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James Passin, the American Who Bought Mongolia – by Brett Forrest (Bloomberg Business Week – May 16, 2013)

http://www.businessweek.com/

The Mongolian Stock Exchange occupies a single room inside a gray building that once housed a children’s movie theater, just off Sükhbaatar Square in the capital city of Ulaanbaatar. On any given day, it’s quieter than the nearby National Library, as 20 or so traders in cubicles click away softly on their laptops.

This muted bourse hardly seems a place to make a fortune, but James Passin, who needs no prompting to declare that he’s “super bullish on Mongolia,” swears it is. Passin, who’s just flown across 12 time zones from New York City, has as much reason to promote Mongolia’s potential as any foreign investor in the country. His future is riding on it.

Passin, 41, has at least $130 million in three funds that he oversees for his employer, Firebird Management, a Manhattan firm that specializes in emerging markets. Passin controls four companies listed on the Mongolian Stock Exchange—in coal, fluorite, and real estate—as well as an undisclosed number of private enterprises. His placements make Firebird one of Mongolia’s largest and most diversified foreign private equity funds.

Until a few months ago, many other international investors shared Passin’s enthusiasm for the Mongolian market. The country, with a 17.3 percent growth rate in 2011, had the fastest-growing economy in the world. A sparsely populated nation of 3.2 million run by communists until 1990, Mongolia has discovered a bounty of natural resources.

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Critical alternative rare earths sources still not secured since China’s 2010 export restrictions – by Henry Lazenby (MiningWeekly.com – May 17, 2013)

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

TORONTO (miningweekly.com) – Following the global economic downturn of 2008/9 and a series of events and press reports in 2010 that coined what some referred to as the “rare-earths crisis”, there has been a glut of new rare earths projects starting out, yet few have progressed up the value curve, and rare earths supplies in the West still largely depend on Chinese production.

During 2010, there was global concern when China cut its rare earths exports and appeared to be restricting the world’s access to rare earths, sending the rare earths market into a flurry of action and rare earths prices sky high. This led to a growing realisation that an almost total US dependence on China for rare-earths elements, including oxides, phosphors, metals, alloys and magnets, was a matter of national security.

Some policymakers also expressed concern that the US had lost its domestic capacity to produce strategic and critical materials, and queried what implications this had for US national security.

Strategic management consultancy Cansource International president and CEO Ron MacDonald recently told Mining Weekly that solving rare earths supply security still remained an issue.

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Freeport suspends Indonesia mine after tunnel collapse – by Randy Fabi and Michael Taylor (Reuters U.S. – May 15, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Freeport-McMoRan Copper & Gold Inc halted operations at the world’s second largest copper mine in Indonesia on Wednesday as rescue workers scrambled to find 25 workers caught underground in a tunnel collapse a day earlier.

The head of Freeport Indonesia said he would travel to the remote West Papua site later on Wednesday to assess rescue operations and decide on when to resume production at the Grasberg mine, which also holds the world’s largest gold reserves.

Thirty-nine workers were attending an underground training class near the mine when a tunnel collapsed on them early on Tuesday morning, the company said. Rescue crews evacuated 14 people, four of whom died, the company said.

The Grasberg mine, which employees more than 24,000 workers, was not significantly affected, but production was suspended to pay homage to those involved in the accident.

“There is no direct impact on our operation but as a sign of sympathy we have suspended the operation,” Rozik Soetjipto, president director of Freeport Indonesia, told reporters. “I will go to the site tonight and from there we can decide what is the next step.”

Rescuers were using jacks, saws and other hand tools to free the remaining workers, as the tight space in the collapsed underground tunnel prevented them from using heavy earth-moving equipment, the company said.

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Mongolia Scolds Rio Tinto on Costs as Mine Riches Replace Yurts – by Michael Kohn & William Mellor (Bloomberg Markets Magazine – April 9, 2013)

http://www.bloomberg.com/markets-magazine/

Outside, it’s minus 30 degrees Celsius as a February wind blasts across the Central Asian steppe and through the Mongolian capital, Ulaanbaatar. Inside Government House, President Tsakhia Elbegdorj delivers a televised speech that simultaneously warms his people and chills foreign investors.

The country’s 76 legislators have convened to debate the future of one of the planet’s richest copper and gold mines, Oyu Tolgoi, which is 66 percent owned by London-based Rio Tinto Group (RIO) and 34 percent owned by the state. Elbegdorj tells them Rio Tinto has let the project’s total cost balloon by $10 billion. The higher expenses, which Rio Tinto disputes, would diminish and delay profits the government shares in, Bloomberg Markets magazine will report in its May issue.

“The time has come for the Mongolian government to take Oyu Tolgoi matters into its own hands,” Elbegdorj says to cheers from the lawmakers. His demands include giving Mongolian employees more management positions on the project, which is scheduled to begin exporting copper concentrate by June.

Few things matter more today in the political and economic life of this landlocked country of 2.8 million people than foreign investment to develop its mineral wealth. Mining money has spawned gleaming office towers, pricey gated communities and luxury-car dealerships in the capital. And yet, half of all Mongolians still live like their nomadic ancestors in circular felt yurts that can be dismantled and moved.

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Precious Holdings [Rare Earth Metals] – by Austin Ramzy (Time Magazine – Feb. 18, 2013)

http://science.time.com/

From smart phones to weaponry, cutting-edge technologies depend on access to elements called rare earths. What happened when China tried too hard to control them

In the dystopia imagined in the video game Call of Duty: Black Ops II, the year 2025 is defined by a rampaging cult, a zombie apocalypse–and a war between the U.S. and China for control of the world’s supply of rare earths, materials crucial to the production of everything from mobile phones to weapons. Early in the game, a character waves around a smart phone, lecturing on the importance of rare earths. “Who controls all of it?” he asks ominously. “China.”

It’s only a video game, but not long ago that scenario–minus the zombies–seemed uncomfortably close to reality. China, the world’s dominant producer of rare-earth elements, announced in 2010 that it was drastically cutting its exports, triggering a global panic. Rare earths are a fundamental ingredient across much of the $1 trillion high-tech manufacturing industry. Consumer companies feared shortages of the rare-earth elements that go into computer screens and lightbulbs; U.S. weapons manufacturers worried that a supply shock would imperil production of Abrams tanks and Tomahawk cruise missiles.

“The scope of this crisis is enormous, and only a concerted national effort will lead us out of this mess,” warned U.S. Representative Donald Manzullo, an Illinois Republican. Paul Krugman, a Nobel Prize–winning Princeton economist and New York Times columnist, wrote that China had achieved “a monopoly position exceeding the wildest dreams of Middle Eastern oil-fueled tyrants.”

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UPDATE 2-Rio Tinto expects Mongolia nod for copper exports soon – by James Regan (Reuters U.S. – May 9, 2013)

http://www.reuters.com/

SYDNEY, May 9 (Reuters) – Rio Tinto could be two weeks away from gaining Mongolian approval to ship copper from its Oyu Tolgoi mine, helping offset a slide in revenue from its U.S. copper business as it faces pressure to slash costs and sell non-core assets.

A landslide at the firm’s Bingham Canyon copper mine in Utah in April, which could result in over $700 million in lost sales revenue based on Reuters calculations, was unlikely to force a rethink on assets sales, Chief Executive Sam Walsh told shareholders at the annual meeting in Sydney on Thursday.

There has been speculation that moves by Rio Tinto to sell its Northparkes copper mine in Australia could be delayed until full production resumed at Bingham Canyon.

“We are not expecting that that (the landslide) will have a difference” on divestment decisions, said Walsh, adding the firm would also not be draw into a “fire sale” of businesses.

Rio Tinto hired Macquarie Bank to sell its majority stake in Northparkes, a source familiar with the matter told Reuters. . Rio Tinto and Macquarie declined comment. Japan’s Sumitomo Corp. own 20 percent of the mine.

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UPDATE 2-POSCO moves closer to iron ore access for $12 bln India steel plant – by Suchitra Mohanty and Krishna N Das (Reuters India – May 10, 2013)

http://in.reuters.com/

NEW DELHI, May 10 (Reuters) – POSCO’s planned $12 billion steel project in India moved a step forward on Friday after a court handed a decision on a mining licence to the federal government, raising the South Korean firm’s chances of getting preferential access to iron ore.

The world’s fourth-largest steel producer has waited eight years to get necessary clearances, land and an iron ore mining licence to start work on the project, billed as India’s largest foreign direct investment.

While the project planned in eastern Odisha state may still face hurdles from protesters and over issues such as land ownership, a supportive federal government is expected to clear the path for POSCO’s top concern – a captive mine that will give it steelmaking raw material iron ore.

“This is positive for the company because the central government has been supporting this project,” said Rakesh Arora, a metals expert and head of research at Macquarie Capital Securities (India). “There’s no doubt that without iron ore, this project was not starting at all.”

India was concerned about the delays and Prime Minister Manmohan Singh himself is monitoring the project’s progress, Trade Minister Anand Sharma had said in January.

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In Indian mining town, the barons are back – by Rama Lakshmi (Washington Post – May 2, 2013)

http://www.washingtonpost.com/

Bellary, India — Until recently, this iron-ore mining district in southern India was a byword for cronyism and plunder. Now it represents redemption, though not everyone is cheering.

It was steel that made Bellary a boomtown; steel sought by China in the run-up to the 2008 Olympic Games. As demand soared, prices leapt 15-fold. Indians who cut corners and mined illegally while the government looked away got rich, including a modern-day robber baron named Gali Janardhana Reddy, whose 60-room mansion stood out among his spoils.

A government crackdown in 2011 shuttered the mines in the name of lawbreaking and corruption, and led to a prison sentence for Reddy, accused of treating Bellary like his private fiefdom.

But now other barons are back and unapologetically so. Their rebound reflects complicated attitudes about ambition, corruption and the law in an India where uneven enforcement of rules has fueled the rise of a new wealthy class in fields such as mining and real estate.

In a district election campaign underway here in the southern state of Karnataka, the candidates include a millionaire named Anil Lad, whose mining licenses were recently canceled for irregularities, as well as dozens of candidates fielded by a new political party launched by Somashekar Reddy, the mansion builder’s older brother.

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China’s ruthless foreign policy is changing the world in dangerous ways – by Jonathan Kay (National Post – April 30, 2013)

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

Are we witnessing the end of the “American age”? It depends whom you ask. But one thing is certain: Thanks to the near-bankruptcy of the American welfare state, Washington is losing both the means and desire to project power across the world. Inevitably, nations with deeper pockets — China, most notably — will fill the void.

This process already is underway in many parts of the world. That includes large swathes of Central Asia, where Beijing’s billions are beginning to revolutionize regional infrastructure and alliances — in dazzling but potentially dangerous ways.

Analyzing Beijing’s foreign policy is a relatively simple exercise. That’s because, unlike the United States and other Western nations, China doesn’t even pretend to operate on any other principle except naked self-interest.

On one hand, China has courted Israel as a partner in developing Mediterranean gas fields — but it also has been happy to do business with Israel’s arch-enemy, Iran, and has sold weapons that ended up in Hezbollah’s arsenal. In South Asia, meanwhile, China has cynically helped Pakistan check India’s regional role, even as China’s state-controlled press has warned Pakistan that Beijing may “intervene militarily” in South Asia if Pakistani-origin jihadis continue to infiltrate Muslim areas of Western China.

In the east, China’s policy has been to claim every square inch of the South China Sea, and intimidate every smaller country that dares to oppose its claims.

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Antam, Vale back on their feet due to increased sales volume – by Raras Cahyafitri (Jakarta Post – May 01 2013)

http://www.thejakartapost.com/

Listed nickel miners PT Aneka Tambang and PT Vale Indonesia are reporting increased net profits in the first quarter of the year due to higher sales volumes offsetting price pressure.

Aneka Tambang (Antam) reported booking Rp 462.43 billion (US$47 million) in net profits in the first three months of the year, up from Rp 379.19 billion in the same period last year, while Vale recorded $31.5 million in net profits, up 728 percent from $3.8 million.

“In the first quarter, our export volume of nickel ore increased and gold sales also rose, although their prices were almost similar to last year,” outgoing Antam president director Alwinsyah Lubis said after the company’s annual general meeting of shareholders on Tuesday.

Antam also reported that its sales volume for gold in the first quarter was up 63 percent to 93,526 troy ounces. Meanwhile, the firm’s gold sales were Rp 1.55 trillion, up 71 percent year-on-year, contributing 46.5 percent to Antam’s total revenues of Rp 3.34 trillion during the January-to-March period, up 35.5 percent from Rp 2.46 trillion in the same period last year.

Antam’s sales of nickel ore contributed about 33 percent of toal revenues, or Rp 1.12 trillion in the first three months of the year, up 67 percent compared to Rp 662 billion year-on-year, according to the company’s financial report.

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China’s slowing growth sending shockwaves through commodities sector – by John Shmuel (National Post – April 27, 2013)

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

China’s economy this month decelerated much faster than many economists had anticipated, sending shock waves throughout the commodity sector. Copper, known as the bellwether metal because it is particularly sensitive to changes in global economic growth, plummeted into a bear market last week. And Brent crude prices have contracted about 9% since peaking in late January.

The world economy depends on China to import more and more metals and oil to keep global demand healthy. The country has, after all, the world’s second-largest economy and it’s the biggest consumer of metals and energy. It’s a dependency that’s been in place for the better part of the past decade and that has helped fuel commodity prices and the stocks of the companies that produce them.

But China’s economy is clearly slowing. From double-digit growth just a few years ago, Chinese officials now expect the country’s gross domestic product to increase by 7.5% this year. And, of course, somewhere down the line, China’s economy will transition to an upper-income and slower one.

When that eventually happens, the global market will need another source of demand to fill the giant hole left behind by China. Which begs the question: Can another country ever become a China, so to speak? If not, alternative investors focused on commodities may be out of luck.

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Centerra Gold and Kyrgyzstan: time for a marriage counsellor – by David Trilling (Globe and Mail/Report on Business Magazine – April 26, 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.

The guys who had set up the roadblock agreed to meet me in the dirt lane outside the village of Barskoon’s school. At sunset, as arranged, a black Mercedes-Benz comes creeping along the edge of the soccer field. An electric window drops and a hand waves me over. The local “youth council” has arrived to talk about the gold mine.

The question at the heart of our meeting: Is a Canadian mining company here in the Central Asian nation of Kyrgyzstan taking advantage of the locals, as the young men say–or the other way around?

Naris Kalchayev and his two friends, all in their 20s, look a little out of place in the village. Kalchayev prefers speaking Russian over Kyrgyz. Wearing a turquoise baseball cap with a Superman decal pulled low over his eyes, he looks like a nightclub DJ—not a shepherd, like most of the local guys.

Kalchayev says he’s concerned about what’s happening on the remote plateau far above this sleepy hamlet. But it’s unclear if he is legitimately worried about the environment and corruption, or is just political muscle. He might be more persuasive if he didn’t use the words “blah, blah, blah” to punctuate his arguments.

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Sulawesi Mining to Invest $1.06b in Smelter – by Damiana Ningsih Simanjuntak (Jakarta Globe – April 26, 2013)

http://www.thejakartaglobe.com/

Sulawesi Mining Investment, an Indonesian-Chinese joint venture company, plans to invest $1.06 billion in a Central Sulawesi nickel mining operation, including a plan to build a smelter, an industry executive said on Thursday.

Alexander Barus, vice president of Bintangdelapan Mineral, the Indonesian firm in the venture, said that some $96 million would go toward the smelter and support the power plant in Morowali, Central Sulawesi, while $100 million would be for the mine and supporting facilities.

Halim Mina, vice president commissioner of Sulawesi Mining, said that the investment would be split into two stages. “For the first phase, the investment will stand at $340 million and the second phase at $640 million,” Halim said.

“The plan is for the first phase to become operational at the end of 2014,” he added, noting that about 30 percent of the first phase had already been completed.

He said the smelter’s output would mostly be exported to China, but gave no details, adding only that its products would be marketed domestically “in line with the demand” for nickel.

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Vale Says Some Progress Made on Contract Talks – by Muhamad Al Azhari (Jakarta Globe – April 24, 2013)

http://www.thejakartaglobe.com/home/

Vale Indonesia, the local unit of the global nickel giant, says it has made progress in mining contract renegotiations with the Energy and Mineral Resources Ministry.

“There are four items that we continue to discuss,” Vale president director Nico Kanter told reporters after a shareholders meeting in South Jakarta on Tuesday, declining to reveal more specific details on the talks. “We are optimistic. … If the government has good intentions, we also have good intentions.”

Nico said the company’s $2 billion nickel smelter plan will depend on the outcome of the renegotiations. “We have plans to boost the capacity of the smelter that we already have. Our target is to produce 120,000 tons of nickel in 2017,” Nico said.

Several miners are currently renegotiating their contracts after the passage of a 2009 mining law designed to elicit more local benefits from the sector, by increasing the royalties paid by miners and adding value to mineral commodities exports.

The 2009 law included an obligation for miners to submit plans to process raw materials domestically before 2014, limits on concession areas, higher royalties for the government and an obligation for foreign miners to gradually divest their shares to local entities five years after production commences.

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COLUMN-China iron ore moves unlikely to have desired effect: – by Clyde Russell (Reuters India – April 22, 2013)

http://in.reuters.com/

(Reuters) – The Chinese have launched another attempt to wrest some control of the global iron ore market from the dominant big three miners, but it’s likely this latest salvo will fall short of the target.

Beijing is planning new rules to force importers to use a domestic trading platform for the steel-making ingredient rather than one backed by the miners.

China, which buys about two-thirds of the world’s seaborne iron ore, will refuse to grant new licences to importers unless they use the China Beijing International Mining Exchange (CBMX) platform, according to a Reuters exclusive story .

This physical trading platform operates in competition to the globalORE system, based in Singapore and backed by the top three producers, Brazil’s Vale, and the Australian pair of Rio Tinto and BHP Billiton. The three are also members of the CBMX platform.

Under new rules, traders and steel mills seeking a new licence to import will now have to trade at least 500,000 tonnes of iron ore on the CBMX, a document on the regulations obtained by Reuters showed. Only Chinese firms are eligible for import licences.

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