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Africa Mining

Barrick, China walk away from Africa deal – by Pav Jordan (Globe and Mail – January 9, 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.

Barrick Gold Corp. has ended months of efforts to sell its African unit to state-owned China National Gold Group (CNGC), unwilling to settle for fire-sale prices even as it struggles to cover massive cost overruns elsewhere.

The assets had been up for sale as part of a revitalization strategy that was launched by the world’s largest gold miner last summer amid a falling stock price and shareholder discontent.

The move leaves Barrick with a high-cost producer in African Barrick Gold PLC at a time when mining on the African continent is losing its shine for shareholders, who are wary of resource nationalism amid months of labour strife in African mines.

The end to the talks also underscores the fiscal discipline of Chinese state-owned mining companies, showing they are careful not to overpay for assets even as the country seeks ownership of mineral resources to feed booming economic growth.

Barrick chief executive officer Jamie Sokalsky, who took the helm of the Toronto-based miner in June after the ouster of predecessor Aaron Regent, engaged the Chinese as one of a series of bold moves to address investor backlash against Barrick, which like others in the sector pursued aggressive growth for years but failed to spark good returns for shareholders.

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New Anglo American CEO aims to create world’s best mining company – by Martin Creamer (MiningWeekly.com – January 8, 2013)

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

JOHANNESBURG (miningweekly.com) – Creating the world’s best mining company is the aim of Mark Cutifani, who takes over the reins of Anglo American as CEO from April 3.

Speaking from London in an international conference call that South African journalists could only enter late as a result of a technical glitch, Cutifani said that the iconic London- and Johannesburg-listed company, which turns 100 in four years, had “the assets, the people and the will” to be the world’s number-one diversified miner, a position BHP Billiton currently holds.

“I’m looking forward to starting with the team in just over two months,” said Cutifani, who has been appointed at a time when Anglo American is seen by some to be poised for potential ascendancy, following its significant streamlining by outgoing CEO Cynthia Carroll, who leaves at the end of April after a six-year stint.

Liberum Capital analyst Ben Davis questioned the amount of traction a turnaround story in Anglo American would gain, however, given the recent company guidance that put 2013 earnings 22% below consensus.

Davis added that the challenges arising from the “structurally defunct” Anglo American Platinum (Amplats) and continuing capital cost increases at the Minas Rio iron-ore project in Brazil had no easy solutions.

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African Barrick Gold/China National Gold deal dead in the water – by Lawrence Williams (Mineweb.com – January 8, 2013)

http://www.mineweb.com/

The long running negotiations between Barrick Gold and China National Gold over the former’s African Barrick Gold (ABG) subsidiary have fallen through and ABG’s share price has dived as a result.

LONDON (MINEWEB) – Discussions on the sale of African Barrick Gold (ABG) to China National Gold Group Corporation (CNG) appear to have come to nothing after a rigorous examination of ABG’s operations by the Chinese state-owned gold mining company. London-quoted African Barrick’s share price initially dropped sharply on receipt of a statement from ABG confirming its 73.9% owner, Canada’s Barrick Gold, has now ended its discussions with CNG which means that ABG is ‘no longer in an offer period under the Takeover Code’.

The Barrick announcement went on to say “Given the direct nature of the discussions between Barrick and CNG, this has meant an extended period of uncertainty for ABG as well as significant extra work. Throughout this period, our focus has been on ensuring the ongoing integrity and stability of our operations, and our employees have made an important contribution towards achieving this. At the same time, Barrick has made it clear that it sees considerable long-term value in the ABG asset base. Barrick remains committed to supporting ABG in fully realising the potential of the business.”

This has not been a great day for Barrick with the news also coming through that its plans to develop the huge Reko Diq copper/gold project in Pakistan’s Balochistan province have been declared invalid by the Pakistani high court, although given the company’s recent rethinking on its major project programme, coupled with the location of Reko Diq close in a far from stable part of the world, this may actually be perceived as a positive in some eyes!

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Cutifani Said to Be Leading Candidate for Anglo CEO Post – by Matthew Campbell & Firat Kayakiran (Bloomberg.com – January 5, 2013)

http://www.bloomberg.com/

AngloGold Ashanti Ltd. (ANG) Chief Executive Officer Mark Cutifani is the leading contender to replace Cynthia Carroll at the helm of mining company Anglo American Plc (AAL), according to people familiar with the situation.

Cutifani has emerged at the top of a list of candidates that has included former BHP Billiton Ltd. (BHP) CEO Chip Goodyear and Chris Griffith, the head of Anglo American’s platinum unit, said the people, who asked not to identified because the matter is private. The decision isn’t yet final on a replacement for Carroll, who said in October she would resign as CEO of the London-based miner after a $14 billion drop in market value.

Carroll’s successor may be announced within two weeks, the people said. The new CEO will face the challenge of increasing growth at Anglo American, which has struggled with cost overruns at projects, including the Minas-Rio iron ore mine in Brazil, and sparred with Chilean state mining company Codelco.

“Mark is a pretty energetic guy,” said Caesar Bryan, a portfolio manager at Gabelli & Co. in Rye, New York, which owns Anglo American and AngloGold shares. “He’s someone that’s very focused on return on invested capital and he seems to have an open mind to doing things differently.”

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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/

CECIL RHODES (1853-1902)

Once one of the British Empire’s most revered but also widely hated figures, Cecil John Rhodes enjoyed a burst of popularity after his death when his legacy, the Rhodes Scholar awards to Oriel College, Oxford, in particular marked him as a great philanthropist and visionary. Since then his reputation seems to have been in almost permanent decline as first his admiration for the Anglo Saxon ‘race’ and then his vision of a worldwide British Empire poisoned his public esteem and earned the contempt, particularly, of modern historians.

Rhodes was born in Bishops Stortford 30 miles north of London, the son of a clergyman. Whilst his brothers attended England’s great public schools and went up to Oxford, Rhodes was sickly and was educated locally. His health meant that he did not initially go to university but left school at 16. After being diagnosed with TB he went to South Africa to join his brother Herbert on his cotton farm in Natal. After a couple of years building up the farm Herbert, who had earlier spent a short time in the diamond fields near Kimberley in Griqualand West, returned to Kimberley and Rhodes followed. Herbert earlier had some success with his claims, but under Cecil’s direction things took on a more organised and businesslike tone.

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2012: A year for calling leaders to account – by Geoff Candy (Mineweb.com – January 2, 2013)

http://www.mineweb.com/

Tragedy, firings and calls for leadership were at the heart of the mining sector’s big stories of 2012.

GRONINGEN (MINEWEB) – 2012 was a big year for leadership. A host of countries, including France and China elected new leaders, others, like the US, chose more of the same. But, all around the world, leaders were being forced to work a little harder to win votes – unsurprising really, when one considers the parlous state of the global economy.

But, it was not just in the political sphere that leadership was being questioned. Mining leaders, at both a government and a company level were put on the spot. Indeed, one could argue that leadership (or a lack thereof) was at the heart of many of the sector’s largest stories in 2012.

The biggest and most tragic story of the year was the unrest on South Africa’s gold and platinum mines – unrest that led to the massacre at Marikana and a wave of strikes almost unprecedented in the industry.

While the full extent of the changes wrought in that crucible are yet to be seen, it is certain that the sector has undergone profound change and will have to see much more before it can begin to recover.

The judicial commission of inquiry into the massacre being Chaired by former judge Ian Farlam, has yet to reach a verdict but it has already raised a number of questions about leadership on all sides of the issue.

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South Africa’s ANC vetoes plan to nationalize mining – by Geoffrey York (Globe and Mail – December 21, 2012)

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.

BLOEMFONTEIN, SOUTH AFRICA — After years of damaging debate, South Africa’s ruling party has finally vetoed the idea of nationalizing its mining sector.

The announcement is part of a broad defeat for the left-wing factions in the African National Congress, reassuring investors and allowing more influence for pro-business leaders in the party. But in a compromise with the left-wingers, the ANC agreed to impose some form of higher taxes on the mining sector, and it promised a bigger role for a state-controlled mining company.

As the world’s biggest platinum producer and the fifth-biggest gold producer, South Africa should be attracting interest from mining investors from around the world. But many companies are scared away by its poor labour relations, heavy government involvement in the sector, and the continuing talk of nationalization.

Many Canadian mining companies have avoided South Africa, preferring to invest in other places, especially West Africa, where governments are seen as friendlier. Canadian mining companies are among the biggest investors in West African countries such as Burkina Faso, Mali, Niger and Senegal.

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Where Canadian ‘self-interest’ leads: The Congo example – by Yves Engler (Nelson Daily – December 11, 2012)

http://thenelsondaily.com/

Former Vice President of the Concordia Student Union, Yves Engler is a well-known left-wing journalist. His recenlty published book is called: THE UGLY CANADIAN – Stephen Harper’s Foreign Policy.

Thank you Julian Fantino.

The International Co-operation Minister caused a ruckus last week when he said that the Canadian International Development Agency should actively promote the country’s interests abroad rather than primarily focus on poverty reduction. Fantino defended “aid” that was given to groups partnering with Canadian companies building mines around the world. He said CIDA has “a duty and a responsibility to ensure that Canadian interests are promoted.”

While some commentators suggested the former Toronto police chief stuck his foot in his mouth, we should thank Fantino for his comments because they raise some important questions that Canadians seldom talk about.

How is Canadian foreign policy made? Which countries are we friendly towards and why? Which do we work against and why? What should be the primary purpose of Canadian foreign policy and aid?

As the author of five books on Canadian foreign policy, I know the answers to these questions can be controversial and complex. A short essay is certainly inadequate to properly address the subject.

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TOP 10 MINERS: A tough year, for CEOs and for stock prices – by Barry Sergeant (Mineweb.com – December 6, 2012)

http://www.mineweb.com/

The CEO’s of major top miners have faced relentless pressure this year, both from poor metal price performance and, increasingly demanding shareholders.

JOHANNESBURG (MINEWEB) – For listed mining companies everywhere, this year has been all about stock prices facing headwinds, along with relentless pressure on CEOs.

The benchmark stock, BHP Billiton, the world’s biggest diversified resources group, saw its stock price in US dollar terms peak out in the latter stages of 2010. Given the wobbles in the global economy, the fall from there has been relatively modest, from around US$26.00 a share to recent trades around US$19.00. Vale, the world’s No 2 miner by market value, has seen its stock price fall by just over 50%, to current levels around US$17.00 a share.

Over the past 12 months, Vale and Anglo American have underperformed, probably on the back of a heavier exposure to developing markets, where regulatory uncertainty has been on the rise, over the past two years, in particular. This week in Johannesburg, outgoing Anglo American CEO Cynthia Carroll decried a number of factors that had contributed to uncertainty in this country, and appealed, in effect, for improved leadership at all levels.

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Thunderous applause as Anglo CEO commits to SA mining solution – by Martin Creamer (MiningWeekly.com – December 4, 2012)

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

JOHANNESBURG (miningweekly.com) – South Africa had succeeded in extricating itself from its grave political problems in the past and the country would succeed again in finding solutions in the wake of the horrific Marikana tragedy, Cynthia Carroll said on Tuesday.

At the same time, the Anglo American CEO, who is stepping down after six years, warned that South Africa had to restore stable labour relations and foster a business environment attractive to international investors.

Carroll drew thunderous applause from a packed Gordon Institute of Business Science (GIBS) audience when she concluded her 30-minute address by saying that “the naysayers and the doomsdayers constantly forecast disaster, but in response, I say loud and clear, South Africa has done it before and it will do it again”, by arriving at a post-Marikana solution to which her company was also totally committed.

She said that the Constitutional foundation that had been laid when South Africa transitioned from the “dark night of apartheid to the new dawn of democracy” would help the country disentangle itself from its post-Marikana crisis.

She observed that the curse of unemployment had resulted in mineworkers often having a large number of economic dependents, against the background of the migrant labour system loosening the bonds of family life and dislocating communities.

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To Save Congo, Let It Fall Apart – by J. Peter Pham (New York Times – November 30, 2012)

http://www.nytimes.com/

J. Peter Pham is director of the Africa Center at the Atlantic Council.

THE Democratic Republic of Congo, which erupted in violence again earlier this month, ought to be one of the richest countries in the world. Its immense mineral reserves are currently valued by some estimates at more than $24 trillion and include 30 percent of the world’s diamond reserves; vast amounts of cobalt, copper and gold; and 70 percent of the world’s coltan, which is used in electronic devices. Yet the most recent edition of the United Nations Development Program’s Human Development Index ranked Congo last among the 187 countries and territories included in the survey.

Instead of prosperity, Congo’s mineral wealth has brought only an endless procession of unscrupulous rulers eager to exploit its riches, from King Leopold II of Belgium to Mobutu Sese Seko, who was allowed by the logic of the cold war to rule the same area as a private fief. And last year, the current president, Joseph Kabila, who inherited the job from his assassinated father more than a decade ago, awarded himself another five-year term in elections that were criticized by everyone from the European Union to the country’s Roman Catholic bishops.

If some enterprises, public or private, can be said to be “too big to fail,” Congo is the reverse: it is too big to succeed. It is an artificial entity whose constituent parts share the misfortune of having been seized by the explorer Henry Morton Stanley in the name of a rapacious 19th-century Belgian monarch. From the moment Congo was given independence in 1960, it was being torn apart by centrifugal forces, beginning with separatism in the mineral-rich southern province of Katanga.

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Keep resource companies out of foriegn aid? You’d only be hurting Africans – by Lucas Robinson (Globe and Mail – December 3, 2012)

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.

 Addis Ababa — Countries throughout Africa are discovering an abundance of minerals, gas and oil beneath their territory. Madagascar is touting trillions of dollars in potential profits from its offshore gas reserves. Zambia continues to pull almost 1900 tonnes of copper from the ground every day – contributing to year-on-year economic growth rates of over 6 per cent.

Ethiopia, where I live, is currently home to 19 million people living on less than $1 per day, and appears to be pinning at least part of its financial security on discovering two to three billion barrels of proven oil reserves. Uganda, Kenya and Tanzania are also looking to exploit newly discovered gas and oil fields, just as Ghana and Nigeria shore up their investments in these sectors.

And yet “supporters of Canada’s foreign aid” are busy criticising the Canadian International Development Agency and International Co-Operation Minister Julian Fantino for what amounts to a very minor engagement with extractive industries. After Mr. Fantino announced a new policy in which the private sector, especially mining companies, would be more directly involved in the delivery of foreign aid alongside CIDA, the response from many quarters was nothing short of venomously hateful. Indeed, many in Canada’s aid community appear to be against any engagement by the private sector in reducing global poverty.

This is not a constructive approach to reducing poverty.

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Blood minerals feed conflict in Congo – by Geoffrey York (Globe and Mail – December 1, 2012)

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.

GOMA, DEMOCRATIC REPUBLIC OF THE CONGO — A few hours after rebel fighters swept into Goma last week, a mysterious convoy of six trucks rumbled up to the Rwandan border on the edge of the city. They were loaded with “conflict minerals” – including tin and tantalum – from warehouses in Goma.

The potholed streets of this sprawling, refugee-filled city, built on volcanic rock, were largely empty. Most people were huddled inside their shacks or high-walled compounds as the rebels seized the city. But at about 5:30 p.m., just before the frontier closed, the trucks reached the border and the guards allowed them to cross from Congo into Rwanda.

“A convoy of six trucks at the same time is unusual,” said Fidel Bafilemba, a conflict-minerals researcher in Goma who received a flood of calls from witnesses when the trucks crossed the border. “Rwanda knew the city had fallen to the rebels, yet they allowed those trucks to enter. They should have stopped them.”

The M23 rebels have been promising for several days to withdraw from Goma, although the pullout was delayed on Friday when United Nations peacekeepers refused to allow the rebels to take a cache of army munitions and equipment from Goma’s airport.

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BRICS mining: the lay of the land – by Chris Lo (Mining Technology.com – January 5, 2012)

http://www.mining-technology.com/

The so-called BRICS nations (Brazil, Russia, India, China and South Africa) are the world’s emerging powerhouses, in more ways than one. As well as exerting an ever-growing influence on the global political stage, these burgeoning economies are building up an industrial base that is closing the gap with the developed western world – or, in some cases, even surpassing it.

No sector illustrates this process better than mining. Competition from low-cost, large-scale mining projects in the BRICS nations has simply been too much for many European and US operations, which are struggling with higher overhead costs and more complex regulatory regimes. As a consequence, countries such as Brazil and China have become hotbeds for international investment.

BRICS countries look outward

BRICS mining investment, however, isn’t just a one-way street – increasingly, these countries are looking to tap into overseas resources in addition to their own domestic deposits. Indian companies including Adani Mining and Lanco Infratech have been assertively investing in Australian coal mining projects, while Brazilian iron ore giant Vale’s funding of iron ore projects in China proves that there are lucrative opportunities in inter-BRICS investment.

In Africa, BRICS countries, particularly China, are becoming more prevalent as investors in new mining projects, both for profit and to provide materials for massive infrastructure and construction projects.

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Africans should reap the benefits of their resource bonanza – by Paul Collier (Globe and Mail – November 26, 2012)

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.

Paul Collier is a professor of economics and public policy at Oxford University. This article is based on the Hagey Lecture, delivered at the University of Waterloo on Nov. 22.

Canada is about to take pole position in a race that will determine the well-being of a billion people. The poorest countries on Earth, many in Africa, are in the throes of massive new resource bonanzas. In the past, such bonanzas have been the path to plunder rather than prosperity. The default option is that this dismal history gets repeated: Corruption and violence remain powerful drivers. But across Africa, many brave people are saying “never again.”

In this momentous struggle, on which the future of a billion poor people hangs, Canadians must now decide where they stand. Although this is a struggle that must be won in Africa, Africans alone do not have the power to win it.

Guinea is a brutal current example of the limitations of what decent African governments can do. For decades, the country was mired in dictatorships, culminating in a military coup so grim that the African Union refused to recognize the regime.

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