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Africa Mining

Kinross takes $3.2-billion hit on African mines – by Pav Jordan (Globe and Mail – February 14, 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. is taking another massive charge on its African operations, slashing the value of its flagship growth properties to a fraction of the $7.1-billion it paid to acquire them just two years ago.

The Toronto-based miner said on Wednesday it would take an impairment charge of $3.206-billion (U.S.) on 2012 earnings, most of it attributable to the Tasiast project in Mauritania amid soaring capital and operating costs that have hit the entire mining industry.

That comes on top of a $2.49-billion charge on the assets a year ago. Altogether, Kinross has now cut nearly 80 per cent of the value of its takeover of Red Back Mining in 2011, which included Tasiast and Chirano, another mine in West Africa.

“It’s pretty darn sad that a company can be that wrong on an acquisition,” said George Topping, an analyst with Stifel Nicolaus in Toronto. “I think they’re pretty much telling you that they think it [the acquisition] is worth $1.5-billion, between Tasiast and Chirano, the two mines that they bought.”

Tasiast represents the company’s key growth driver.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

Canadian J. AUSTEN BANCROFT (1882-1957) Zambian copperbelt

The name of Joe Austen Bancroft, a Canadian born in North Sydney, Cape Breton, is synonymous with the exploration and development of what is now known as the Zambian copperbelt. The exploration programme that he oversaw in then Northern Rhodesia in the 1930s was probably the most extensive scientifically-based programme seen anywhere up to that time and from it was born one of the largest copper mining provinces in the world. Bancroft pioneered the science of economic geology in the first part of the 20th century; at the time such a term would have been considered an oxymoron but now it is the driving force behind most commercial geology.

He was born in 1882 one of eight children and his father was a Methodist minister. The early part of Bancroft’s adult life, after graduating first in his class from Acadia University, Nova Scotia in 1903 and being awarded a Yale fellowship, was spent studying and then teaching geology. He joined the faculty of McGill University in Montreal in 1905 and took post-graduate courses at Leipzig University, Georgius Agricola’s alma mater, and Bonn University between 1908 and 1910.

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Distressed PGMs sector’s ‘crisis’ can be resolved – analyst – by Nomvelo Buthelezi (MiningWeekly.com February 8, 2013)

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

The South African platinum mining industry – which hosts about 80% of the world’s resources – is in some distress, with the challenges it is experiencing including sluggish demand and significant amounts of the precious metal being brought back onto the market through recycling, increasing operating costs, greater stakeholder expectations, inadequate funds for capital expenditure projects and the need to improve extraction efficiencies as deposits are becoming deeper and more complex to mine.

But Cadiz Corporate Solutions mining and resources division manager Peter Major is adamant that “the platinum industry crisis” is not that bad, averring that “it is not a meltdown and there are ways through which the platinum industry can recover”.

He believes that the industry “can survive at the current platinum price of $1 700/oz. “The crisis can be resolved. The state of the industry is the result of a very positive macro environment – the industry grew too fast and, with the money that was coming in, overexpenditure took place,” Major tells Mining Weekly.

But professional services firm Deloitte’s Ebrahim Takolia stresses that companies need to assess all aspects of their operating costs and capital expenditure and improve extracting efficiencies, wherever possible, without compromising on safety, the long-term viability of platinum reserves or the industry.

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The White Stuff: Mining Giant Rio Tinto Unearths Unrest in Madagascar – by Jessica Hatcher (Time World Magazine – February 8, 2013)

http://world.time.com/

Fort Dauphin – For five days in January, a few hundred protesters armed with slingshots in Fort Dauphin, Madagascar, blocked the road to one of the country’s largest economic assets, a $940 million mining operation run by the British-Australian company Rio Tinto. Their grievances were local: high unemployment, alleged political corruption and unsatisfactory reimbursement for relocating homes to make room for the mine. But the protest’s effects were global, and relate to anyone who wants to brush their teeth, put on sunscreen or whitewash their house.

Fort Dauphin could have supplied a tenth of the world’s ilmenite, a mineral used to make titanium dioxide, the white pigment commonly found in toothpaste, cosmetics and paint. The product is a staple of household goods in the west and global demand is growing, especially in India and China. But three weeks after the Fort Dauphin standoff, which ended when the Malagasy military dispersed the crowd with teargas, Rio Tinto announced a major scale-back in Madagascar. The company is shelving plans for a second – and larger –mine nearby in St. Luce, which leaves only one of three planned sites in operation.

The cuts mark a potential setback for Madagascar, where 70% of the population lives on less than $1 per day. The African nation has hydrocarbon deposits, gold, and half of the world’s sapphires, and the arrival of mining companies like Rio Tinto brought the prospect of improved economic conditions. But the protesters in Fort Dauphin say the mine exploited them, a charge the company denies.

Fort Dauphin is a small stretch of arable land bordered by mountains and sea in southeastern Madagascar. When Rio Tinto moved in to set up its mine, the only land it could offer in compensation to displaced locals had little agricultural value, so the company gave out cash.

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Mali turmoil bad for Canadian mining ambitions in West Africa: analysts – by Mike Blanchfield, The Canadian Press/CTV News – February 8, 2013)

http://www.ctvnews.ca/

OTTAWA, Ont. — As Islamist rebels controlled a chunk of Mali the size of France late last month, Toronto-mining analyst Pawel Rajszel honed his advice to investors on a leading Canadian mining company in the country.

Rajszel had previously told investors to “take their money and run.” His note of Jan. 24 concluded with one word: “Sell.”
Even after French and African troops routed al Qaeda terrorists from major cities in Mali’s north this week — and after French President Francois Hollande basked in the euphoria of a liberated Timbuktu — Rajszel was still unmoved.

“We haven’t changed our opinion,” Rajszel, head of the precious metals team at Veritas Investment Research, told The Canadian Press.

The Mali crisis and its spillover into West Africa are a monkey wrench in the Harper government’s ambitions for Canadian firms, especially in the mining sector.

The government is actively promoting Canadian business opportunities in Africa, but has no stomach for contributing troops to the French-led military campaign to drive al Qaeda-linked extremists out of northern Mali. Industry analysts say headlines about terrorists gaining a foothold in West Africa are chilling investors, and casting a pall over future prospects.

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Why Africa Will Rule The 21st Century – Anver Versi (African Business – January 7, 2013)

http://africanbusinessmagazine.com/main-articles/new-african

According to the authors of a new book, The Fastest Billion – the story behind Africa’ s Economic Revolution, Africa’ s current sustained growth level is set to not only continue but rise over the next four decades so that, come 2050, the continent’ s GDP will equal the combined GDPs of the US and the EU at current prices. There is a possibility that Africa’ s growth could outstrip that of Asia over this time span. Some have described this scenario as over-optimistic and an exercise in wishful thinking. But the authors of the book put forward sound arguments based on analyses of trends going back centuries to support their thesis. Editor Anver Versi talked to the book’ s lead author, economist Charles Robertson, to outline the case for a defence of the theory.

The one thing most economists and historians are agreed upon is that we have not yet discovered a magic formula that allows us to explain why civilizations rise and fall when they do. The best we can do is in retrospect and assign this or that cause to the rise of this power and the decline of that power but what triggers the change that turns a humdrum nation into a mighty empire, or what series of events bring about the collapse of a mighty power continues to baffle us. There are so many ifs and buts, so many accidental turns, so much good fortune or bad fortune involved in the destiny of nations that crystal ball gazing by crunching numbers has shown up many prophets of the future to be little more than educated idiots.

Take this passage quoted by Dr Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance and the former MD of the World Bank, in a foreword to The Fastest Billion: “Imagine a continent torn by multiple wars, beset by ethnic and religious warfare, malnutrition, disease and illiteracy – all of it complicated by poorly drawn borders, a still potent post-colonial stigma and the incessant meddling of outside powers.

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Canada’s Iamgold keen to stay in troubled Mali – by Reuters (MiningWeekly.com – February 7, 2013)

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

MELBOURNE – Canadian gold miner Iamgold is committed to Mali despite the conflict in the African nation and poor production performance of its mining joint ventures there, its chief executive said.

While Mali, where French forces have been bombing sites controlled by Islamist insurgents, may appear unattractive to investors, it is one location in Africa where the company is eager to stay as the mines should be highly profitable, CEO Steve Letwin told Reuters in an interview on Thursday.

“I just think as an investment it is a good investment if we can all collectively get our heads around it and the Malians can get some semblance of stability,” Letwin said. The situation in northern Mali has not disrupted operations at Iamgold’s joint ventures — the Sadiola and Yatela mines in the south.

But its partner in the ventures, AngloGold Ashanti, is considering getting out as part of a broader revamp of its operations. Letwin said Iamgold is not big enough to take on AngloGold’s share.

“We have people who are interested, but they need to talk to Anglo, and I’m sure they have,” he said, declining to name who was interested. “I want to make it work, because it makes sense. I want to work with the Malians and whomever partner we have.”

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Does reality TV’s gold boom suggest an end to soaring prices? – by Colin Campbell (Maclean’s Magazine – February 5, 2013)

http://www2.macleans.ca/

Gold Rush fans may not want to change the channel just yet

Reality television’s latest obsession is gold. Jungle Gold, Gold Rush, Bering Sea Gold and Gold Fever are all shows documenting miners’ efforts to dig up flakes of the precious metal worth $1,700 an ounce. The last time TV was so caught up in a trend it was in the house-flipping genre (Flip This House, Flip That House), which seemed to hit its peak just before the U.S. housing market crashed. Is there a similar warning sign in the TV gold boom? Does all the mainstream fascination with gold suggest an overinflated interest and price?

Some analysts on Wall Street, at least, seem to think gold’s wild ride may be nearing its end. This week, Morgan Stanley lowered its gold-price forecast for the year by four per cent, to $1,773. Late last year, Goldman Sachs cut its target price for 2013 to $1,800 an ounce from $1,940, citing an improving U.S. economy. “The risk-reward of holding a long gold position is diminishing,” it said.

Gold is the ultimate safe-haven investment and has enjoyed an incredible rise in recent years. A decade ago, gold was worth little more than $300 an ounce. Since 2000, it has gone up every year for 12 years (a record) and in each of the three years after the 2008 crash, gold prices peaked to hit record highs. That gold might be finally losing some of its shine suggests fear of riskier investments may be ebbing. The S&P 500 index last week, for instance, cracked the 1,500 mark for the first time since 2007.

Not everyone is convinced the gold rush is finished just yet. Morgan Stanley said that despite its price cut, it still remains “bullish on the gold-price outlook,” citing an ongoing commitment in the U.S. to low interest rates and government stimulus spending in the face of “a below-par recovery.” Many central banks are also still buying gold. As Goldman admits, “calling the peak in gold prices is a difficult exercise.”

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Live from Mining Indaba 2013: Cynthia Carroll, outgoing Anglo American CEO with Geoff Candy – by Moneyweb.co.za (February 6, 2012)

http://www.moneyweb.co.za/moneyweb-home

Carroll talks mining prospects, Anglo projects and the Plat Review.

GEOFF CANDY: Hello and welcome to this Mineweb.com Newsmaker podcast. Joining me here live at the Cape Town Convention Centre is Cynthia Carroll, the outgoing CEO at Anglo American. Cynthia, you took over the reins at Anglo American in March 2007. It’s been an exceptionally eventful five years, not just for Anglo American but for the sector as a whole. What do you think is the most significant change you’ve seen in the mining sector in those five years?

CYNTHIA CARROLL: Well, first of all we have clearly gone through two significant economic downturns that I don’t think anybody anticipated, and at the same time Anglo American had two record years – 2008 and 2011. I think that there has been a developing disconnect between the expectation of investors and what the mining companies have been able to deliver in the short term. And during the peak of the cycle when everything was going gangbusters, everybody was saying you have to invest and you have to spend and we want to see growth and we want to see production.

But we’re in a period right now, again that nobody would have predicted when there has been much more contraction, starting with Europe in terms of demand and then a slowing down in Asia. So some investors are walking away completely from the industry, others are putting greater demands on industry heads to say, we want to be assured of our returns first and foremost before you spend any money, and we want you to cut back significantly.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

SIR ERNEST OPPENHEIMER (1880-1957)

It is impossible when considering mining in the 20th century not to place the Oppenheimer family at the centre of the development of the South African industry, one that is pre-eminent in the production of precious metals. Sir Ernest Oppenheimer played a crucial role in establishing the Anglo American group and, as Chairman of De Beers, in organising the modern diamond-trading cartel, the Central Selling Organisation, now much reformed.

Sir Ernest was born in 1880 in Freidberg, Germany, where his father Edward was a cigar merchant. The Oppenheimers were a large German Jewish family with excellent connections, particularly in the diamond business in England. When he was 16 he went to England and started work as a clerk in the London office of diamond merchant A. Dunkelsbuhler, who was his cousin, and became a naturalised Briton.

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South Africa Faces Tax Dilemma as Mining Industry Costs Soar – by Mike Cohen & Paul Burkhardt (Bloomberg.com – February 5, 2013)

http://www.bloomberg.com/

South Africa’s government faces a dilemma: how to help mining companies weather surging costs and depressed commodity prices as the ruling African National Congress seeks to wring more revenue from the industry.

Upheaval has plagued platinum and gold producers since August last year, when thousands of workers staged a series of illegal strikes, winning pay increases of as much as 22 percent. Adding to mining costs, Eskom Holdings Ltd., which supplies about 95 percent of South Africa’s power, is seeking 16 percent average annual tariff increases until 2018 to fund expansion.

While Mining Minister Susan Shabangu says the government is committed to working with the industry, the ruling ANC wants the country to derive greater benefit from its minerals. At a conference in December, the party said a “resource-rent” tax, or higher royalties, were under consideration.

“I’m quite worried,” Nick Holland, the chief executive officer of Gold Fields Ltd. (GFI), Africa’s No. 2 gold producer, said in an interview yesterday at the Investing in African Mining Indaba, a gathering of more than 7,500 industry executives. “We can ill afford to accept any taxes beyond what we have. It’s just going to increase the speed of the decline of the mining industry.”

Mining output slumped 11 percent on a seasonally adjusted basis in the three months through November from the prior three months, government data show. Nine loss-making platinum-mine shafts were shut in the second half of 2012, according to the Department of Mineral Resources, while Anglo American Platinum Ltd. (AMS), the largest producer, last month announced plans to idle four shafts, which may result in as many as 14,000 job losses.

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Glencore’s Glasenberg Seen Eyeing Anglo After Xstrata – by By Matthew Campbell & Jesse Riseborough (Bloomberg.com – Feb 4, 2013)

http://www.bloomberg.com/

What will Ivan do next? That’s the question likely to percolate amid seaside cocktails in Cape Town this week as mining executives gather for a four-day industry confab of speeches and discreet meetings.

Ivan, as everyone calls him, is billionaire Ivan Glasenberg, chief executive officer of Glencore International Plc. (GLEN) Next month he’s due to close a $37 billion takeover of Xstrata Plc (XTA), creating the world’s fourth-largest mining company. While he isn’t scheduled to address the annual Investing in African Mining Indaba conference, his outsized role in the industry almost guarantees speculation about his next move.

It could be a whopper. Glasenberg, 56, may consider a long- speculated takeover of Anglo American Plc (AAL), according to people familiar with his thinking. The $43 billion mining giant trades at the cheapest level relative to profit of any rival, data compiled by Bloomberg show. Also on his mind: Smaller deals such as a purchase of Eurasian Natural Resources Corp. (ENRC), which has operations in the Democratic Republic of Congo that complement Glencore’s, said the people, who asked not to be identified because the matter is private. First Quantum Minerals Ltd. (FM) is also a candidate, according to Sanford C. Bernstein & Co.

“I don’t see why Glasenberg shouldn’t try this again with another target,” said Paul Gait, a mining analyst at Bernstein in London. “If Glasenberg wants to continue expanding, he has two choices: double down on the Congo via the ENRC or First Quantum route and be a third-world miner, or set up a lower political-risk entity by merging the Anglo and Xstrata operating assets.”

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Canada’s African adventure takes a colonial turn – by Doug Saunders (Globe and Mail – February 2, 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.

What do we call the thing Canada is doing in Africa?

It involves our largest corporations, the federal government, public- and private-sector aid agencies, and sometimes the military. And their activities are increasingly connected, sometimes by choice, often by force of circumstance.

This week saw Ed Fast, the Minister of International Trade, touring some of the scores of city-sized mining, oil and infrastructure developments that Canada is creating in Nigeria and Ghana, and the development and aid activities that we’ve brought in to surround them. He’s the third cabinet minister to visit those countries since October.

If you follow his steps, you realize Canada is no longer simply “doing business” or “providing aid” in Africa. What we’re doing is something that bears a striking resemblance to the things Britain and France were doing in Canada two centuries ago.

First came the exploiters, in search of mineral wealth. Though most Canadians don’t realize it, Canada is now the largest foreign mining operator in the continent, exceeding even China: We have almost $25-billion in investments in hundreds of huge projects. Our petroleum companies are gigantic players, too.

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Anglo American – Haunted by history – by Rex Gibson (Financial Mail – January 31, 2013)

http://www.fm.co.za/

What’s in Mark Cutifani’s in-tray

What kind of company will Mark Cutifani inherit? Every move Anglo American makes provokes an intense response from its myriad local stakeholders. This despite its moving its primary listing to London 14 years ago . Rex Gibson reflects on the role mining, and in particular Anglo American, has played in the SA economy.

It may be one of the most inept public relations performances ever by a government not renowned for its PR skills. President Jacob Zuma went to the World Economic Forum in Davos intending to reassure the world that SA welcomed investors in mining. But it appears that nobody told some of his top lieutenants.

A few days before, mineral resources minister Susan Shabangu launched a broadside of remarkable ferocity and insensitivity against Anglo American and its subsidiary, Anglo American Platinum (Amplats). The two culprits had had the nerve to announce their business proposals without talking to her.

Though clearly directed at these two, her bullying approach carried a disturbing message for the industry as a whole: “I’ll show you who’s the boss.” The result was that Zuma felt obliged to repudiate Shabangu, insisting that investors were welcome. But that didn’t do much for the confidence and sense of security of those looking to store their money for the long term in a safe place.

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Mining tycoon becomes first African billionaire to pledge half his wealth to charity – by Geoffrey York (Globe and Mail – January 31, 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.

JOHANNESBURG — As a boy in an impoverished village in South Africa’s apartheid era, Patrice Motsepe watched his mother giving free food to the poorest customers at their small grocery store.

It was a lesson he never forgot, even when he made history by becoming South Africa’s first black billionaire. Ranked the eighth-richest man on the continent with an estimated fortune of $2.65-billion, the 51-year-old mining tycoon has become the first African billionaire to make a dramatic pledge to give away half the wealth generated by his family’s assets.

It’s a huge coup for U.S. entrepreneurs Warren Buffett and Bill Gates as they try to launch a global wave of philanthropy. They have persuaded nearly 100 billionaires to pledge the bulk of their wealth to charity, but most so far are American, and Mr. Motsepe is believed to be the first in the fast-rising African economy to participate in the program, the Giving Pledge, in which prosperous families are encourage to give away at least half their wealth.

The 51-year-old mining tycoon announced Wednesday that he has joined the Giving Pledge. Members of the campaign have courted him for months. Last August he held talks with Mr. Buffett in Omaha, and last month Mr. Gates flew to Cape Town and met Mr. Motsepe to explain the Giving Pledge. At a press conference on Wednesday, Mr. Gates joined by video link to praise Mr. Motsepe’s decision.

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