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Africa Mining

Gold’s slide takes $2.4-billion toll on Kinross – by Tim Kiladze (Globe and Mail – August 1, 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.

Kinross Gold Corp. announced a $2.4-billion impairment charge because of lower gold price assumptions and a previously announced loss on an Ecuadorian project that the miner abandoned a few months ago. The latest charge brings the company’s writedowns to $8-billion over the past year and a half, exceeding Kinross’s market capitalization of about $6.1-billion.

The company cancelled its next semi-annual dividend payment, and raised the possibility that it would scrap the dividend altogether, depending on factors such as market conditions and its balance sheet strength.

Kinross also said Wednesday that it would delay a decision on whether to proceed with the construction of a new mill that processes the ore it mines at its Tasiast project in West Africa. That decision follows a commitment made just three months ago to proceed with the next phase of its expansion.

Kinross’s woes are emblematic of a struggling industry hampered by a slew of multibillion-dollar writedowns, cost cuts and share price slumps. Kinross shares are now worth just $5.34 apiece, down 78 per cent from their post-crisis peak, while Barrick Gold Corp.’s have fallen to $17 each – a low that was, until very recently, last seen in 1992.

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UPDATE 2-African Barrick eyes more cost cuts as impairment hits H1 – by Clara Ferreira-Marques and Sarah Young (Reuters India – July 30, 2013)

http://in.reuters.com/

LONDON, July 30 (Reuters) – Miner African Barrick Gold , battling a plunge in the price of bullion, identified more cost cuts to help engineer a turnaround after sinking to a first-half loss on the back of a $727 million impairment charge.

African Barrick was under pressure even before a gold price rout began in April, hit by illegal mining, power generation problems and strikes, issues which forced it to warn in February that output would shrink for a fifth straight year.

The company on Tuesday posted a first half net loss of $701.2 million, against a profit for the year-ago period of $73.7 million, after a lower gold price and a review of its lower grade mines forced it to take the $727 million charge.

On a quarterly-basis, however, it beat consensus on a production and cost basis, helped by actions taken as part of a review.

The review identified $185 million of potential savings, with over $100 million of cuts seen in 2013. Initially prompted by a failed takeover attempt earlier this year, the process was given fresh impetus by a fall in the price of gold.

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NUM: Violence in [South African] platinum belt continues unabated- by Greg Nicolson and Thapelo Lekgowa (Daily Maverick – July 30, 2013)

http://www.dailymaverick.co.za/

National Union of Mineworkers (NUM) general secretary Frans Baleni expressed shock at the ongoing violence in the platinum belt and appealed to all signatories to Deputy President Kgalema Motlanthe’s Framework Agreement for a Sustainable Mining Industry to meet their commitments to ensure a stable mining industry. The union’s national executive committee (NEC) said violence and intimidation continues almost a month after mining stakeholders signed the agreement, making a “mockery” of the initiative.

“The NUM is of the view that the deputy president must urgently act in operationalising that framework as agreed by the parties,” said Baleni, speaking in the union’s offices. “We are making a call that this framework has not been operationalised. Besides that, being operationalised, crime continues to be committed in terms of intimidation [and] violence.” He said there are 14 murder cases where no suspect has been arrested and in cases where arrests have been made prosecutions are yet to begin. The NUM called on the justice department to shift cases from Rustenburg’s courts to other courts so mine-related cases can be fast-tracked.

Baleni refused to name those responsible, but the NEC statement clearly points to the Association of Mineworkers and Construction Union (AMCU). The NUM claims that of 42 suspects arrested for violence or intimidation, 78% of them are from Amcu.

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Zimbabwe: Mining Sector Has Potential to Turn Around Economy – (All Africa.com Editorial – February 1, 2013)

http://allafrica.com/

Zimbabwe is rich in natural resources and produces more than 40 types of metals and minerals. Mineral exports account for close to 40 percent of the country’s export receipts, accounting for massive employment and 12 percent of the gross domestic product.

Gold belts run along sources of nickel, asbestos, iron ore and pyrites production and contain reserves of antimony, tungsten, corundum and limestone. Zimbabwe is the world’s third largest source of platinum group metals and significant reserves of nickel are found along the Great Dyke.

Coal is one of Zimbabwe’s primary energy sources. High quality coal deposits abound in Hwange, parts of Matabeleland North, the Zambezi Valley and in the south east.

The Makonde basin in the north west of Zimbabwe, contains the country’s copper and graphite mines as well as reserves of lead, zinc and silver.

Diamonds have also entered the scene amid high expectations for the economy’s turnaround on the back of strengthening global demand for the precious gems.

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Fostering awareness of the origins of minerals – by Terry Pender (Waterloo Record – July 29, 2013)

http://www.therecord.com/waterlooregion/

WATERLOO REGION — Kirsten Van Houten is helping people make the links between their smartphones and the brutal war ravaging the Democratic Republic of the Congo.

Van Houten is collecting signatures in support of the Just Minerals Campaign — a national effort to raise awareness of minerals that are mined in Africa and used in cellphones and computers. So far, she has collected more than 100 signatures.

The minerals are tin, tungsten, tantalum and gold. Van Houten and the Just Minerals Campaign are concerned about the supply chains for tech companies that start in Sudan, Uganda, Rwanda, Burundi, Tanzania and the Congo.

The Just Minerals Campaign is in support of New Democratic MP Paul Dewar’s private member’s bill called the Conflict Minerals Act. It is modelled on U.S. legislation that will require all companies to publicly report on the source of minerals used their products.

“We would like to indicate there is support in this community,” Van Houten said. “We would also like to create consumer awareness and create demand for a fair trade cellphone.” The young woman wrote her master’s thesis on the demand for small guns and light weapons in the Congo.

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Mugabe wants mining indigenisation without compensation – by Tawanda Karombo (South Africa Business Day – July 29, 2013)

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

HARARE — Indications that Zimbabwe’s contentious indigenisation policy will be changed to rule out compensation for expropriated stakes in mining companies have been buttressed by President Robert Mugabe during a campaign rally in the capital ahead of the country’s elections on Wednesday.

The empowerment policy, first promulgated in 2007 and forcibly implemented in the past two years, seeks to transfer majority control in foreign mining groups to black Zimbabwean groups.

However, where foreign mining companies would have received compensation for the 51% shares ceded to black Zimbabwean groups, they will now receive no monetary compensation, Mr Mugabe has said.

Impala Platinum, Anglo American Platinum and Aquarius Platinum are the major mining houses in the industry in Zimbabwe, which is home to the world’s second-largest platinum reserves. The country also has vast deposits of other minerals such as gold, nickel, diamonds and coal, which are being exploited by foreign companies that include New Dawn Mining, Mzi Khumalo’s Metallon Gold and Caledonia Mining Corporation.

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SA seventh-largest iron-ore producer – by Yolandi Booyens (MiningWeekly.com – July 26, 2013)

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

South Africa’s position as the number three supplier of iron-ore to China emphasises the strategic importance of iron-ore deposits in the country and its importance as a significant iron-ore contributor worldwide, says minerals adviser Venmyn Deloitte MD Andy Clay.

He adds that this is testimony to the rapid historical development of South Africa’s iron-ore mines, in conjunction with the South African government’s infrastructure development.

South Africa is the seventh-largest producer of iron-ore and has also traditionally been the fourth-largest exporter worldwide. The country increased the percentage of iron it exports because of the suspension of mine operations in Goa, India, in September 2012 , owing to contraventions in terms of mining without licences or beyond licensed areas.

As a result, the global demand that Goa’s iron-ore mining operations used to meet can now be met by South Africa, in addition to other producers, such as Australia. “One of the factors that enables South Africa to export so much ore is the efficient Sishen iron-ore rail line,” notes Clay.

Opened in 1947, the Sishen mine is iron-ore supplier Kumba’s flagship operation and one of the largest openpit mines in the world. It has sufficient resources to sustain 21 years of production. It operates 24/7 and, in 2011, it transported 38.9-million tons of iron-ore.

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AFRICA INVESTMENT-South African platinum fund tempts mine investors – by Jan Harvey (Reuters India – July 25, 2013)

http://in.reuters.com/

LONDON, July 25 (Reuters) – South Africa’s platinum sector, already under pressure from rising costs, labour unrest and falling metal prices, is now facing a rival for investment flows — a major new physical platinum fund with unprecedented levels of demand.

The New Gold Platinum exchange-traded fund (NewPlat) has pulled in more than half a million ounces of metal since its launch three months ago, worth 7.6 billion rand ($780 million) at today’s prices. The fund’s holdings currently total more than 543,000 ounces, a level it took the world’s largest platinum-backed ETF, New York-based ETFS Physical Platinum — which holds 611,847 ounces of metal — more than two years to achieve.

A great deal of investment in NewPlat, analysts say, has come from funds in South Africa choosing to seek exposure to platinum prices directly through the physical metal, effectively delivering a vote of no-confidence in South Africa’s beleaguered mining companies.

While shares in South African platinum producers are felt to be unattractive given the industry’s problems, investors have taken account of threats to supply from the mines, and detected tentative first signs of better times ahead for the European motor industry, which uses a lot of platinum in exhaust systems.

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Anglo American silicosis claimants turn to South African courts – by Sherilee Lakmidas (Reuters U.K. – July 25, 2013)

http://uk.reuters.com/

JOHANNESBURG – (Reuters) – A British court has thrown out a lawsuit against Anglo American South Africa brought by miners who contracted the deadly lung disease silicosis when they worked in South Africa, saying it did not have jurisdiction to hear the matter.

A lawyer for the 2,336 miners said on Wednesday many of them planned to file papers in the next few days in South Africa seeking damages against the South African unit of the global mining giant.

“Anglo American South Africa believes that the court correctly found that the English court does not have jurisdiction to hear this claim,” said Anglo American spokesman Pranill Ramchander.

Anglo American (AAL.L), which switched its headquarters from Johannesburg to London in 1999, no longer has gold mines in South Africa but the lawyers said its Johannesburg-based unit still had assets of around $15 billion (9 billion pounds).

“Today’s ruling was a pyrrhic victory for Anglo American, which as the largest gold mining company over the past 50 years still has to face compelling claims by thousands of miners affected by dust-related lung diseases,” said Richard Meeran of Leigh Day, which is representing the miners.

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Congo Raises Tax on Copper, Cobalt Concentrates by Two-Thirds – by By Michael J. KavanaghJuly (Boomberg News – July 25, 2013)

http://www.businessweek.com/

The Democratic Republic of Congo’s Katanga province raised its tax on copper and cobalt concentrates to $100 per metric ton from $60 as the country prepares to ban their export at the end of this year.

“We needed a way to discourage companies from continuing to export concentrates, so we raised the tax,” Valery Mukasa, chief of staff for Mines Minster Martin Kabwelulu, said yesterday in an interview in Kinshasa, the capital.

The Central African nation is trying force mining companies to increase the value of their exports by fully processing minerals within the country’s borders, Mukasa said.

Congo was the world’s eighth-largest producer of copper and the biggest producer of cobalt last year, according to the U.S. Geological Survey. At least 13 companies exported concentrates of copper, cobalt, or a copper-cobalt concentrate last year, according to Katangan provincial Mines Ministry statistics.

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No quick fix as Anglo’s new boss prepares to woo investors – by Clara Ferreira-Marques (Reuters U.K. – July 24, 2013)

http://uk.reuters.com/

LONDON, July 24 (Reuters) – Anglo American’s new boss will lay out his stall on Friday after four months in the job and while investors are not counting on a quick fix, they are betting his plans will include cost cuts, more disciplined spending and potential asset sales.

Anglo, the smallest of the major diversified miners, has underperformed its peers, most recently battling labour unrest in South Africa, where it generates half its earnings, and multi-billion dollar cost overruns in Brazil.

Investors piling into BHP Billiton, Rio Tinto and Anglo in 2006 would have made more than one and a half times their money at BHP and seen returns of 65 percent at Rio. But they would have lost money at Anglo – a negative total return of around 16 percent, according to Reuters data.

Anglo posted its first loss in a decade in 2012, a year of hefty writedowns and CEO departures across the industry. According to Citi, last year Anglo’s return on equity, a measure of profitability, hit its lowest level since the 1930s.

So while the market may not be preparing for what some analysts called a “big bang” menu of asset splits or a radical and frequently debated platinum spin-off – all are demanding change from boss Mark Cutifani, an Australian former miner and engineer who joined from bullion producer AngloGold.

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Japan has vision for California-style ‘platinum valley’ in SA – by Helmo Preuss (Business Day Live – July 23, 2013)

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

JAPAN plans to encourage a “platinum valley” in South Africa similar to the US’s Silicon Valley, minister in the Japanese embassy in Pretoria Ken Okinawa told BDlive in an exclusive interview last week.

“What we want to do is encourage South Africa to establish a kind of platinum valley here similar to Silicon Valley in California. This facility would aim to find new uses for platinum, while also addressing issues such as job creation and beneficiation,” he said.

To promote this, a senior Japanese expert in fuel cells would shortly come to South Africa, he said.

Government-led projects have supported the commercialisation of fuel cells for many years in Asia, Europe and North America, and this has led to cost reduction, technological advancements and customer acceptance.

Yoshinori Tanaka of the national policy unit in Japan said in 2012 that the need for platinum group metals was likely to increase as more fuel cells that used platinum as a catalyst were installed in cars and homes.

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Mark Cutifani to set out his vision for Anglo American – by James Wilson and Andrew England (Financial Post – July 22, 2013)

http://www.ft.com/home/us

Metals prices are under pressure. Costs remain sky-high. And disgruntled shareholders want more money back. Yet still there is a consolation for most mining chief executives: their problems are not as bad as Mark Cutifani’s.

At Anglo American, the diversified miner he has led since April, Mr Cutifani does not merely have to pep up the company’s financial performance. In South Africa, where Anglo’s roots date back nearly 100 years, he has to show political savvy to negotiate a sometimes violent environment of labour unrest and government anger. In Brazil, Anglo’s flagship iron ore project is wildly over schedule and budget.

This week Mr Cutifani, one of a cohort of recently anointed chief executives at the world’s largest mining groups, has promised his first public explanation of how he intends to improve Anglo, which underperformed its peers during the mining boom. Since 2008 Anglo’s total shareholder return has halved compared with a fall of 24 per cent for Rio Tinto and a 44 per cent increase for BHP Billiton.

“The company has not been delivering on shareholder expectations,” he acknowledges. “We need a much more commercial, value-focused mindset.” Rivals including BHP and Rio have promoted insiders to their top jobs, arguably giving them a head start in addressing a markedly more pessimistic environment for the sector.

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SA mining and the almost ‘unwinnable’ labour situation – by Jeff Candy (Mineweb.com – July 23, 2013)

http://www.mineweb.com/

Norton Rose Fulbright’s Joe Mothibi discusses the lay of the South African mining labour landscape and looks at the best and worst case outcomes for the current gold wage negotiations

GRONINGEN (MINEWEB) – GEOFF CANDY: Hello and welcome to this edition of Mineweb.com Newsmaker podcast. Joining me on the line is Joe Mothibi – he is a partner with Norton Rose Fulbright. Joe we saw over the course of last week, significant movement on the wage negotiation space within the South African gold sector. We saw the gold companies represented by the Chamber of Mines, putting out their first offer of 4% increases across the board for basic wages and for housing allowances, and on the other end of the spectrum we saw demands from the likes of AMCU of up to 130%, we saw demands from NUM of 61%. Clearly these are very far apart numbers, is this as far apart as you’ve seen it in the South African labour sector?

JOE MOTHIBI: Without a doubt, certainly in recent memory. What concerns me most is this probably is an indication or symptom of the instability which is actually occurring within the federation of COSATU and the weakness that is perceived by unions such as AMCU who then see a weakness and try and go in there and get a piece of the cake in terms of membership. Yes, but certainly it’s been quite stark indeed, the gap between what they each put on the table.

GEOFF CANDY: Now we’ve heard fairly strong words from the likes of AMCU and from NUM, Lesiba Seshoka telling Mineweb earlier last week that these demands or the offer by the companies was an insult, was a cause for provocation, Joseph Mathunjwa telling Mineweb that he probably wasn’t going to take it back to his members because it wasn’t very good.

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Conflict mineral policy hurt miners – by Jonathan Cooper (Vancouver Sun – July 22, 2013)

http://www.vancouversun.com/index.html

‘Cure-all’ legislation that was meant to improve things, cost millions of jobs

Jonathan Cooper is vice-president of Macdonald Realty Group and has written this commentary as a concerned private citizen.

On July 1, 2010, the U.S. Congress passed the Dodd-Frank bill, a massive and complex piece of legislation which was designed to avoid a repeat of the 2008 housing bubble collapse and subsequent financial crisis. Buried in the bill’s 2,000-plus pages was Article 1502, the objective of which was considerably removed from the minutiae of credit-default swaps and mortgage finance.

Dodd-Frank Article 1502 (DF 1502) intended to prevent U.S. companies from being involved in the trade of “conflict minerals” in the Democratic Republic of Congo (DRC). As a result of strident lobbying by Hollywood celebrities and non-government agencies (NGO) like The Enough Project, Congress believed that eastern DRC’s immense mineral wealth was fuelling the civil war in that region, a war which has caused as many as five million deaths since its inception in 1998.

In the three years since its passage, DF 1502 has encouraged increased due diligence on the part of both multinationals and the DRC government. However, it has also become an object lesson in the unforeseen consequences of legislative intervention.

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