fields CEO Nick Holland (Johannesburg – August 15, 2013)

http://www.goldfields.co.za/

This speech was give by Gold Fields CEO Nick Holland at the Gordon Institute of Business Science in Johannesburg on
15 August 2013.

Thank you and good evening, it is certainly good to be here and I’m glad that we’ve mentioned the fact that it’s the eve of the anniversary of the Marikana tragedy. I guess some of the things I’m going to talk about tonight are probably going to be appropriate in the context of that terrible tragedy of over a year ago.

A lot of debate has been raised on resource nationalism. It has been rated the number one risk in various surveys. I guess what is interesting is maybe that risk has been somewhat overshadowed of late by the decline in metal prices across the mining industry, which in of itself I think presents another challenge.So the reason that we’ve decided to look at this topic is to spark some debate. And I think there are going to be a lot of different views on resource  nationalism. What is it really? Is it good? Is it bad? And the other thing I just want to highlight is this is not a South Africa centric presentation.

Many of the problems that we’re currently experiencing in the South African mining industry are not unique to South Africa. The same issues present themselves around the world.

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Resource nationalism can mean growth and prosperity – by Nick Holland (South Africa Business Day – August 16, 2013)

http://www.bdlive.co.za/

Nick Holland is the CEO or Gold Fields.

AT A time when the global mining industry is besieged by falling commodity prices, soaring input costs and investor apathy, resource nationalism strikes fear into the hearts of many mining executives and investors. At Gold Fields we have a different view.

We are strongly in favour of a more equitable distribution of the benefits of the mining economy, provided that we — governments and the mining industry — are aligned on which economic pie it is we are sharing. Is it the ever-shrinking mining earnings pie that has become the norm in most countries, or is it the growing mining economy pie so elusive to most countries?

A debate of this sensitivity requires well-defined parameters. We view resource nationalism as “government actions to extract the maximum developmental impact and value from a country’s natural resources for its people”. We believe this is the right, if not the duty, of every government.

Most developing countries with a natural resource endowment, including South Africa, have a legacy of poverty and inequality. To address this, and to see more sustainable growth, we need to maximise the socioeconomic benefits from the extraction of natural resources without shrinking the mining pie.

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South Africa all but off BHP Billiton’s radar screen – by Martin Creamer (MiningWeekly.com – August 21, 2013)

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

JOHANNESBURG (miningweekly.com) – South Africa has all but fallen off the radar screen of BHP Billiton, the world’s biggest mining company, which on Tuesday reported an 8.7% fall in revenue to $65.9-billion for the year ended June.

The name of the country did not cross the lips of new CEO Andrew Mackenzie and one got the impression that this region’s aluminium, thermal coal and manganese interests are hanging on by a thin thread in a company dominated by iron-ore, oil, copper and coking coal.

When BHP and Gencor/Billiton of South Africa merged at the start of the new millennium, the South African assets helped to lift the chin of a then downcast BHP.

The performance of then standalone BHP, which in merged form has paid out more in dividends than the rest of the mining world put together, was so mediocre that the Economist of London scoffed that the letters BHP really stood for Broken Hearted People, and not Broken Hill Proprietary.

But the powers that be are clearly in no mood to return the favour; instead they are directing any tender, loving care they still have towards potash risk at Jansen in Canada, which is still a cost centre.

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FEATURE-North Nigeria’s poor beat path to nascent mining boom – by Tim Cocks (Reuters India – August 22, 2013)

http://in.reuters.com/

BAGEGA, Nigeria, Aug 22 (Reuters) – Like almost everything else in Nigeria’s economy, mining of metals and other solid minerals fell by the wayside when the West African nation discovered oil.

In the two decades to 1954, foreign companies produced around 360,000 ounces of gold in total, according to government statistics – tiny by today’s standards, but not insignificant for a country approaching independence with high hopes.

By 1964 – post-independence and less than a decade after oil was found in the creeks of the southern Niger Delta – gold production had largely ground to a halt.

Now much of the digging up of Nigeria’s minerals is done by artisanal miners in the largely Muslim north, bereft of the high-tech machinery that makes it safe and brings economies of scale.

“The sector was left in the hands … of untrained and ill-equipped artisans … making negligible contributions to GDP,” was how a government policy brief summed it up last year.

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An African gold rush slows to a crawl – by Iain Marlow (Globe and Mail – August 21, 2013)

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.

ACCRA, GHANA – On a shaded patio off a large pink and yellow building in central Accra, Kweku Boohene, a Ghanaian goldsmith with a stubbly grey beard, is watching the glowing coals of his makeshift smelter turn to white ash.

A colleague has just melted down a bit of gold, poured it into an ingot mould and returned inside to a cluttered workshop where five of them usually shape the precious metal into rings and chains with hammers and rolling mills. But for now, there is only one person working. As Mr. Boohene stands there in sandals and a loose-fitting green shirt, two others lounge in patio chairs.

“I used to make 10 rings a day, but now it’s not even one,” said Mr. Boohene, a 35-year veteran in the jewellery business.

In Ghana, Africa’s second-largest gold producer, the yellow metal is big business: Gold currently accounts for about 40 per cent of export earnings. As global gold prices have plummeted – 26 per cent in the first half of 2013 alone – the small-scale miners who supply this workshop have stopped coming by to sell the gold dust and tiny nuggets dug out of Ghana’s red earth.

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Another gold CEO bites the dust – this time at African Barrick – by Lawrence Williams (Mineweb.com – August 21, 2013)

http://www.mineweb.com/

African Barrick Gold’s CEO Greg Hawkins has resigned and has been replaced by Bradley Gordon, formerly with Intrepid Mines, to try and improve the fortunes of the African gold miner.

LONDON (MINEWEB) – African Barrick Gold (ABG), which has seldom seemed able to meet its operating objectives since its spin-off from parent Barrick Gold and listing on the London Stock Exchange three years ago, has announced the resignation of its Chief Executive Officer, Greg Hawkins ‘to pursue other opportunities’, and his replacement by Australian Bradley Gordon who takes over with immediate effect. Gordon resigned from his previous position as CEO of Intrepid Mines last month – presumably with the ABG appointment already settled.

Thus, Hawkins is the latest gold mining company CEO to be ousted, in this case to see if new blood can revitalise the ailing African gold miner. African Barrick stock has lost 73% of its value since its launch in 2010 and, although part of this fall is attributable to the plunging gold price and so outside management control, Hawkins is seemingly carrying the can for the company’s continual underperformance.

ABG operates three mines in Tanzania and is that country’s largest gold miner. The flagship mine is the Bulyanhulu underground operation and the others are Buzwagi (open pit) and North Mara, also an open pit operation. A fourth mine, Tulawaka, was closed down earlier this year as it was uneconomic.

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Amplats to cut 7,000 South African jobs, union ‘shocked’ – by Sherilee Lakmidas and Ed Stoddard (Reuters U.S. – August 19, 2013)

http://www.reuters.com/ 

JOHANNESBURG – (Reuters) – Anglo American Platinum (Amplats) said it planned almost 7,000 job cuts at its South African operations including thousands of compulsory lay-offs, drawing an angry response from a labor union and raising the risk of renewed unrest at its mines.

Amplats (AMSJ.J), the world’s top platinum producer and a unit of Anglo American (AAL.L), had aimed for 14,000 job cuts after posting its first loss last year, but lowered the target after a backlash from the government and the unions, which organized a series of strikes.

After months of consultations with government officials and worker representatives, the company said 6,000 mining jobs would go and that “approximately 900 corporate and overhead employees will also be affected”.

The addition of white-collar job cuts might alleviate some criticism of the lay-off plan, since not only blue-collar workers would be affected. But at least one union saw the decision by Amplats as a betrayal, saying the company had committed only last week to avoiding forced lay-offs.

“We are shocked. Our agreement with Amplats was to cut 3,000 jobs and those jobs would not be forced retrenchments but voluntary severance packages.

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Shift from ‘blame seeking’ will aid efforts to tackle SA’s AMD challenge – by Leandi Kolver (MiningWeekly.com – August 16, 2013)

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

JOHANNESBURG (miningweekly.com) – Current mining industry players are faced with the challenge of who should be responsible for and deal with the subsequent financial impact of the legacy issue of acid mine drainage (AMD).

The mining industry has been a significant driver of the country’s economy, dating back many years; however, as many of the mining houses that pioneered the industry in South Africa have moved on to other areas, or have evolved into other companies or consortiums, the challenge of assigning responsibility for current issues is a real concern, says minerals industry consultancy Venmyn Deloitte environmental industry adviser Sarah Dyke.

As South Africa’s water systems are interconnected, AMD, if not treated, could potentially decrease the country’s water supply quality, which will impact on industries, such as agriculture and manufacturing, Deloitte strategy and innovation consultant Sabatha Mhlanga says.

Out of the 120 mining companies that once mined in the Witwatersrand, only six remain, and there are about 6 000 ownerless and abandoned mines, as well as about 270 tailings dams in the area containing six-billion tons of pyrite – a catalyst for AMD.

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Analysis – On ‘massacre’ anniversary, South Africa mines still volatile – by Peroshni Govender (Reuters U.K. – August 15, 2013)

http://uk.reuters.com/

MARIKANA, South Africa – (Reuters) – A year after South Africa’s bloodiest post-apartheid labour incident awoke the world to the potential for unrest in the country’s mines, the industry still suffers from worker poverty, pay disputes, shrinking profits and a violent union feud.

At Lonmin’s Marikana mine where 34 striking platinum workers were shot dead by police on August 16, 2012 in killings that shocked South Africa and the world, memorial services are planned for Friday by politicians, unions and civic leaders.

President Jacob Zuma, still facing criticism for his African National Congress (ANC) government’s handling of what has come to be known as the “Marikana massacre”, has led a solemn chorus of assurances that such bloodshed must never happen again.

“We must all resolve to do everything possible to prevent a repeat of similar incidents,” Zuma said in a statement listing government steps to keep the peace and improve conditions in the country’s mines, where recurring illegal strikes have badly dented Africa’s biggest economy over the last year.

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A year after Marikana: The pendulum is swinging, but in which direction? – by Geoff Candy (Mineweb.com – August 16, 2013)

http://www.mineweb.com/

Many things have changed in the 12 months since the massacre by police of striking workers in South Africa’s platinum belt, but is it enough?

GRONINGEN (MINEWEB) – Shorthand for the worst possible outcome, the name Marikana has been mentioned many times in the last 12 months.

It has been used as both a rallying cry and a cautionary tale. But, asked what has changed over the course of the last 12 months either in terms of improving the lot of those who work in the mines or to ensure that such a tragedy can never recur, the answer is almost always: “not enough”.

For the most part, that is where the similarities end. Yes, some progress has been made. The wave of wildcat strike action that plagued the country in the last quarter of 2012 that spilled over into other sectors from the mines has been calmed but, on the mines, continued tension among the unions have led to further shootings.

Government has stepped up to the plate, committing to deliverables by signing the peace and stability framework. But a year later the Farlam Commission is yet to present its findings and the violence on the mines still remains too high.

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UPDATE 2-Platinum miner Lonmin recognises AMCU union, averts strike threat – by Sherilee Lakmidas (Reuters U.S. – August 14, 2013)

http://www.reuters.com/

JOHANNESBURG, Aug 14 (Reuters) – Platinum producer Lonmin and South Africa’s hardline AMCU said they signed a recognition accord on Wednesday in a move that averts threatened strike action by the union.

The agreement, reached two days before the first anniversary of the massacre of 34 striking workers shot by police at Lonmin’s Marikana mine, opens the way for wage talks between the Association of Mineworkers and Construction Union and the company that are expected to start within weeks.

While the deal heads off a potential strike over recognition, the pay talks are expected to be extremely tough, given AMCU is demanding pay hikes as high as 150 percent from Lonmin rival Anglo American Platinum, the world’s top producer of the precious metal.

Members of AMCU, which claims most of Lonmin’s workforce, have twice this year staged brief illegal strikes at its mines and had threatened to down tools again unless the company recognised it as the dominant union.

The agreement formally recognises AMCU as the majority union at Lonmin, the world’s third largest platinum producer.

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EDITORIAL: Industrial policy gone wrong (South Africa Business Day Live Editorial – August 13, 2013)

http://www.bdlive.co.za/

REPORTS that Eskom stands to lose as much as R11.5bn in revenue as a result of its controversial preferential power agreement with BHP Billiton is a brutal lesson in the pitfalls of ill-conceived industrial policy. It will also hopefully provide a learning opportunity for Eskom as it completes the process of negotiating the present round of renewable energy agreements.

In its annual report last week, Eskom said it expected its liability as a result of an agreement signed in 1992 to provide cut-price electricity to BHP Billiton’s aluminium smelters, Mozal and Hillside, to more than double from the R5.9bn reported in last year’s financial statement. While the potential for revenue losses as a result of the agreement is regrettable, the biggest error in the agreement was failing to build in a stop-loss clause. The extent of the liability is calculated as the opportunity cost of supplying electricity to BHP Billiton on the present special pricing formula compared with the revenue that would be generated if it was to sell that power at regular industrial customer tariffs.

When the agreement was signed in 1992, it was hoped it would serve the dual purpose of utilising the power utility’s excess capacity and developing South Africa’s industrial capacity. However, during the first decade of democracy in particular, economic growth and Eskom’s failure to invest sufficiently in new capacity has meant that excess capacity has been eroded, to the point where there are now other industrial users willing to pay more than BHP Billiton — hence the potential for loss.

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Losing Faith in Gold From Ghana to Vancouver Proves Rout – by Peter Robison & Ekow Dontoh (Bloomberg News – August 13, 2013)


http://www.bloomberg.com/

Akwesi Boahene’s gold dreams ended better than those of some people in Dunkwa-on-Offin, Ghana, whose riverbeds yield flecks of the precious metal to pickaxes. He still had his life.

Boahene, a satellite-television installer, and a partner pooled $10,000 two years ago to rent land and start a mining operation in a muddy West African town then booming with prospectors lured by what was gold’s longest bull market in at least nine decades.

In May, as prices sagged, his venture became another victim in a year of lost faith in the metal. Boahene shut down the no-longer-profitable business and told his 15 workers to stay home. When a former employee phoned one morning in June about returning to work, Boahene, 33, had no good news.

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