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Mining Week has arrived in Canada – by Marilyn Scales (Canadian Mining Journal – May 13, 2013)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

This is National Mining Week, from May 13 to 17. Did it sneak up on our readers? It certainly did on us … and it has been celebrated since 1996 to call attention to Canada’s international leadership and expertise in mining.

The Hon. Joe Oliver, Minister of Natural Resources Canada, kicked off the week by sounding the siren to open the Toronto Stock Exchange this morning.

Certainly Minister Oliver supports our industry: “We are committed to attracting investment, supporting innovations, opening new markets and improving the regulatory system for major mining projects. Mining continues to be a cornerstone of the Canadian economy, providing good jobs and benefits to communities across the country.”

But his rhetoric wandered into the political realm when he continued:

“Our government is committed to the continued prosperity of Canada’s mining sector. National Mining Week is an opportunity to highlight how realizing the potential of mining is essential to our government’s goal of jobs, growth and long term prosperity for Canadians.”

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Gold Bears Pull $20.8 Billion as BlackRock Says Buy: Commodities – by Elizabeth Campbell (Bloomberg News – May 13, 2013)

http://www.bloomberg.com/

Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK), the world’s biggest money manager, said it’s still bullish.

Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs.

Gold is having its worst start to a year since 1982 after dropping 15 percent and sliding into a bear market in April. Holdings in exchange-traded funds backed by bullion tumbled to the lowest since July 2011 even as central banks print money on an unprecedented scale to boost growth. BlackRock’s President Robert Kapito said May 9 he would still buy the metal, echoing billionaire John Paulson, who’s sticking with a bullish view even after losing 27 percent in his Gold Fund last month.

“People have been told the world is going to end for five years, and it hasn’t, so they’re finally moving on,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees $325 billion of assets. “So even when crisis flashes now, you don’t get the same upside, and then in good times, you get more downside, and that’s what you’re getting in gold as the Armageddon premium is coming out.”

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Could gold’s fall be the start of a broader resources slump? – by Chris Sorensen (MacLean’s Magazine – April 30, 2013)

http://www2.macleans.ca/?cid=navlogo

Resource prices have driven the Canadian economy for over a decade. Are the good times coming to an end?

For investors and producers alike, gold’s recent rout was as devastating as it was unexpected. The price plummeted by $200 an ounce over a two-day period last week, suffering its biggest single-day drop in 30 years. Though it eventually stabilized at around $1,400 an ounce, stocks of gold mines—many of them Canadian—continued to be hammered by investors for days afterward, with some reports suggesting that as many as 15 per cent of the world’s gold mining companies are now wallowing in red ink.

There are many theories as to what caused gold to fall so far, so fast. They range from rumours that Cyprus planned to sell off some of its reserves to pay for its bailout, to the easing of fears that central bankers are destroying currencies with their unprecedented stimulus measures. “People thought loose monetary policies lead to rampant inflation,” says Keith Head, a professor at the University of British Columbia’s Sauder School of Business. “But gold prices stayed high, even when the underlying theory was repudiated by actual evidence, and that’s a vulnerable situation to be in.”

The big question now is whether other commodity prices will follow suit. Though gold, which traded as high as $1,888 an ounce in 2011, is unique in many respects—it is valued mostly as a way to store wealth, as opposed to as an industrial input—prices of everything from aluminum to zinc have slumped over the past several years after hitting historic highs, creating fears of a broader crash.

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NEWS RELEASE: National Mining Week, May 13–19, 2013

National Mining Week celebrates the important role that mining plays in the lives of Canadians. It is hard to imagine a life without minerals and metals – we use them and rely on them every day.

This year’s theme, Our Mineral Resource Advantage: Working for Canadians, highlights the essential role that Natural Resources Canada (NRCan) plays in helping raise awareness of the important contributions mining makes to Canadian communities and the national economy. NRCan is the Government of Canada’s voice on mining and a world-class centre of knowledge and technologies (e.g., the Green Mining Initiative) in mining environment and processing.

Our mining industry has been a cornerstone of Canada’s economy for generations, shaping our national identity with benefits in all regions. Over the next 30 years, the world will need to extract more resources to meet the demands of the growing middle classes in emerging economies. Canada will continue to be a reliable global supplier of these resources, as it has in the past.

The numbers tell the story. Canada produces more than 60 minerals and metals and is one of the world’s leading exporters. We are the world’s number-one producer of potash. We rank in the top five in aluminum, cadmium, cobalt, diamonds, nickel, platinum group metals, sulphur, titanium concentrates, tungsten, and uranium.

This is a good time to celebrate Canada’s international leadership in mining. Did you know that:

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A nugget of wisdom for gold miners: Think small – by Eric Reguly (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.

ROME — I think I have figured out Canadian gold mining executives. They assume that gold is not a mineral; it is a perishable commodity that will rot in the ground, like a potato, unless it is dug up immediately.

And not just immediately but in vast quantities. Canadian gold mining executives are obsessed with the concept of bigness. They want projects they can label “game changers,” ones capable of vaulting medium-sized firms into the big leagues, or thrust the biggies to the very top of the global heap. Bigness permeates their lives. They drive big cars, live in big houses. Some, like Barrick Gold Corp. boss Peter Munk, bob around the planet in the biggest of yachts.

The problem with bigness is that it translates into trouble when it’s extended to corporate development. Big projects are big gambles. They invariably come in far over budget, sometimes billions over budget, which gets shareholders rather annoyed. Big projects also attract lots of attention from environmental activists, politicians and aboriginal peoples. The result is expensive delays and bad publicity.

Canada’s gold mining sector is a mess, with share prices down by about half even though the gold price is down by only 20 per cent from its high of almost $1,800 (U.S.) an ounce last October. Executives are being tossed into the garbage like the remains of a steak lunch. Returns on equity are sinking into single-digit territory or, in Barrick’s case, turning negative. Problems at flagship projects are not going away – in some cases they’re intensifying – after years of fix-it efforts.

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Illegal mining Colombia’s new bane – by Paul Harris (Globe and Mail – May 9, 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.

Canadian junior miners on front lines as criminal gangs, demobilized paramilitaries and guerrilla groups mine gold outside the law

MEDELLIN, COLOMBIA — In Segovia, a prosperous Colombian town of 50,000 people in northeastern Antioquia, the shops are closed by 6:30 p.m. and the streets empty. Segovia is a boom town, one of the country’s richest gold production centres, but tension is in the air as criminal gangs, demobilized paramilitaries and guerrilla groups flock to the area to mine gold illegally.

In Colombia, gold is the new cocaine as outlaw groups increasingly move into mineral-rich parts of the country on their own terms to take advantage of the metal’s strong price.

“The relatively high price of gold, the fact that the final product is legal and its production sources cannot easily be traced, means that illegal groups can operate large, profitable operations without the risks involved in the drug trade,” said Daniel Linsker, vice-president of global services for Latin America, at Control Risks, an international business risk consulting firm.

It’s estimated that illegal mining accounts for most of Colombia’s gold production. Production was an estimated 66 tonnes in 2012, according to the country’s National Mining Agency. About 10 tonnes comes from legal mines and about 10 tonnes from scrap such as old jewellery, meaning more than 40 tonnes is produced illegally, estimates CIIGSA, one of Medellin’s gold refineries.

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Australia cuts benchmark interest rate [Mining in Australia] – by Tavia Grant (Globe and Mail – May 8, 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.

An overvalued currency, lower commodity prices and cooling investment in the mining sector. These things are not just happening in Canada, they’re also dealing a blow to Australia, which surprised markets by cutting its key interest rate in an effort to bolster its economy.

The Reserve Bank of Australia cut its benchmark rate to a record low of 2.75 per cent Tuesday, citing rising unemployment, “below trend” economic growth and resource-sector investment that’s poised to cool. And it didn’t mince words about the Australian dollar, which it suggests is too strong. As its natural resource sector slows, the central bank is aiming to give a lift to consumer spending and factories.

Canada’s economy is often compared with Australia’s. Both countries are heavily reliant on commodity exports, have triple-A credit ratings and strong currencies. They have similar levels of wealth, as measured by GDP per capita, and relatively small populations spread over a huge land mass.

But though Australia’s rate cut will be closely watched by Canada’s incoming central bank governor, Stephen Poloz, that doesn’t mean this country’s monetary policy will follow suit.

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Canada’s precarious dependence on the commodity price super-cycle – by Alex Carrick (Journal of Commerce – May 7, 2013)

http://www.journalofcommerce.com/

Chief Economist, CanaData

Mid-April was not a good time for Canada’s raw materials sector. In the course of just a couple of days, an already weakening price of gold surrendered all restraint and plunged the most in three decades.

Falling from its most recent high of $1,900 per ounce to a low of $1,350 per ounce, gold has exhibited a “bear” market. The usual definitions of “bull” and “bear” markets are asset value swings of at least +20% and -20% respectively.

From its previous peak to most current trough, the price of gold fell by nearly 30%. It has since recovered slightly.
Three primary reasons are cited for the floor-dropping air pocket.

First, inflation is still nowhere to be found. Canada’s latest year-over-year increase in the Consumer Price Index (CPI) was only +1.0%. In the U.S., April’s inflation rate was a slow +1.5%.

Gold is usually seen as a hedge against rapid price run-ups. Central banks around the world have been keeping interest rates low while rapidly expanding the money supply. The Federal Reserve in the U.S. has been buying $85 billion per month in bonds and the Bank of Japan is about to embark on a similar 7.5 trillion-yen per month ($75 billion U.S.) bond-purchase spree.

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2013 Vale Medal Awarded to Jon Baird – Advocate for a united state of mining – by Elise Dyck

http://www.cim.org/en.aspx

The Vale Medal is presented as a mark of distinction and recognition to the person who has made a meritorious and practical contribution of outstanding importance to the mining and metallurgical industry of Canada.

“In recognition of his many years of service in the Canadian mining industry, of his long-time leadership of CAMESE, and of his volunteer work with CIM and other leading mining associations.”

Jon Baird, managing director of the Canadian Association of Mining Equipment and Services for Export (CAMESE), started his career in the mining industry in Canada’s North, working as a field geophysicist. He transferred to the business side of the industry and, almost 50 years later, has worked all around the world, marketing and developing supply chains. Baird’s travel experience has allowed him to see diverse places and people and to face various issues in the mining industry. It also enabled him to understand the vital role collaboration and communication play in the industry’s success.

“It is important how the Canadian mining industry collectively tackles problems that affect everyone,” says Baird. “The mining industry in Canada is very balkanized, due to factors such as geography, natural resources falling under different provincial jurisdictions, and distinct professional associations and advocacy groups working separately on different issues.” Baird saw value in encouraging cooperation among Canada’s mining industry players – companies and associations — and started to play a leadership role in making it happen.

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Commodities: Be bullish, you’re not buying at the peak – by Martin Mittelstaedt (Globe and Mail – May 6, 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.

Gold has cratered into bear market territory. Ditto for silver and copper. Aluminum is in a big downtrend too, along with its metallic cousin nickel. The price of oil has been moving sideways and agricultural commodities are well off last year’s drought-induced highs.

Glance at a list of commodities, and just about everything other than natural gas has been doing nothing or heading south. Sure, there are occasional counter trend rallies, like Friday’s nice move upward for oil and copper on the back of stronger-than-expected U.S. payroll figures, but the overarching trend doesn’t look good.

Investors have got to be getting jittery about one of the prime reasons for plunking down money in the space – the notion that we’re in a commodity super-cycle, a once-in-a-generation move upward for natural resource prices. If the trend is really over, commodity exposure will be a sure way to sink portfolios.

But my hunch is that we’re in a kind of pause that refreshes, a lengthy and painful correction in what is likely to be recognized as a bull market that has further to run.

Those views were reinforced at Desjardins Securities Inc.’s annual commodity conference last week in Toronto. Each year, Desjardins assembles some of the world’s leading experts.

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Canadian mining company got embassy help amid controversy in Mexico: Advocacy group – by Julian Sher – (Toronto Star – May 6, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Mining Watch issues report on what Canadian embassy in Mexico knew about the murder of Chiapas anti-mining activist, whose accused killers had ties to Calgary company Blackfire.

Secret diplomatic emails and briefings suggest the Canadian embassy in Mexico provided “active and unquestioning support” to a Canadian mining company before, during and after it became embroiled in controversy over the murder of a prominent local activist in Chiapas and corruption allegations, according to a report issued Monday by MiningWatch Canada.

The study, made available by the advocacy group to the Star and La Presse, is based on 900 pages of documents obtained through Access to Information from the Department of Foreign Affairs and International Trade about its dealings with Calgary-based Blackfire Exploration.

In late 2009, three men with links to the company were arrested after the drive-by shooting of Mariano Abarca, who was leading the fight against Blackfire’s barite mine in the often turbulent state of Chiapas.

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Canadian Mining Industry Continues to Face Opposition in Central America (The Costa Rica News – May 5, 2013)

http://thecostaricanews.com/

Canadian mining operations have faced fierce opposition from numerous Latin America countries and communities over the past decade continuing most recently in Guatemala and Costa Rica.

In 2008 a Latin American independent report, Investing in Conflict—Public Money, Private Gain: Goldcorp in the Americas condemns the business practices of Canada mining companies, focusing on the largest, Goldcorp Inc., and discusses the Canadian mining industry’s socially and environmentally destructive practices in the Americas.

Even before this report, a Canadian mining operation met strong resistance in Costa Rica. In 2003 Canadian mining corporation Glencairn, started open pit mining in Miamar Costa Rica, ignoring concerns by locals and scientists of the riskiness of the area for large-scale open-pit mining, and an impending ban on open-pit mining in the country. [Reported on http://www.earthworksaction.org]

The company set up a mine using “cyanide heap leaching” at Bellavista, close to Miamar, which is a process where intensely toxic cyanide trickles through massive mounds of ore and removes the gold from the ore.

In July 2007, earth movements caused by geological instability and rainfall cracked the mine’s leach pad liner, allegedly leaking cyanide and contaminating the groundwater near the community of Miramar.

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Russia, Zimbabwe pick up the asbestos baton from Canada – by Kathleen Ruff (Toronto Star – May 5, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Canada is not longer in the asbestos business but its message is clear: if you can make money from a hazardous substance, then oppose safety requirements.

Kathleen Ruff is co-coordinator of ROCA (Rotterdam Convention Alliance) and will be attending the Geneva conference.

In February last year, an Italian court sentenced two asbestos industrialists to 16 years in prison for criminal conduct in having for years covered up the hazards of asbestos and failed to implement safety measures.

As a result of this coverup, thousands of workers and nearby residents of their Eternit asbestos-cement factory at Casale, Italy, died painful deaths from asbestos-related diseases. And the death toll at Casale continues to rise.

Yet the asbestos industry is fighting to carry on this same deadly coverup today. To date, Canada has been the industry’s chief political ally in achieving this goal. But this is about to change.

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Ex-Barrick CEO Said to Start Firm Seeking Mining Assets – by Liezel Hill & Matthew Campbell (Bloomberg News – May 4, 2013)

http://www.bloomberg.com/

Aaron Regent, who was fired last year as chief executive officer of Barrick Gold Corp. (ABX), the biggest producer of the metal, started a company to invest in mining assets, according to two people familiar with the matter.

Magris Resources Inc. is looking to acquire assets mainly in the Americas with backing from institutional and private- equity investors, said one of the people, who asked not to be named because the information isn’t yet public. Magris has employees in Toronto, the people said.

The new company was one of the bidders for BHP Billiton Ltd. (BHP)’s Pinto Valley copper mine in Arizona, according to a third person familiar with that sale process. Capstone Mining Corp. (CS) said April 28 it agreed to buy the mine and a railroad in the U.S. for $650 million.

Regent, 47, joins other prominent figures in the mining industry who are setting up, or plan to establish, companies to buy assets. They’re doing so at the same time as some of the world’s largest miners are selling off unwanted operations.

Former Xstrata Plc Chief Executive Officer Mick Davis and Chief Financial Officer Trevor Reid are weighing plans to set up a privately backed mining fund, people familiar with the matter said last month. Bankers led by Lloyd Pengilly, previously at JPMorgan Chase & Co., are setting up a London-based fund that plans to invest mainly in African mining.

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Growth in mining exports predicted for Canada in 2013 – by Liz Cowan (Northern Ontario Business – May 1, 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

As the world economy recovers from the recent downturn, Canada is well positioned for growth, thanks to its abundance of resources and services that are in demand around the world.

That’s the word from Peter G. Hall, chief economist with Export Development Canada (EDC), who spoke to an April 30 lunchtime crowd during a visit to Sudbury, an event sponsored by Northern Ontario Business.

Canadian exports are expected to rise by eight per cent in 2013 and five per cent in 2014. The largest segment to see growth is metals and ores, followed by forestry products, due to a rise in U.S. housing starts.

With 600 projects worth $650 billion requiring 800,000 net new workers expected to come online in the next 10 years—figures supplied by the Ministry of Natural Resources—Ontario will experience a “phenomenal amount of growth,” Hall said.

He called the province’s metals and mining sector Canada’s “new export star,” suggesting Sudbury in particular can cash in on the largesse.

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