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Africa Mining

AngloGold poised to write down value of assets by up to $2.6bn – by James Wilson and Andrew England (Financial Times – July 15, 2013)

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

London/Johannesburg – AngloGold Ashanti joined other goldminers in responding to the sharp fall in the price of the precious metal by writing down the value of assets by up to $2.6bn and curbing production plans.

The South African miner will take a writedown charge of $2.2bn-$2.6bn in its most recent quarter, which included the steepest one-day drop in the gold price in more than three decades.

Goldminers around the world have cut the value of their assets by billions of dollars in recent weeks. AngloGold, the third-largest producer by volume, joins rivals including Barrick and Newcrest in acknowledging the deterioration in prospects for the sector.

AngloGold would “tighten up on costs, overheads and capital”, said Srinivasan Venkatakrishnan, chief executive, after a $220 drop in the average quarterly gold price. Output this year would now be 4m-4.1m oz, AngloGold said, cutting previous guidance of 4.1m-4.4m oz.

The fall in the gold price has squeezed margins for miners, with South Africa’s Chamber of Mines on Monday warning that about 60 per cent of the nation’s gold mining operations are lossmaking at current prices as the sector enters critical wage talks.

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South African health minister: Canada should join us to fight TB in mines – by Aaron Motoaledi (Globe and Mail – July 11, 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.

As South Africa’s Minister for Health, it may be surprising that many of the meetings I will have during my visit to Canada this week are not with health officials or medical personnel, but with representatives from mining companies.

Our mining industry has recently been the subject of intense international and national media scrutiny due to industrial unrest. As government, we have placed a high premium on returning stability to the industry and our deputy president has been tasked with managing this process. It is important that we succeed because mining is one of the driving forces of the South African economy, contributing around 20 per cent of the country’s gross domestic product and being a major employer.

What is less well known, and so far has not been subject to the same degree of media attention, is the devastation caused to miners and their families by tuberculosis (TB). The disease, which was the number one killer of Canadians in the early 20th century, remains the leading cause of death in South Africa today. It is an airborne disease, spreading through the air when people who have it cough or sneeze, and is often fatal if left untreated.

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South African gold output continues to fall – how much further? – by Lawrence Williams (Mineweb.com – July 12, 2013)

http://www.mineweb.com/

South Africa’s vitally important minerals sector saw further production falls in May with the once dominant gold sector declining by a further 14.6% year on year.

LONDON (MINEWEB) –  How the mighty have fallen! Not so long ago South Africa dominated global gold output with the rest coming nowhere in comparison, but the country’s gold output has been on the decline since the 1970s.

It fell to fifth largest gold producer in 2012 when it was overtaken by Russia and on the latest output figures the country has drifted downwards towards being now only the world’s sixth largest gold producer, having been overtaken by Peru as well – however that is on production so far this year.

In yesterday’s publication of minerals output and revenues, Statistics South Africa noted that the country’s gold output fell again in May commenting that its ‘overall mining production decreased by 0.7% year-on-year in May.The largest negative growth rates were recorded for ‘other’ metallic minerals (-32.3%), diamonds (-19.7%) and gold (-14,6%). The main contributor to the 0.7% decrease was gold (contributing -2.4 percentage points). Manganese ore (contributing 1.5 percentage points) was a significant positive contributor.’

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SA gold production plunges, total mining output down 0.7% – by Natasha Odendaal (MiningWeekly.com – July 11, 2013)

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

JOHANNESBURG (miningweekly.com) – Statistics South Africa (Stats SA) on Thursday said that mining output during May decreased 0.7%, after a 0.7% revised year-on-year improvement in April.

Gold production emerged as the highest contributor, at -2.4 percentage points, to the decline, while manganese ore, contributing 1.5 percentage points, was a significant positive contributor.

Investment bank Investec’s Kamilla Kaplan commented: “There was a continuation of the trend in gold production that has been in place for much of the last decade. Specifically, that production remained in contractionary territory”.

Gold output, which has been falling since May 2011, plunged 14.6% year-on-year during the month under review, compared with a 3% year-on-year decline reported in April. The gold sector remained a key mineral export, accounting for 8.8% of total export revenues in the first five months of this year.

“At the prevailing gold price, gold miners are already under pressure to sustain operations and will struggle to grant double-digit wage increases sought by the unions [in this year’s wage negotiations],” Kaplan pointed out.

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Anglo American chief warns on S Africa mining talks – by Andrew England (Financial Times – July 10, 2013)

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

Mark Cutifani, chief executive of Anglo American, warned on Wednesday that the wage negotiations beginning in South Africa’s mining sector will determine not only the future of the industry, but also the future of the continent’s largest economy.

Speaking to the Financial Times a day before gold miners open salary talks, Mr Cutifani said: “[I am] worried for South Africa, I’m worried for the industry and I’m worried for the people. We have got to get the balance right”.

The mining industry in South Africa is entering two-yearly wage negotiations as many companies are still recovering from a weeks of wildcat strikes last year. That unrest is estimated to have cost the industry more than R15bn ($1.5bn) in lost revenue, while some 50 people were killed in strike-related violence.

How the wage talks proceed is seen as a major test for the country’s fragile labour relations, with concerns that any further unrest could have a contagion effect on other sectors.

“The period we are in now is the most important period I’ve seen in my time here in the [South African] industry – it is so critical for the future of the industry and the future of the country,” said Mr Cutifani, who is also president of the South African Chamber of Mines.

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AFRICA INVESTMENT-South African miners demand leap to “living wage” – by Ed Stoddard and Benon Oluka (Reuters India – July 10, 2013)

http://in.reuters.com/

JOHANNESBURG, July 10 (Reuters) – “A living wage” is the battle cry of South Africa’s Association of Mineworkers and Construction Union (AMCU) as it and rival unions plunge into pay talks this month with mining houses.

But what is a living wage for a South African miner? Finding a definition, no easy task, has become the goal of an increasingly militant labour force demanding pay increases ranging from 15 to 150 percent, which mining companies can ill afford as precious metals prices tumble and costs surge.

Wage negotiations in the gold sector kick off on Thursday. The issue is complicated by many variables and by the difficulty of defining fair pay for work that may often require only low levels of skill but is very tough and dangerous.

“It’s difficult to put a number on a living wage,” said Boitumelo Sethlatswe, a researcher at the South African Institute of Race Relations.

“It depends how many people are in your household, and are there people in your household with access to social grants such as for old age pensions and child support,” she said.

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The Guangxi miners in Ghana gold rush – by Anna Healy Fenton (South China Morning Post – June 4, 2013)

http://www.scmp.com/

Chinese President Xi Jinping ended his six-day visit to Africa on a high note, leaving behind signed deals and warm pledges. The Republic of Congo was his final stop, after Tanzania and South Africa. He’s committed to a river port in Oyo, Congolese President Denis Sassou Nguesso’s hometown, and a sea port in Pointe-Noire for exporting mineral ore.

Congo is already an established oil producer and China is already its biggest trading partner. Xi announced he wanted to raise ties with Congo “to a new and higher level”.

“We expect to work together with our African friends to seize upon historic opportunities and deepen cooperation … in order to bring greater benefit to the Chinese and African peoples,” he said in Brazzaville.

Fine words indeed. One place he did not go was Ghana, in West Africa, where he could have seen Chinese and African co-operation in action. This is the scene of the gold rush 2013 style, where about 50,000 migrants from Shanglin in southern Guangxi, have received welcomes a little less warm than Xi’s.

Natives of Shanglin, famous for producing and exporting gold miners, started heading to Ghana’s goldfields eight years ago.

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New life for SA’s small mining towns – by Loni Prinsloo (South Africa Business Day – July 7, 2013)

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

THERE has been a piquing of interest in the mineral wealth of Northern Cape, the “Cinderella Province”, with 13 new iron-ore and manganese mines being opened in the past three years.

After 130 years, the diamond-mining industry is slowing down, leaving the province with many ghost towns as other industries have struggled to take root.

But, according to Mehmood Ahmed, head of the Industrial Development Corporation (IDC) Northern Cape, new life is being blown into the region, with housing developments popping up on every block and trucks travelling between bustling little towns again.

“Towns such as Kuruman, Kathu, Hotazel and Postmasburg can’t keep up with developments. The area is growing at a tremendous pace.” The new mines all have a strong black shareholding and ownership model driven by a mandate from the government to transform the country’s mining industry.

A black consortium led by Clyde Johnson has reopened the Sedibeng iron-ore mine at Postmasburg, which was first mined in the 1960s.

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Ghana’s Crackdown on Chinese Gold Miners Hits One Rural Area Hard – by Dan Levin (New York Times – June 29, 2013)

http://www.nytimes.com/

MINGLIANG, China — To the people of Shanglin County, gold is a curse. For nearly a decade, thousands of peasants from this rural speck in southern China’s Guangxi Autonomous Region borrowed heavily before boarding flights for Ghana, Africa’s second-largest gold producer, with glinting ambitions and no backup plan.

The Chinese found their gold, though trouble soon found them, in the form of crooked police officers and armed bandits who prowled the mining camps. Then, this month, the Ghanaian authorities declared the mines illegal and arrested more than 200 Chinese miners, accusing them of polluting the land and abusing local workers. Countless others fled as local residents armed with guns and machetes attacked the camps, robbing miners of their possessions and killing some who fought back.

After the crackdown, images of violent deaths and vandalized mining camps blazed across Chinese social media, fueling national anger and soul searching. But here in Shanglin, a mountainous county of 470,000 in one of China’s poorest regions, it is despair over financial ruin that is most pronounced.

“My son might be killed in Ghana, but if he comes back he’s dead anyway,” said Shen Aiquan, 65, whose family borrowed 3 million renminbi, or $489,000, to build a mining operation, though from whom exactly she did not know. All she could do was wait for her son, and the debt collectors who would surely follow.

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South Africa now only world’s sixth biggest gold producer – by (Mineweb.com/Reuters -July 8, 2013)

http://www.mineweb.com/

Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tonnes of gold.

KROMDRAAI/JOHANNESBURG (REUTERS) – A hand drill lying in the hillside tunnel of a 19th-century South African gold mine testifies to the back-breaking labour by black miners that built what was once the world’s biggest bullion industry.

But even with basic tools and cheap labour, costs overran returns at the Kromdraai gold mine north of Johannesburg, which listed in London in 1893 and closed in 1914.

A century later, South African’s remaining gold mines, which still employ a mostly black and lowly paid workforce, look set to follow the same fate, as the sun sets on an industry that has produced a third of the bullion extracted from the planet.

Gold’s sliding price and surging costs are hitting an industry that laid the foundations for Africa’s largest economy but has been slowly dying for decades as ore grades decline and shafts reach depths of 4 kms, the world’s deepest.

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The huge potential of Congo potash – by Lawrence Williams (Mineweb.com – July 5, 2013)

http://www.mineweb.com/

The Republic of Congo (ROC), not to be confused with the neighbouring DRC, has the potential to develop into one of the world’s biggest potash miners over the next decade.

For those who are unaware there are two Congos. The former Belgian colony of the Democratic Republic of Congo – the DRC – is the one which is mostly in the news, with its huge and rich base and other industrial metals, gold and diamond resources. However, lying immediately to the west of much of the DRC on the northern side of the Congo river is the former French colony of the Republic of Congo (ROC – also known as Congo Brazzaville to more easily differentiate itself from its neighbour to the south.)

The ROC, like many African nations has had its own share of difficulties since it cast off its colonial yoke in 1960, but these have not been quite as violent as the problems which have continually beset the DRC over the years and there has been a relatively stable government in place under President Denis Sassou Nguessa since a bloody civil war in 1997. While certainly not exactly a model modern democracy, the ROC has been relatively stable for the past decade and President Sassou has won succeeding Presidential elections, although with suspiciously high percentage majorities!

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Chinese demand to drive African iron-ore projects – by Natalie Greve (MiningWeekly.com – July 4, 2013)

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

An increasing dependency on iron-ore imports by China would present substantial opportunity for the intensified development of African iron-ore projects, the MSA Group geology operations manager Brendan Clarke said at the Geological Society of South Africa’s GeoForum conference on Thursday.

China’s iron-ore import ratio was set to rise from 70% of total consumption to 85%, as local grades declined and the costs associated with the mining and beneficiation of lower-grade ores increased.

While the Chinese government was a significant producer, Clarke believed that domestic producers offered an expensive, yet low-quality product. As a result, the country was the world’s largest importer of iron-ore, bringing in 58% of total production in 2012.

The bulk of these imports were from the Pilbara region of Australia, accounting for 45% of imports. South Africa accounted for 6% of the iron-ore China sourced from outside the country in 2012. “Aside from projects in South Africa, there is very little production elsewhere on the continent, as the mega-projects, such as Tonkolili, in Sierra Leone, Simandou, in Guinea, and Mbalam, in Cameroon, struggle to get over the line,” Clarke commented.

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Mining’s who’s-who leave AMCU out to dry as accord is signed – by Martin Creamer (MiningWeekly.com – July 3, 2013)

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

PRETORIA (miningweekly.com) – The who’s who of the South African mining sector on Tuesday went ahead and signed the framework agreement for sustainable mining without waiting any longer for the emerging Association of Mineworkers and Construction Union (AMCU) to do so, providing a formidable potential bulwark against any errant behaviour during the upcoming wage talks.

Deputy President Kgalema Motlanthe, himself a former mineworker and union leader, led a top table of government, labour and business ratification of the document that AMCU helped to draft 19 days ago, and urged the absent AMCU to do the same as soon as it had consulted fully with its members.

Motlanthe told a media conference that at the Presidential Guest House in Pretoria that there was overwhelming agreement that the framework captured the correct approach to addressing the South African mining industry’s niggling problems.

“It also provides a roadmap,” he said of the framework’s stipulation of issues that had to be tackled forthwith and those that would be tacked in the medium and long term, with inputs from AMCU, the National Union of Mineworkers, Solidarity, UASA, the Chamber of Mines, the South African Mining Development Association and government.

The declaration at the foot of the document signed lays down swift action, no abrogation of responsibilities and immediate meetings to deal with problems.

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World Bank says mining can make double digit contribution to Nigeria’s GDP – by Luke Ajulo (World Stage Group – July 3, 2013)

http://www.worldstagegroup.com/worldstagenew/index.php

WorldStage Newsonline—From the current 0.5 per cent contribution of mining to Nigeria’s Gross Domestic Product (GDP), the World Bank believed that a duble digit figure can be achieved through proper planning.

Speaking at Stakeholders Workshop on the Australian and Canadian Externally Financed Output (EFO) Programme for Mining Sector Development in Nigeria, the World Bank Country Director, Marie Franciose Marie-Nell, said that in partnership with the Canada International Development Agency (CIDA) and the Australian Agency for International Development (Aid), the World Bank was launching a two-year mining sector intervention Programme as a continuation of the Sustainable Management of Mineral Resources Programme which ended last year.

Represented by Mr.Mr. Michael Wong, he said that “it is a stepping stone for a further programme and a wider engagement in the mining sector. As we know, the contribution from the sector is 0.5% GDP, and it can be increased to double digit if possible and we hope that contribution are needed and the Australian government will assist the ministry in developing the roadmap towards the development of the sector.”

He said the Programme is financing timely integrated infrastructural development, adding that the Programme fits into the country’s new system framework for development partners such as DFID, the African Development Bank and others.

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Barrick may wipe out retained earnings with huge Pascua-Lama writedown – by Peter Koven (National Post – July 3, 2013)

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

Barrick Gold Corp. is poised to wipe out all of its retained earnings for the second time in less than four years.

An anticipated writedown of US$4.5-billion to US$5.5-billion on the bungled Pascua-Lama project would eliminate the US$3.9-billion in retained profits that the gold giant reported at the end of the first quarter. Back in 2010, Barrick wiped out more than US$2.2-billion of retained earnings when it took a US$5.2-billion charge to close out its hedge book.

It is highly unusual for a company of Barrick’s size and profitability to be in this position twice in such a short time. And while these are non-cash charges, experts said they point to a troubling trend of poor decision-making and oversight at the world’s largest gold producer.

“The writedowns impact them in perception,” said George Topping, an analyst at Stifel Nicolaus.

The red ink could be a lot bigger when the company reports second quarter earnings in four weeks. Barrick warned of other possible impairments last Friday, and analyst Greg Barnes of TD Securities estimated they could total close to US$10-billion.

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