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Gold Imports by India Seen Shrinking as Curbs Increase Costs – by Swansy Afonso & Pratik Parija (Bloomberg News – July 17, 2013)

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Gold imports by India, the world’s biggest consumer last year, may tumble in the second half as the government curbs shipments to contain a record current-account deficit and stem a slide in the currency.

Inbound shipments may drop 22 percent to 372.5 metric tons in the six months through December from 478 tons a year earlier, according to a median of estimates from 10 importers, jewelers, analysts and trade groups compiled by Bloomberg.

That may still boost full-year imports to about 902 tons from 860 tons in 2012, according to Bloomberg calculations based on data from the World Gold Council and the All India Gem & Jewellery Trade Federation.

Falling Indian demand for physical gold may deepen a bear market in bullion as some investors sell the metal amid signs of an improving U.S. economy. Shoppers from India to China and Turkey crowded retail outlets to buy jewelry, coins and bars in April after the precious metal posted the biggest two-day loss in three decades. Goldman Sachs Group Inc. says that gold will reach $1,050 by the end of 2014, while Credit Suisse Group AG forecasts $1,150 in about a year.

“I see no reason to buy more gold,” said Bharti Chandra, a 38-year-old housewife, dressed in a salwar, who was selling an old necklace in Mumbai’s Zaveri Bazaar, the largest bullion market in the country.

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Special report: In tax case, Mongolia is the mouse that roared – By Anthony Deutsch and Terrence Edwards (Reuters India – July 16, 2013)

http://in.reuters.com/

AMSTERDAM/ULAN BATOR – (Reuters) – Turquoise Hill Netherlands is a little-known Amsterdam-based company with three employees, no office, and not even its own mailbox. To the government of Mongolia, though, the company represents billions in taxes that it will never see.

Turquoise Hill was created in 2009, five years after Mongolia and the Netherlands signed a tax treaty to avoid double taxation and boost investment in Mongolia. But in 2011, Mongolia decided to cancel the pact, arguing that it would cost the country income from one of the most lucrative gold and copper mines in the world.

The move was rare – tax experts say only a handful of such deals between countries have ever been cancelled – and it highlights a big contradiction.

The Netherlands, which has more than 90 such treaties globally, spent roughly 13 million euros ($17 million) on three aid programs to Mongolia in 2009 and 2010. Globally its aid budget is about $5.5 billion – the fifth most-generous rate among rich nations at 0.71 percent of Gross National Income, according to the OECD.

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UPDATE 3-POSCO drops $5.3 bln Indian steel mill, keeps main project alive – by Hyunjoo Jin (Reuters India – July 16, 2013)

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SEOUL, July 16 (Reuters) – South Korea’s POSCO said on Tuesday it will pull out of a $5.3 billion steel mill development in India’s Karnataka state, but will proceed with another $12 billion project billed as the country’s largest foreign direct investment.

POSCO said in a regulatory filing that it had agreed to cancel the project with the government of southern Karnataka state because of delays in receiving iron ore mining rights and opposition from residents which had held back land acquisition.

The move could provide fresh impetus to POSCO’s main steel project in the eastern state of Odisha. Already eight years in the making, it has recently gained momentum with the clearing of legal obstacles to the granting of an iron ore exploration licence.

“We will proceed with a steel mill project in Odisha, which is making progress. The latest move will make us more focused on the project,” POSCO spokeswoman Kim Ji-young said. POSCO, the world’s fifth-biggest steelmaker, had pursued three steel mills in India as a way of hedging its bets on the slow-moving Odisha project.

In 2010, POSCO signed a preliminary agreement with the Karnataka state government to construct a mill capable of producing 6 million tonnes of steel a year. A year earlier it signed a separate steel mill deal with state-run Steel Authority of India Ltd (SAIL).

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Bruised by purity rule, Indonesia tin exporters face trading overhaul – by Michael Taylor and Yayat Supriatna (Reuters India – July 12, 2013)

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JAKARTA, July 12 (Reuters) – Indonesia’s plans to force tin producers to trade through a domestic exchange could be a new source of disruption for shipments by the world’s top exporter, coming just as firms are trying to meet new tin purity rules, industry sources said.

The Southeast Asian nation has been trying to boost its profile in commodities markets in the hope of setting its own price benchmarks, but so far has faced an uphill task to attract enough liquidity to challenge benchmarks on overseas exchanges.

Under the new rules, all 51 registered tin exporters must trade on a domestic exchange after August 29. The trading plan is in addition to new rules brought in this month to raise minimum purity levels for tin exports to 99.9 percent, which are already expected to slash exports over the next few months, potentially lifting tin prices.

The Indonesia Commodity and Derivatives Exchange (ICDX) launched the country’s only physical tin contract last year, although it has struggled to challenge the dominant London Metal Exchange (LME) contract. “The new trading rules will promote sustainable tin mining, (and) will be good for producers and Indonesia,” said Megain Widjaja, ICDX’s chief executive, assuring there could be a transparent market with a fair price for producers and buyers.

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POSCO may soon get iron ore licence for Odisha plant – by Krishna N Das (Reuters India – July 10, 2013)

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REUTERS – India is expected to grant an iron ore exploration licence to POSCO(005490.KS) for its planned $12 billion steel plant in the country, two government officials told Reuters, in a step that should speed up the project stuck for eight years.

The Supreme Court in May handed a decision on a licence to the government, raising the South Korean firm’s chances of getting access to iron ore for the project billed as India’s largest foreign direct investment.

“POSCO India should get the license in a month or so,” said a senior government official involved with the decision-making. “The government is looking at it positively.”

Another official directly involved in the matter said the government was speeding up the process given that the Supreme Court has already ruled against a lower court order declining a prospecting licence for POSCO. Prospecting licences are generally valid for three years, after which a prospector has to apply for a mining lease.

Access to iron ore, the main raw material in making steel, is the most important factor in POSCO deciding to set up the plant in India, experts have 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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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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Canadian potash deal shows trend among Chinese – by Eddy Lok (China Daily U.S.A. – July 5, 2013)

sa.chinadaily.com.cn/index.

Chinese investment in a potash project in the Canadian province of Saskatchewan bodes well for junior mining companies in search of international financing, analysts say.

Vancouver-based Western Potash Corp, recently closed what it called was a strategic equity investment in the company by China BlueChemical Ltd and Guoxin International Investment Corporation.

Under the joint-venture deal, CBC (Canada) Holding Corp will make a strategic equity investment of $32 million in Western Potash at a price of 71 cents a share, according to a company news release.

As a result of this transaction CBC (Canada) Holding will hold a 19.9 percent ownership stake in the company on a non-diluted basis.

CBC (Canada) Holding is jointly owned by China BlueChemical Ltd and Benewood Holdings Corp Ltd. China BlueChemical is a majority-owned subsidiary of China National Offshore Oil Corporation, while Benewood is a wholly-owned subsidiary of Hong Kong registered Guoxin International Investment Corporation Limited.

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China’s exploration spend is world’s largest – by Natalie Greve (MiningWeekly.com – July 4, 2013)

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

Amid a global trend of increasing exploration expenditure, China has emerged as the country that spends more on exploration activities than any other country in the world, MinEx Consulting MD Richard Schodde said on Wednesday.

“To be fair, however, around half of this is for bulk minerals,” he said during an address at the Geological Society of South Africa’s 2013 GeoForum conference.

This came as Canada, Australia and the US’s market shares had halved in the last 20 years, despite global exploration expenditure hitting an all-time high of $29.4-billion in 2012 alone. China’s spend accounted for around 14% of this amount.

While gold remained the primary target, Schodde had observed a major increase in spending associated with bulk minerals, which had accompanied a shift from exploration in developed countries to developing ones.

He added that growing exploration spend was driven by commodity prices, emphasising that there was a strong correlation between the gold price and exploration spend.

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Export income dispute holds up Rio’s Oyu Tolgoi mine – Mongolia – by Terrence Edwards (Reuters India – July 4, 2013)

http://in.reuters.com/

ULAN BATOR, July 4 (Reuters) – The Mongolian government and Rio Tinto have not yet reached an agreement on whether the miner can repatriate earnings from the $6.2 billion Oyu Tolgoi mine, the country’s mining minister said, delaying first copper shipments.

The dispute could heighten investor concerns about the risks of mining in Mongolia and threaten Rio Tinto’s plans to grow its copper portfolio to ease dependence on iron ore.

Metals traders have been closely watching whether Rio gets official approval to export concentrate from Oyu Tolgoi amid a shortfall in shipments from the Grasberg mine in Indonesia, run by Freeport McMoRan Copper & Gold. The unlocking of ore shipments would increase supply in top copper consumer China and boost treatment and refining charges charged by smelters there.

Exports from the copper and gold mine were initially due to start on June 14, but were then postponed to June 21, before the Mongolian government told Rio to delay them again without setting a date. Uncertainty over the reasons for the delay has slashed the share price of other Mongolian miners.

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INTERVIEW-Indonesia trade minister eyes speedy end to Freeport contract talks – by Michael Taylor (Reuters India – July 2, 2013)

http://in.reuters.com/

JAKARTA, July 2 (Reuters) – A deadly tunnel collapse at Freeport McMoRan Copper and Gold’s Indonesian mine seven weeks ago should not delay contract talks with the U.S.-based firm, a member of the government negotiating team said, adding that he hoped to strike a deal as soon as possible.

Contract talks between Freeport Indonesia and the government were put on hold after a training area in a tunnel caved in on May 14, killing 28 people at the world’s No.2 copper mine in remote West Papua.

“It is tragic what happened, but Indonesia needs to be cognizant of where it needs to be going forward as an economic relevance to the world,” Trade Minister Gita Wirjawan told Reuters. “It is important for a conclusion to be reached sooner rather than later because it will reflect upon the desires of both Freeport and the Indonesian government.”

“ASAP,” said Wirjawan, when asked about the ideal time for the talks to be concluded. “I’m hopeful that there will be a meeting of minds between both sides.”

Open-pit mining at Freeport’s Grasberg mine is due to end after 2016, just five years before its current mining contract expires. Freeport estimates it will cost about $15 billion to turn the complex into a vast underground mine, an investment that only makes sense if it has a new contract with the Indonesian government beyond 2021.

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Mongolia neo-Nazis announce a change of tack – pollution control – by Carlos Barria (Reuters U.S. – July 2, 2013)

http://www.reuters.com/

ULAN BATOR – (Reuters) – A Mongolian neo-Nazi group has rebranded itself as an environmentalist organization fighting pollution by foreign-owned mines, seeking legitimacy as it sends Swastika-wearing members to check mining permits.

Tsagaan Khass, or White Swastika, has only 100-plus members but it is one of several groups with names like Dayar Mongol (Whole Mongolia), Gal Undesten (Fire Nation) and Khukh Mongol (Blue Mongolia), expanding a wave of resource nationalism as foreign firms seek to exploit the mineral wealth of the vast country, landlocked between Russia and China.

From an office behind a lingerie store in the Mongolian capital, the shaven-headed, jackbooted Tsagaan Khass storm-troopers launch bizarre raids on mining projects, demanding paperwork or soil samples to be studied for contaminants.

“Before we used to work in a harsh way, like breaking down doors, but now we have changed and we use other approaches, like demonstrations,” the group’s leader, Ariunbold Altankhuum, 40, told Reuters, speaking through a translator.

On a patrol to a quarry in grasslands a dusty two-hour ride from the capital, members wore black SS-style Nazi uniforms complete with lightning flashes and replica Iron Crosses. They questioned a mine worker against the sound of machinery grinding stones about paper work, opting to return in a week when the owner had returned.

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Rudd: China Boom Over – by Anthony Fensom (The Diplomat – June 27, 2013)

http://thediplomat.com/

Australia’s second-time Prime Minister Kevin Rudd has wasted no time hammering a nail in the coffin of the China boom after ending the political career of his predecessor. Making his first press statement Wednesday night after successfully challenging Julia Gillard for the Labor Party leadership, the Mandarin-speaking Rudd said Australians must diversify away from the Middle Kingdom.

“The global economy is still experiencing the slowest of recoveries. The China resources boom is over…and when China represents such a large slice of Australia’s own economy, our jobs, and the opportunities for raising our living standards, the time has come for us to adjust to the new challenges,” he said.

“New challenges in productivity. New challenges also in the diversification of our economy. New opportunities for what we do with processed foods and agriculture, in the services sector, and also in manufacturing…..Looking at our global economic circumstances therefore, we have tough decisions ahead on the future of our economy.”

China overtook Japan as Australia’s top trading partner in late 2007 due to China’s seemingly insatiable appetite for Australia’s energy and mineral resources, including iron ore, coal and gold. Two-way trade amounted to A$125 billion in 2012, with Australia becoming China’s sixth-largest source of imports.

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Mongolian president wins second term amid focus on mining curbs (Reuters India – June 27, 2013)

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ULAN BATOR – (Reuters) – Mongolia’s incumbent president, Tsakhia Elbegdorj, who wants more controls on foreign mining investments, has emerged as the winner of Wednesday’s polls with a narrow majority of votes cast, the country’s election commission said on Thursday.

Elbegdorj, 50, who has served as president since 2009, was the overwhelming favourite in the contest, played out amid worries about Mongolia’s faltering economy as well as the growing role of foreign mining firms.

The commission said Elbegdorj got 50.23 percent of the votes, beating a former wrestling champion, Bat-Erdene Badmaanyambuu of the Mongolian People’s Party, and health minister Udval Natsag, of the Mongolian People’s Revolutionary Party.

The lower-than-expected margin of victory could be traced to low turnout, said Julian Dierkes, an expert in Mongolian politics at the University of British Columbia, adding that participation was 10 percent lower than the last election.

“The consensus was that Elbegdorj was winning and I suspect that a lot of potential voters thought he was winning anyway, and didn’t vote,” said Dierkes, who is in Ulan Bator to monitor the election.

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Mongolia risk to hurt growth even with Oyu Tolgoi start-up, election – by Terrence Edwards and Sonali Paul (Reuters India – June 26, 2013)

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ULAN BATOR/MELBOURNE, June 26 (Reuters) – Mongolia’s efforts to protect its mineral wealth have scared investors so much that not even the first exports from its biggest mine and the expected re-election this week of a president who wants foreign capital will turn sentiment around.

With the country’s economic growth heavily tied to its vast copper and coal resources, Mongolia should have been celebrating the first copper sales to China from the $6.2 billion Oyu Tolgoi mine.

Instead, the government twice this month told mine operator Rio Tinto to delay the first shipment, partly due to a dispute over the repatriation of profits. Some analysts said the holdup was also aimed at keeping a lid on nationalism ahead of the presidential vote on Wednesday.

Industry experts believe exports will start soon, but the delays follow a year in which Mongolia introduced draft legislation to tighten control over mining activity and limit foreign investment.

“Whilst the country has lots of resource potential and holds Oyu Tolgoi, a world-scale mine, there’s too much headline risk,” said Darko Kuzmanovic, a portfolio manager at Caledonia Investments, which holds global mining stocks but has steered clear of Mongolia-focused miners.

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