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Asia Mining

COLUMN-Asia’s coal appetite still defying forecasts for drop – by Clyde Russell (Reuters India – April 23, 2013)

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LAUNCESTON, Australia, April 23 (Reuters) – Asia’s coal markets are starting to resemble Waiting for Godot, Samuel Beckett’s absurdist play where the main characters wait in vain for something that doesn’t happen.

In coal’s case, the market is expecting demand, and by extension, prices, to drop amid anticipated slower economic growth in the region and rising electricity generation from alternative sources.

The problem is that so far coal imports by the big three Asian consumers, China, Japan and South Korea, are increasing, defying forecasts for the past several months of an imminent slowdown.

It’s not only that overall coal imports are gaining, it’s also that some suppliers are gaining market share, most oddly Australia, which is one of the highest-cost producers in the region. China’s coal imports jumped 20.2 percent in March from a year earlier to 20.52 million tonnes, and at 63.796 million tonnes are up 27.3 percent in the first quarter from the same period in 2012.

Japan’s imports were 15.821 million tonnes in March, an annual gain of 5.8 percent and the fiscal year that ended in March saw imports total 106.29 million tonnes, a record high and up 4.5 percent on the prior fiscal year.

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Indonesia could ease smelter rules for Freeport, Newmont -minister – by Yayat Supriatna and Fergus Jensen (Reuters India – April 23, 2013)

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JAKARTA, April 23 (Reuters) – Major miners in Indonesia, such as Freeport and Newmont, will get extra time to build smelters or sign pacts with smelters under construction, as they move to comply with a ban on exports of unprocessed minerals set for 2014, the industry minister said on Tuesday.

Mineral processing is politically sensitive in Southeast Asia’s largest economy, which is looking to garner greater benefits from its resources by developing processing industries, particularly where foreign firms are involved.

The comment spotlights division in the government over Indonesia’s rules on smelters, after remarks by the deputy mining minister last week that building smelters was not viable in some cases.

“We can give them extra time, facilities or incentives, but they have to start building a smelter or work with another company to build one,” Mohamad S. Hidayat told reporters.

“They have to follow our rules and regulations. No exception,” he added, referring to international mining giants Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp.

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Freeport near Indonesia supply deal, could ease contract renegotiations – by Yayat Supriatna and Michael Taylor (Reuters U.S. – April 22, 2013)

http://www.reuters.com/

(Reuters) – Freeport-McMoRan Copper & Gold Inc is near a deal to supply copper concentrate to an upcoming smelter in Indonesia, the smelter’s chairman said, which could help the U.S. miner in its contract renegotiations with the Southeast Asian nation.

The Indonesian government is pushing foreign miners, including Freeport’s local unit Freeport Indonesia, to add more value within the country, as well as trying to secure higher royalty payments and sales of controlling shares.

Last year Indonesia asked all miners to submit plans to build refineries or smelters ahead of a January 2014 ban on raw mineral exports. Freeport runs the world’s second-biggest copper mine, Grasberg, in west Papua province.

“After long negotiations, I just got a signal from PT Freeport (Indonesia) that they will be ready to sign a raw material supply contract with us soon,” PT Indosmelt’s chairman Natsir Mansyur told Reuters on Monday.

Besides PT Indosmelt, other smelters due to start construction before the 2014 deadline are PT Nusantara Smelting and PT Global Investindo, which together with the existing PT Smelting will give total copper concentrate capacity of 3.4 million tonnes, according to industry ministry data obtained by Reuters.

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China’s President Xi Jinping, a corrupt autocrat’s best friend – by Robert I. Rotberg (National Post – April 22, 2013)

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

African autocrats absolutely adore China’s President Xi Jinping. At a meeting last month with 13 prominent African leaders in Durban, South Africa, Equatorial Guinea’s hard-fisted President Teodoro Obiang Nguema Mbasogo led the others in lavishing praise on China. The front page of the weekend China Daily for March 29 trumpeted their obsequieousness and China-Africa friendship.

None of Africa’s despots dare bite the hand that has fed so well, and so consistently. While Chinese support keeps rolling in, these leaders enrich themselves and their inner circles while their people go without.

China directly supports the leaders and enables their continued internal tyrannies by refusing to “interfere” in local politics, by willfully ignoring well-documented trails of human rights violations, by turning a blind eye to egregious corrupt practices, and by protecting presidents such as Zimbabwae’s Robert Mugabe and Sudan’s Omar al-Bashir when the UN or other regional organizations threaten to investigate their regimes.

China has also helped to shield Bashir from the consequences of his indictment for war crimes by the International Criminal Court.

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China’s cooldown: Charting a new path for commodities – by Carolynne Wheeler and Barrie McKenna (Globe and Mail – April 20, 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.

BEIJING AND OTTAWA — Zhang Lianjin remembers the 2008 global financial crisis well. It nearly shuttered his brand-new metal casting factory in Wuhan, the steel centre of China.

Sales for the firm, SAFE-Cronite Asia, have been recovering slowly since the crisis. But while orders are still rising, so far this year they’re growing at only about half the pace the company was expecting. The company’s automotive business is strong, but there’s been a drop-off in orders tied to heavy machinery. And the broader steel industry in China is a worry.

“Many steel mills are really impacted. Some are even closing. There is too much [capacity] in steel mills in China, the economy is slowing down, the market doesn’t need so much and the production is much higher than the market needs,” said Mr. Zhang, the Beijing-based general manager of the European-owned company.

On top of overcapacity and massive overstocking, some competitors are also caught in a shadow banking crisis in which companies borrowed money against their inventory and find themselves unable to repay.

Now, firms like Mr. Zhang’s are having to adjust to the reality that China’s economy is maturing, and double-digit growth is a thing of the past.

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Gold slump tipped to fuel China’s acquisition hunt – by Sonali Paul and Sarah Young (Reuters U.S. – April 18, 2013)

http://www.reuters.com/

MELBOURNE/LONDON, April 18 (Reuters) – The collapse in bullion prices is set to rekindle gold mining takeovers as Chinese companies, sovereign wealth funds and private equity and hedge funds step in to rescue cash-strapped small and mid-sized miners.

Gold miners in China, the world’s biggest producer, have been chasing mines and listed companies in a bid to grow and match the largest global producers, like Barrick Gold Corp .

A seven-fold rise in gold prices between 2001 and 2011 spurred a run of gold mergers and acquisitions. Activity fell last year as major miners digested some big buys and smaller players held out for better offers, with global gold M&A tumbling to $14.6 billion from $43.3 billion in 2011, according to Ernst & Young.

But that is expected to pick up again this year as a 15 percent plunge in gold prices this month forces smaller miners, especially those with high-cost production or single assets, to seek partners to stave off a cash crunch.

“This might be the final shoe to drop that makes some people think ‘there’s no way I’m able to finance myself going forward, so I’ve got to think more seriously about my investors and give my investors a return by putting things together with people that have … got the cash’,” John McGloin, executive chairman of Africa-focused miner Amara Mining, told Reuters.

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The poetry of Potash Corp.’s attempted takeover by the Dead Sea – Editorial (Globe and Mail – April 12, 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.

There is a certain poetic justice in the difficulties that Potash Corp. of Saskatchewan Inc. is having as it tries to acquire a controlling interest in Israel Chemicals Ltd., although the government of Israel should not stand in its way, yielding to economic nationalism.

In 2010, the management of Potash Corp. was quite willing to let Canadian economic nationalism work against its proposed takeover by BHP Billiton Ltd., an Australian-British mining corporation; in the end, the federal government took the position that BHP’s purchase would not be of net benefit to Canada.

Yair Lapid, the new Israeli Finance Minister, has gone so far as to say that a takeover by Potash would be “an un-Zionist act.” Such an opinion as applied to a Canadian company presents a striking contrast with the Canadian government’s emphatic support for Israel, expressed in Prime Minister Benjamin Netanyahu’s invitation to John Baird, the Minister of Foreign Affairs, to help revive the Middle East process; Mr. Baird has described himself as a “true believer.”

Israel Chemicals, which mines the Dead Sea at Sdom (named after the Biblical Sodom), is the sixth-largest potash producer in the world, in a highly concentrated industry.

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Asia, Australia risk mining investment as rankings slip – by Clyde Russell (Reuters India – April 11, 2013)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, April 11 (Reuters) – Asia-Pacific countries are the best-placed to supply the region’s future commodity demand, but rather than encouraging mining it appears they are making it harder for explorers and producers.

Virtually every key resource-rich nation in the region slipped in annual rankings compiled by the Fraser Institute, a Canadian-based free-market think-tank that surveyed 742 mining companies for its report, released in February.

And it’s not just that Asian commodity producers slipped, the results showed that Indonesia was the worst mining jurisdiction, and was joined in the bottom 10 by Vietnam and the Philippines.

Australia, which prides itself on being a welcoming and secure place to do business, also saw the rankings of five of its six states and the Northern Territory decline, although all remained in the top 50 jurisdictions.

And while China and India are both major commodity importers, they are also significant producers and for them the survey was bleak reading.

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Tibet’s mining disaster draws criticism in Canada – by Yeshe Choesang (The Tibet Post International – April 11, 2013)

http://www.thetibetpost.com/

Toronto: – Following the devastating landslide in Tibet that left 83 dead, dozens of Tibetan-Canadians and supporters rallied in front of the Toronto Stock Exchange (TSX) Wednesday demanding that the Vancouver-based China Gold International Resources stop its destructive mining operations in Gyama township near Tibet’s capital Lhasa.

Students for a Free Tibet (SFT) Canada members simulated a landslide in front of the TSX (where China Gold International Resources is listed as CGG) with Tibetans lying on the sidewalk to represent the fatal impacts of mining-related environmental destruction in Tibet.

“This catastrophic landslide shows how China Gold International Resources, a Canadian-based mining company, is tearing apart the fragile ecology of Tibet and triggering devastating impacts on the Tibetan people. This is but a glimpse of the fatal consequences mining in Chinese-occupied Tibet poses for all involved, and particularly for the Tibetan people who are not in a position to give their free, prior and informed consent over the mine operations,” said Urgyen Badheytsang, National Director Students for a Free Tibet Canada.

“Canadian and Chinese mining companies are turning the beautiful Meldro Gungkhar valley into the tar sands of Tibet, and this is only confirmed by the pressure from Chinese State media to stick to their reports on this incident.”

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Massive mineral exploitation in Tibet caused recent mining disaster – by Yeshe Choesang (The Tibet Post International – April 10, 2013)

http://www.thetibetpost.com/

Dharamshala: – The environmental researchers of the Central Tibetan Administration (CTA) based in Dharamshala Wednesday said China’s large-scale exploitation of mineral resources in Tibet caused the recent disaster that killed more than 80 Chinese miners.

‘On Friday, 29 March 2013, Chinese state media reported that 83 miners including two Tibetans have been buried after a major landslide hit part of the Gyama (Ch:Jiama) Copper Polymetallic Mine at 6.00 AM local time. As of 4 April, 66 miners have been confirmed dead and 17 are reported missing, believed dead,’ CTA environment desk said in an assessment report of the recent landslide event in the Gyama Valley, near Tibet’s capital Lhasa.

“The workers were reportedly asleep in their tents when they were buried by a mass of mud, rocks and debris, three kilometres wide and 30 metres deep. The landslide occurred in the Pulang Valley in Siphug Village of Tashi Gang Town of Central Tibet,” the report said.

The Tibetan administration said that “Tibet’s rich mineral deposits have become a resource curse for the local residents and ecosystem. Since the late ’60s, these mineral deposits have been exploited in various scales, mostly under poor environmental norms and regulations. As for the minerals extracted, copper, chromium, gold, lead, iron and zinc are the minerals of greatest interest to Chinese and other foreign miners operating in Tibet.”

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Canadian uranium industry a step closer to trading with India – by Henry Lazenby (MiningWeekly.com – April 10, 2013)

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

TORONTO (miningweekly.com) – The Mining Association of Canada (MAC) said it supported the Canadian Nuclear Safety Commission and India’s Department of Atomic Energy finalising and signing the Appropriate Arrangement for Nuclear Cooperation agreement on Monday, which placed the Canadian uranium industry one step closer to trading with India.

“This is tremendous news for Canada’s uranium mining industry, which is the second largest in the world. This puts Canada in position to capitalise on growing global demand for nuclear energy and opens up the uranium sector to India, which is a large and strategic emerging market for the commodity as a key source of power,” MAC president and CEO Pierre Gratton said.

Finalising the arrangement followed on the heels of the Agreement between the Government of Canada and the Government of India for Cooperation in the Peaceful Uses of Nuclear Energy.

The arrangement outlined the tracking, monitoring and reporting requirements that would ensure the material is used for peaceful civilian purposes only. It was the next step towards full implementation of the Nuclear Cooperation Agreement (NCA) between Canada and India, which was signed in 2010.

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Mongolia Scolds Rio Tinto on Mine Costs as Yurts Replaced – by Michael Kohn and William Mellor (Bloomberg Businessweek – April 09, 2013)

http://www.businessweek.com/

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.

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China Failed Mining Deals Top $45 Billion on Hanlong Bungle – by Helen Yuan and Elisabeth Behrmann (Bloomberg News – April 9, 2013)

http://www.bloomberg.com/

Sichuan Hanlong Group’s botched $1.2 billion bid for Australia’s Sundance Resources Ltd. (SDL) brings the value of China’s recent failed mining deals to $45 billion, a record that’s prompted stricter Chinese scrutiny of acquisitions.

Chinese companies attempted $107 billion worth of mining takeovers over the past five years, with about $45 billion, or 42 percent by value, of deals ending in failure. Of $562 billion of deals proposed globally in the same period, $180 billion, or 32 percent, didn’t proceed, according to data compiled by Bloomberg.

The collapse yesterday of the bid for Sundance, seeking to develop a $4.7 billion iron ore project in Africa, comes after a string of failed investments by Chinese companies, including the demise of a $19.5 billion investment in Rio Tinto Group in 2009. Regulators under China’s new leadership team of Xi Jinping and Li Keqiang have told state-owned companies that overseas takeovers will face a more stringent approval process.

“Chinese regulators are probably going to allow fewer deals to go through as they become more discerning,” Jonathan Li, a corporate partner at Clayton Utz, said in a phone interview from Melbourne. “The market will come to expect that when a deal involving a Chinese acquirer is announced, all the internal Chinese approvals will already have been obtained.”

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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/

THE RISE OF THE GULAGS AND NORILSK

The Soviet years of central control and direction saw a major push to develop the vast country into an economic powerhouse to match the West. These were the Stalin years and the expansion of the mining industry was often achieved by the use of labour transported to the Gulags of the eastern USSR. In these transportations dissident professional and manual workers alike were settled in camps, often for decades, until the death of Stalin in 1953 led to most of them being closed by 1960.

The Gulags had a number of key political functions, but economically they played an important role in the establishment of heavy industrial complexes for steel, manufacturing and mining, including mining of coal, iron ore and base metals. Gold production was also an important activity given that the rouble was unconvertible and the USSR was not a major manufacturing exporter like Germany or the UK, but was from time to time a heavy importer of food stuffs and advanced machinery, and therefore in need of convertible assets.


 

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‘Common ground’ sought in mega-mine dispute – by Don Cayo (Vancouver Sun – April 2, 2013)

http://www.vancouversun.com/index.html

Mongolia, Rio Tinto both have reasons to settle in time to meet June deadline

A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company such as Rio Tinto with sales last year topping $50 billion.

But to a “little” country like Mongolia – which may have a land mass about twice the size of B.C., but has barely more than half the number of people and a much smaller fraction of our wealth – it’s a staggeringly large sum. It accounts for fully a fifth of last year’s GDP – in relative Canadian terms, the equivalent of about $350 billion.

Which goes a long way to explain the tension between the company, a two-thirds partner in Vancouver-based Turquoise Hill Resources, which owns the just-opened world’s largest copper mine in remote Mongolia, and the country, which has a 34-per-cent stake.

Mongolia’s parliament signed on in 2009 to borrow a third of the money to fund a $4.2-billion project, says parliamentary president Zandaakhuu Enkh-bold, who was in Vancouver last week at the end of a cross-Canada visit.

“If at that time they had told us the cost will be $6.2 billion, then we would have thought twice,” he said in an interview with The Vancouver Sun.

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