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Anglo American

Zimbabwe to Seize Mines While Compensating Banks – by Franz Wild (Bloomberg News – August 6, 2013)

http://www.bloomberg.com/

President Robert Mugabe’s government plans to seize control of foreign-owned mines without paying for them as part of a program to accumulate $7 billion of assets following his July 31 election victory, a minister said.

The government will compensate bank owners as it takes control of their companies, Saviour Kasukuwere, the minister in charge of the program to compel foreign companies to cede 51 percent of their assets to black investors or the government, said in an interview in Harare, the capital, today. His comments echo a suggestion made by Mugabe earlier this year.

“When it comes to natural resources, Zimbabwe will not pay for her resources,” Kasukuwere said. “If they don’t want to follow the law that’s their problem.” Non-compliant mine owners risk losing their licenses, he said.

Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP), Barclays Plc (BARC) and Standard Chartered Plc (STAN) are among companies that operate in the country. Other industries may have to yield smaller stakes to black owners, Kasukuwere said. Metals and minerals, including platinum and gold, accounted for 71 percent, or $719.9 million, in exports in the first four months of this year, the state-controlled Herald newspaper said, citing the finance ministry.

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Falling profits for Vale – by Reuters and Star Staff (August 6, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Battered by falling iron ore and nickel prices, Vale on Wednesday is expected to report a 30% drop in second-quarter profit to $1.85 billion US from a year earlier, analysts are predicting. If so, it would be Vale’s eighth consecutive quarterly profit fall, according to the average preliminary estimates of seven analysts surveyed by Reuters.

Most of the decline is due to a 12% drop in average iron ore prices and a 38% decline in nickel prices, more than offset-t ing increases in volumes shipped by the world’s No. 1 iron ore miner and No. 2 nickel producer.

Its shares have been the worst performer among the world’s big five mining companies, down 27% this year, despite a rally from nearly four-year lows in July. Of the big five, Rio Tinto, Brazil’s Vale, Glencore Xstrata and Anglo American are expected to report sharp drops in profit.

They have been slammed by weaker copper, iron ore and coal prices as they struggle to sell off assets. Anglo — the first of the diversified majors to publish results — said last week underlying operating profit fell in the six months to $3.3 billion, ahead of a consensus estimate of $3.12 billion.

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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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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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Get moving on Pebble Project permitting, mining plan! – Murkowski – by Dorothy Kosich (Mineweb.com – July 9, 2012)

http://www.mineweb.com/

U.S. Senator Lisa Murkowski urged the Pebble Partnership to set a timeline and stick with it for the benefit of Alaskans waiting nearly a decade for the massive copper-gold project.

RENO (MINEWEB) – The Ranking Member of the U.S. Senate Energy and Natural Resources Committee, Sen. Lisa Murkowski, R-Alaska, has urged the Pebble Partnership to release their mining plan for development of the Pebble copper-gold deposit in Southwest Alaska.

In a July 1st letter to Pebble Limited Partnership (PLP) CEO John Shivley, Anglo American CEO Mark Cutifani, and Northern Dynasty Minerals CEO Ron Thiessen, Murkowski said the partnership’s delay in describing the project and submitting permit applications has caused confusion and anxiety among Alaskans about the proposed mine, as well as allowed federal regulators to further muddy the water with several hypothetical mine scenarios.

Northern Dynasty and Anglo American are 50-50 partners in the massive project.

Murkowski said the partnership’s “failure to describe the project and submit permit applications” has deprived “relevant government agencies and all stakeholders of the specifics needed to make informed decisions.”

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A Potential Copper Bonanza Runs Afoul of the EPA – by Daniel McGroarty (Wall Street Journal – July 5, 2013)

http://online.wsj.com/home-page

The metal is essential for wind turbines, but a proposed mine in Alaska has set off Keystone-like alarms.

Activists are pushing the Environmental Protection Agency to take a drastic regulatory step that could have significant repercussions for the U.S. economy. I’m not referring to the Keystone XL pipeline or taxing carbon emissions. At issue is the Pebble Mine—a natural-resource project in Alaska that could yield more copper than has ever been found in one place anywhere in the world.

In addition to an estimated 80 billion pounds of copper, the Pebble Mine also holds strategic metals like molybdenum and rhenium, which are essential to countless American manufacturing, high-tech and national-security applications. Yet even before a plan to mine the deposit has been introduced by the Pebble Partnership, the group poised to bring the mine into production, the EPA appears all too willing to bend to the pressure of environmental activists. The EPA has conducted a hypothetical environmental assessment of the region that positions the agency to pre-emptively veto the Pebble project before the partnership even applies for a single permit.

Apparently some left-wing environmental groups, like the Natural Resources Defense Council, Earthworks and Trout Unlimited are so worried that the project might make it through the permitting process that they’re trying to stop it before it starts. As the NRDC put it in August 2012: “EPA’s study (and intervention) is critically important. If left to its own devices, the state of Alaska has never said no to a large mine.”

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MINING’S ROLE IN SOCIETY – by Anglo American CEO Mark Cutifani (June 26, 2013)

http://www.angloamerican.com/

This speech was given to the Minerals Council of Australia, Canaberra on 26 June 2013.

Distinguished guests, Colleagues of the Minerals Council of Australia, Ladies and gentlemen. Good morning. Thank you for that introduction Mitch and for the opportunity to speak here today.

Now, some of you may be wondering about the photo behind me [see image below]. Before I explain, let me set a little bit of context.

Mining – In Our Global Context

In 2010 the global mining industry, including the quarrying and petroleum sectors, represented 11.5% of the world’s GDP, as measured by revenues from products sold. Based on experiences in mining jurisdictions, if we include payments to service and support industries, mining’s direct contribution to global economic activity is estimated to be around 21%. But we need to think about mining in a much broader context. We produce products that make the world work.

Fuel for energy generation, products that support construction and industrial processes and most other value creating activities, are simple examples of how we literally make the world go around. So, let me get back to that photo showing two cornfields, one using phosphate fertilisers and one without. Since the turn of the last century it is estimated that the products of mining have supported a more than 100% increase in agricultural production per area unit under cultivation.

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Miner calls for end to Australian class war – by John McCarthy (Brisbaine Courier-Mail – June 25, 2013)

http://www.couriermail.com.au/business

ANGLOAMERICAN has called for the end of class warfare and for more vision from governments to revive Australia’s global business and repair its reputation

New chief executive Mark Cutifani said Australia’s reputation had been badly damaged by the debate over mining tax and the Government’s initiation of class warfare. That debate was sparked by attacks on the mining industry by people such as Gina Rinehart and his comments will add fire to the internal power struggle in the Labor Government.

Mr Cutifani said people in Europe and Asia were concerned about Australians brawling with each other, rather than debating the issues. “That is something they say they haven’t seen for 20 or 30 years,” Mr Cutifani said.

He would tell a Minerals Council of Australia forum in Canberra tomorrow that governments had not spent the revenue from the mining industry wisely. “There is a lack of vision, but it’s even worse than that,” he said. “It worries me that we have been fighting each other, rather than working together.

“The class warfare thing has done incredible damage,” Mr Cutifani said. “I am amazed by how many people who are observing us remark on how we are fighting each other, rather than just our normal robust debate.”

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Tempers flare at mine as leaders dither – by Loni Prinsloo (South Africa Business Day Live – June 16, 2013)

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

AS HIGH-level leaders of government, business and labour met on Friday to stabilise the troubled mining environment, tempers flared at one of South Africa’s biggest platinum mines in Rustenburg.

Chris Griffiths, CEO of Anglo American Platinum (Amplats), met Deputy President Kgalema Motlanthe, Finance Minister Pravin Gordhan and other senior stakeholders while about 2,400 workers were prevented by other employees from exiting underground operations at Amplats’ Thembalani mine near Rustenburg by shop stewards of the Association of Mineworkers and Construction Union (Amcu).

Amplats said this followed the suspension of four shop stewards “for inappropriate behaviour that is against our behavioural procedure”.

The battle between the National Union of Mineworkers (NUM) and Amcu that boiled over in August 2012 has not died. Tensions are running high with the first round of wage negotiations due in about two weeks. Amcu is determined to gain majority recognition at the platinum mines.

“While it is a positive move for leaders from different spheres to come together to address the issues, it will ultimately be the buy-in from workers that determines whether such a framework will make any difference. Therein lies the real challenge,” said Solidarity general secretary Gideon du Plessis.

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Miner [Anglo-American], Billions Over Budget, Slogs Ahead in Rural Brazil – by John W. Miller and Paul Kiernan (Wall Street Journal – June 9, 2013)

http://online.wsj.com/home-page

CONCEIÇÃO do MATO DENTRO, Brazil—The hills surrounding this isolated rural town contain a rich lode of iron ore and the seeds of one of the biggest cost overruns in mining history.

Anglo American AAL.LN -3.52% PLC is spending $8.8 billion on a massive mine project here—more than three times what it initially projected, and not a single ton of iron ore has been mined. The project, conceived by some of the best geologists and engineers in the world and currently employing 12,000, is three years behind schedule.

“I think all the time about what we could have done differently,” Cynthia Carroll said in an interview. Mrs. Carroll, who still believes the mine will be profitable, stepped down as CEO in April after shareholders complained about cost overruns, especially at this mine, baptized Minas Rio.

Anglo American knew mining iron ore under cattle farms crisscrossed by strips of red dirt roads—then processing and shipping it—would be a logistical challenge. And it isn’t the only one under pressure. With coastal areas tapped out, global mining companies are having to dig in increasingly remote areas, often in countries with unstable currencies, volatile economies, and uncertain legal systems.

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Environment assessment for Alaska’s Pebble mine ‘theatre of the absurd’ – Northern Dynasty- by Henry Lazenby (MiningWeekly.com – June 5, 2013)

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

TORONTO (miningweekly.com) – Dual-listed project developer Northern Dynasty Minerals has filed a 205-page submission with the US Environmental Protection Agency (EPA) in response to its call for public comments on the revised draft Bristol Bay Watershed Assessment (BBWA), calling the draft report and the process used to complete it “biased, manipulative and contrary to the EPA’s own guidelines”.

Northern Dynasty president and CEO Ronald Thiessen said the 2013 draft BBWA, released in April, suffers from the same significant shortcomings as the original report published in May 2012 – in particular, that the EPA continued to assess the environmental effects of a hypothetical mine of its own invention, one that did not employ modern engineering standards, environmental safeguards or project-specific mitigation measures and could not be permitted under US or Alaska law.

Despite the fact that the EPA’s “hypothetical mine” was sited at the location of the Pebble deposit, Northern Dynasty believed the BBWA authors continued to refuse to consider the most extensive scientific data set available on the region – environmental baseline data collected by the Pebble Limited Partnership (PLP) at a cost of about $150-million.

Northern Dynasty said the EPA’s failure to fully consider the PLP’s environmental data was contrary to its own guidelines for data quality and was compounded by the fact that the BBWA study authors had never set foot on the Pebble project site.

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Wanted: Miners in Brazil for Anglo American – by John W. Miller (The Wall Street Journal – May 19, 2013)

http://online.wsj.com/home-page

In Remote Town, Company Must Train a Workforce Before Digging for Ore

CONCEICAO DO MATO DENTRO, Brazil—One key to controlling the wage inflation that bedevils mining companies is finding a captive labor force that’s willing to be trained, such as the one in this remote town, where cows outnumber residents almost two to one.

Nineteen-year-old Augusto Alonso Silva is eager to earn $600 a month as an industrial mechanic at an Anglo American AAL.LN +3.70% PLC iron-ore mine here. The pay is about half what mining wages are elsewhere in Brazil, but Mr. Silva says it is twice as much as he dreamed of earning as a soldier. “Now I have a different dream,” says the 19-year-old, during a break in a basic engineering class.

While rising labor costs have become almost routine for global mining firms—a drill operator in Australia can earn $200,000 a year and a truck driver in Chile $70,000—locals here have been willing to take lower-level jobs such as operating a conveyor belt or maintaining machines for less than $10,000 a year.

Instead of money, the big issue has been lack of skills. The illiteracy rate in this town of 17,000 is close to 18% for people 15 and over.

“There are lots of people in this area who were simply unemployable” when Anglo American arrived in 2007, says Pedro Borrego, the company’s Brazil director of human resources.

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Anglo American Platinum Announces Revised Proposals to Create a Sustainable, Competitive and Profitable Platinum Business – (All Africa.com – May 14, 2013)

http://allafrica.com/

Johannesburg — In January 2013, Anglo American Platinum Limited (“Anglo American Platinum” or “the Company”) announced its proposals to create a sustainable, competitive and profitable platinum business for the long term benefit of all its stakeholders.

Following the announcement of its proposals, Anglo American Platinum and its recognised unions agreed to suspend the section 189 consultations to allow for engagement to take place with the Department of Mineral Resources (DMR) and the unions.

At the request of the DMR, such engagement became a bilateral engagement between Anglo American Platinum and the DMR. The bilateral engagements with the DMR have now been completed. Anglo American Platinum has formulated revised proposals which remain focused on improving the profitability and sustainability of its business, while taking cognisance of the local and national socio economic challenges.

The Company’s review of the business was in response to its revised expectations for platinum demand growth and a number of structural challenges that have eroded profitability in recent years, including capital intensity, mine depths, lower ore grades, higher than inflation unit cost increases, jewellery demand elasticity and increasing secondary supply of platinum.

Anglo American Platinum’s revised proposals continue to address the objective of aligning the business with its expectations of long term demand and are an extension of the steps taken to reposition the business in recent years.

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Amplats to slash platinum production, 6,000 jobs, in South Africa – by Geoffrey York (Globe and Mail – May 11, 2013)

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 — The world’s biggest platinum producer, Anglo American Platinum, has announced plans to cut 6,000 jobs from its South African mines, triggering fears of a major battle with trade unions as the platinum sector struggles with mounting losses.

The announcement was immediately greeted by furious criticism from South Africa’s powerful unions, raising the spectre of another season of violent clashes in a country where dozens of workers were killed last year.

But the company, known as Amplats, insisted that it had to reduce production in its platinum mines after suffering heavy losses last year. One study estimated that 70 per cent of all South African platinum mines were operating at a loss last year because of rising costs, oversupply and falling prices.

Amplats had originally intended to cut 14,000 jobs from a work force of about 56,000 employees. But when its plan was first mentioned in January, the South African government was outraged, accusing the company of behaving like “a child.”

The company agreed to suspend the plan while it discussed the issue with the government, but on Friday it announced that it would still go ahead with deep cuts to its production and job levels.

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Tensions high as Amplats to unveil South Africa job cuts plan – by Ed Stoddart (Reuters U.S. – May 9, 2013)

http://www.reuters.com/

(Reuters) – Anglo American’s (AAL.L) platinum arm, under pressure from South Africa’s government, could announce a restructuring plan on Thursday or Friday that will sharply scale back job losses as it tries to balance out cost cuts and the threat of labor unrest.

Anglo American Platinum (AMSJ.J) had planned to slash 14,000 jobs and mothball two mines to return to profit but industry sources have told Reuters that the final plan would be pared back, with as few as 5,000 jobs cut.

Militant workers have signaled they will launch protest strikes even if the job cuts fall far short of the initial target. Social tensions are running high after violence rooted in a labor turf war killed more than 50 people last year and sparked illegal strikes that hit production.

For Amplats, reining in costs and cutting production to such an extent that it lifts the price of platinum, used for emissions-capping catalytic converters in automobiles, is absolutely crucial after it fell into a loss last year.

“From the point of view of Amplats itself, both numbers will be critical, how many ounces will you produce, but also how many people, because that impacts on the cost base,” said Alison Turner, an analyst at Panmure Gordon.

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