Canadian/International Media Resource Articles – Page 11

Reports Of Commodities Bull Market Demise May Be Greatly Exaggerated – by Marty Leclerc (Forbes Magazine – July 9, 2013)

July 9, 2013

http://www.forbes.com/

It has been a powerful bull market in commodities. So impressive, many refer to it as “the super-cycle.” Driven by insatiable demand from China and other developing nations, cheap money courtesy of the Fed and lack of investment in the previous cycle, commodities have been the place to be for over a decade.

Oil prices are up five-fold since the late 1990s, iron ore is up seven times and most agricultural commodities have more than doubled. Gold, as attested to on AM radio and in late night TV commercials, also enjoyed a bullish ride and is up over five times its price in 2001.

Now, if you believe the commodity bears, this super-cycle is over. Their argument: China’s economy is permanently stuck in a lower growth mode and Beijing’s focus has moved from building infrastructure to stimulating its consumer economy. This will slacken demand for commodities, the argument goes, and put downward pressure on prices. The big investment banks have published unequivocal research supporting this view including Citi’s, “From Commodities Super-cycle to Unicycles,” and Deutsche Bank DB +0.7%’s, “Trading the Commodity Underperformance Cycle.”

This thesis has gathered steam as commodity prices have fallen. Since Labor Day 2011, gold has dropped by 34%. Many other formerly hot commodities haven’t fared much better.

The growing political risk to miners posed by water shortages – by Will Thomson (Mining.com – July 9, 2013)

July 9, 2013

http://www.mining.com/

In response to the growing global demand for metals and minerals, the mining industry has stepped up exploration and development of mines in various inhospitable places the world over. Though this trend has recently reversed in the wake of softening global demand, 136 new projects were announced in 2012, according to Ernst & Young. Despite the soft medium-term global economic outlook and rapidly decreasing capital expenditures by major miners, the long-term demand expectations of the developing world remain high, and thus so too does the need to continue exploration for metals and minerals in the world’s far-flung places.

Unsurprisingly, the development of difficult resource deposits has occurred in increasingly sensitive environments, far from the infrastructure necessary to meet the immense challenges of large-scale mining operations. One of the most common risk factors mining firms are faced with, in the frontier and emerging economies where these new deposits have been found, is a lack of the rivers, lakes, and water sources that are so important to a successful mining operation.

Access to a secure and stable water supply is essential for most mining operations, as water plays a vital role in every step of the mining process, from initial extraction to the refinement of ore. Water is often used to separate high value metals and minerals from the rock that ore is found in, is used to cool drill bits, and is essential for dust control. For mines that focus on the some of the world’s most important resources, such as gold and copper, water is a necessity. As the easy-access deposits of such valued resources have become increasingly scarce, and reliance on low-quality ores has increased, so too has the demand for water for the mining and refinement process.

BMS [ferro-nickel] Smelter to Start Operations in 2014 – by Damiana Simanjuntak (Jakartaa Globe – July 8, 2013)

July 9, 2013

http://www.thejakartaglobe.com/

Local miner Bumi Makmur Selaras Group Indonesia and Chinese metal miner Hanking Group are set to start operating their $500 million ferro-nickel smelting plant in Sulawesi next year, to comply with a government requirement to process mining product domestically.

Tadjudin Hidajat, the BMS president director, said the company and its Chinese partner had invested $150 million by the end of June. He said the processing plant is projected to be complete by December and to start commercial operations next May.

“The smelter was built in response to the ban on export of raw minerals that will be imposed by the government in 2014,” he said after a meeting with Industry Minister M.S. Hidayat last week.

The 2009 Mining Law states that mining outfits operating in the country must submit plans to process raw minerals such as aluminium and copper domestically before 2014. The government will ban the export of raw minerals after 2014 for mining outfits without such plans. In its early stage the Sulawesi smelter’s production capacity will reach 20,000 tons per year and be increased incrementally to 60,000 tons per year.

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

July 9, 2013

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.”

New life for SA’s small mining towns – by Loni Prinsloo (South Africa Business Day – July 7, 2013)

July 9, 2013

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

THERE has been a piquing of interest in the mineral wealth of Northern Cape, the “Cinderella Province”, with 13 new iron-ore and manganese mines being opened in the past three years.

After 130 years, the diamond-mining industry is slowing down, leaving the province with many ghost towns as other industries have struggled to take root.

But, according to Mehmood Ahmed, head of the Industrial Development Corporation (IDC) Northern Cape, new life is being blown into the region, with housing developments popping up on every block and trucks travelling between bustling little towns again.

“Towns such as Kuruman, Kathu, Hotazel and Postmasburg can’t keep up with developments. The area is growing at a tremendous pace.” The new mines all have a strong black shareholding and ownership model driven by a mandate from the government to transform the country’s mining industry.

A black consortium led by Clyde Johnson has reopened the Sedibeng iron-ore mine at Postmasburg, which was first mined in the 1960s.

Ghana’s Crackdown on Chinese Gold Miners Hits One Rural Area Hard – by Dan Levin (New York Times – June 29, 2013)

July 9, 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.

Quebec tragedy reminds us pipelines are safest way to transport oil – by Diana Furchtgott-Roth (Globe and Mail – July 9, 2013)

July 9, 2013

The 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.

After Saturday’s tragedy in Lac-Mégantic, Que., it is time to speed up the approval of new pipeline construction in North America. Pipelines are the safest way of transporting oil and natural gas, and we need more of them, without delay.

In Lac-Mégantic, the derailment of 73 rail cars carrying crude oil has claimed at least 13 lives with more sure to be announced in coming days. The calamity follows the June derailment of five rail cars in Calgary, where fortunately no lives were lost.

If this oil shipment had been carried through pipelines, instead of rail, families in Lac-Mégantic would not be grieving for lost loved ones today, and oil would not be polluting Lac Mégantic and the Chaudière River.

Although North America is home to 825,000 kilometres of pipeline in Canada and 4.2-million kilometres in the United States, government authorities still insist on blocking additional pipeline construction.

U.S. President Barack Obama has delayed approval of TransCanada’s Keystone XL pipeline, which would transport Canadian oil to U.S. refiners on the Gulf of Mexico.

For lack of pipelines, the risks of rail – Globe and Mail Editorial (July 9, 2013)

July 9, 2013

The 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 horrific explosion and fire at Lac-Mégantic, Que., is above all a shocking tragedy for a community, the causes of which are not yet known, but it also invites two provisional observations.

First, the Montreal, Maine and Atlantic Railway train was left unattended overnight; it was a false economy not to have an employee present through the night to keep an eye on a shipment of hazardous materials. Second, the probability of accidents involving trains carrying crude oil has been greatly increased by the shortage of pipeline capacity in North America.

MMA has advanced the hypothesis that some unknown person shut down the train’s locomotive after the engineer left for the night, along with the rest of the crew, and that the shutdown “may have resulted in the release of air brakes on the locomotive that was holding the train in place.” Of course, it was right for the engineer and his colleagues to get a good night’s sleep at a local hotel, before resuming the journey. But one night shift for some other employee, to keep an eye on the train, might well have averted the disaster. Common sense would suggest that a locomotive left running overnight should not be unattended.

The amount of rail transport of oil in North America has increased enormously, and unexpectedly, since 2008.

Quebec rail tragedy serves as reminder that oil pipeline debate has led to poor decisions – by Claudia Cattaneo (July 9, 2013)

July 9, 2013

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

The number of dead from Quebec’s Lac-Mégantic tragic rail accident are still being counted, and yet both sides in the oil pipeline debate are using the event to bolster their agendas. Environmentalists are arguing it’s another wake-up call that oil is bad for the planet, while pipeline proponents maintain that the incident proves that pipelines are safer than rail and projects like Keystone XL should be approved.

The real wake-up call is that the clash between the two worldviews is leading to a lot of poor decisions. Oil companies are being driven to jump on the rail bandwagon — despite mounting evidence that it’s less safe. Environmentalists refuse to let go of totally unrealistic expectations that the world must get off its oil addiction.

Their activism is stalling the approval of heavy-oil pipelines and pushing oil into trains, trucks and barges. Politicians caught in the middle are avoiding making reasonable decisions out of fear of political blowback — see Barack Obama’s latest twist on Keystone XL, which now has to pass a new test about whether it will have a “net” impact on climate change.

With pipeline capacity in North America subjected to rigorous environmental assessment — and failing to keep up with surging oil production from tight-oil discoveries and increasing production from Alberta’s oil sands — oil shipments by rail have mushroomed.

Commodity super cycle not over, support should last another 15-20 years: SocGen – by Vandana Hari and Mriganka Jaipuriyar (Platts.com – July 9, 2013)

July 9, 2013

http://www.platts.com/

The current and history’s third commodities super cycle, which began in 2000, is far from over, and the major factors supporting it — population growth and rapid urbanization — would easily stay with us for another 15-20 years, according to a senior analyst at Societe Generale.

While acknowledging that “nobody really defines what a commodity super cycle is,” and the current period might not be “as super,” it is “not uncommon to have cycles within super cycles,” Michael Haigh, SocGen’s New York-based Global Head of Commodity Research, told a media round table in Singapore Monday.

Just as prices go up and down during those cycles within a super cycle, different commodities rise at different times, Haigh suggested, implying not all commodities needed to be consistently high all the time to define a super cycle.

Price controls, the lack of investment, insufficient production and technological innovations are some of the reasons commodities behave differently during a super cycle, he said. Copper is the best commodity to study in super cycles, Haigh said, noting that the base metal continues to trade significantly above its 90th percentile long-run cost of $4,500/mt.

Fighting Mines in Wisconsin: A Radical New Way to Be Radical – by Mary Annette Pember (Indian Country Today Media Network – July 07, 2013)

July 8, 2013

http://indiancountrytodaymedianetwork.com/

A brand new tribe is emerging in Northern Wisconsin. Enrollment requirements for the Penokee tribe are stringent, according to Paul DeMain, co-founder of the Penokee Hills Harvest Camp—they require all members prove they are at least 70 percent water.

Water, the element that unifies all human life, is the binding force behind a surprising coalition of people and organizations near the Great Northern Divide in the Penokee Hills. Although many of these people have had opposing philosophies regarding economic development, they are united in their desire to ensure clean water. Public concern over the impact on the water and environment of a proposed 4.5 mile wide open-pit iron ore mine is creating a whole new tribe and new way to protest.

The fictitious, allegorical Penokee Tribe effectively includes all human beings since everyone needs water to survive. The Harvest Camp and inclusive nature of other groups protesting the mine underscores this binding fact. More than a simple protest by occupation, the residents and supporters of the camp demonstrate and include visitors in traditional plant gathering and preparation. The goal is to instill awareness of the natural resources of the area and how they would be affected by the mine.

SocGen Bearish on Gold Sees Commodity Super Cycle Persisting – by Luzi Ann Javier (Bloomberg News – July 8, 2013)

July 8, 2013

http://www.bloomberg.com/

Gold will probably extend its decline through 2014, even as the commodity super cycle that’s brought longer-than-average rising prices may persist for a further two decades, according to Societe Generale SA.

Bullion may average $1,150 an ounce next year, said the head of commodities research, Michael Haigh, who in April correctly predicted the metal’s rout. That would be the lowest annual average since 2009, data compiled by Bloomberg show.

Gold is heading for its first yearly loss since 2000 as some investors lost faith in the metal as a store of value after the U.S. Federal Reserve said it may slow asset purchases this year if the economy continues to improve. While Societe Generale is bearish on bullion, it expects the decade-long bull market in commodities to extend for a further 15 to 20 years, driven by rapid urbanization and growing population in countries including China and India, said Haigh.

“It would take something dreadful to happen to make the super cycle suddenly end,” said Haigh, citing risks including a sharp slowdown in China, a scenario the bank doesn’t expect. “If you believe that the third super cycle is a function of population and urbanization, you’re looking at another 15 to 20 years. But it’s not going to be an upward price for all.”

South Africa now only world’s sixth biggest gold producer – by (Mineweb.com/Reuters -July 8, 2013)

July 8, 2013

http://www.mineweb.com/

Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tonnes of gold.

KROMDRAAI/JOHANNESBURG (REUTERS) – A hand drill lying in the hillside tunnel of a 19th-century South African gold mine testifies to the back-breaking labour by black miners that built what was once the world’s biggest bullion industry.

But even with basic tools and cheap labour, costs overran returns at the Kromdraai gold mine north of Johannesburg, which listed in London in 1893 and closed in 1914.

A century later, South African’s remaining gold mines, which still employ a mostly black and lowly paid workforce, look set to follow the same fate, as the sun sets on an industry that has produced a third of the bullion extracted from the planet.

Gold’s sliding price and surging costs are hitting an industry that laid the foundations for Africa’s largest economy but has been slowly dying for decades as ore grades decline and shafts reach depths of 4 kms, the world’s deepest.

Commodities: Death of the ‘supercycle’ exaggerated – by Chris Flood (Financial Times – July 7, 2013)

July 8, 2013

http://www.ft.com/home/us

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An air of gloom appears to have descended on commodity markets. Gold, copper and iron ore prices have tumbled sharply from their post-financial crisis highs while returns to investors have proved disappointing.
The S&P GSCI, the most widely followed commodities benchmark, has delivered a -8.9 per cent total return over the two years to June 30.

Amid concerns about a possible slowdown in demand growth in China, the once popular theory that commodity markets would enjoy a “supercycle” of prolonged growth has been declared dead.

But interest among many institutional investors remains healthy, according to leading commodity managers. “We are seeing tremendous interest in commodities from a wide range of investors that want to enlarge their current holdings or to make new allocations,” says Jonathan Berland, managing director at Gresham, a specialist commodities manager with $16bn in assets.

Quebec Disaster Spurs Rail-Versus-Pipelines Debate on Oil – by Jeremy van Loon & Gerrit De Vynck (Bloomberg News – July 8, 2013)

July 8, 2013

http://www.bloomberg.com/

A train disaster that killed five people in Quebec promises to touch off debate over the safety of shipping crude oil by rail or pipelines such as TransCanada Corp. (TRP)’s Keystone XL. As authorities began investigating the explosion of refinery-bound tank cars hauled by Montreal, Maine & Atlantic Railway Ltd., Quebec’s Green Party demanded stricter regulations and an energy industry association predicted tough scrutiny ahead for rail carriers.

“People think rail is costless until something like this happens,” said John Stephenson, fund manager with First Asset Investment Management Inc., said from Toronto, where he helps manage C$2.70 billion ($2.65 billion). “This is another data point that shows how much costlier and riskier rail is compared to pipelines and will probably move Canada closer to having an energy strategy.”

The July 6 accident forced the evacuation of 2,000 near the town of Lac-Megantic as Montreal, Maine & Atlantic moved oil to Irving Oil Corp.’s Saint John refinery in New Brunswick. The cargo was part of Canadian producers’ growing use of rail amid tight pipeline capacity.

“It’s been a real shame that a lot of the public and especially the activists have pushed the public to sway so much from pipelines which are likely much, much safer over time,” said Arthur Salzer, chief executive officer of Northland Wealth Management, which oversees C$225 million. “It is going to be something that’s going to weigh on the public’s mind.”