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Canadian/International Media Resource Articles

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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China, Base Metal Tiger, Sets the Trend for Metals: Stefan Ioannou – Interview by Brian Sylvester (The Gold Report – July 1, 13)

http://www.streetwisereports.com/

Industrial metal prices have struggled to find firm footing. Stefan Ioannou of Haywood Securities tees up near-, medium- and long-term scenarios for three industrial metals—copper, zinc and nickel—and explains why he is most enthusiastic about zinc. In this interview with The Gold Report, Ioannou discusses companies that stand to benefit from the coming supply squeezes and China’s role as both supplier and consumer of all three metals.

The Gold Report: In January, Haywood Securities forecast a copper price above $3.60/pound ($3.60/lb) for the remainder of 2013. Six months later, copper is struggling to remain above $3/lb. What is causing the weakness?

Stefan Ioannou: A lot of it relates to uncertainty regarding the global economic situation. Early in the year, the price hovered around $3.25–3.50/lb and recently nosedived to $3/lb. That happened on the back of Federal Reserve Chairman Ben Bernanke’s hints that quantitative easing in the United States may end in mid-2014, raising concerns that U.S. demand for raw goods will decline. Because copper goes into a lot of raw goods, that supposes less demand. In addition, copper inventories are well over 600,000 tons (600 Kt), which is high on a historic basis.

China is the other big concern. Its manufacturing numbers are weakening. People are worried that China, which really drives a lot of the metal stories, is not growing as fast as expected.

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Analysis: Latest Barrick mine delay fans price tag fears – by Julie Gordon (Reuters U.S. – June 30, 2013)

http://www.reuters.com/

TORONTO – (Reuters) – Barrick Gold Corp (ABX.TO) has slowed spending at its Pascua-Lama project in South America, delaying first output to 2016, but that may not be enough for the its shareholders, who worry that the final price tag may creep beyond what the mine is worth.

While the flagship development, which straddles the border of Chile and Argentina, is one of the richest untapped gold deposits in the world, the string of delays and budget overruns have been a nightmare for world’s top producer and its investors.

“They should walk from Pascua-Lama,” said John Ing, president of boutique investment and research firm Maison Placements, adding that the embattled miner also needs to divest non-core assets, cut exploration spending and slash hefty board salaries if it wants to turn its fortunes around.

Barrick said late on Friday that it would re-sequence construction of the controversial project to target first production by mid-2016, deferring some $1.5 billion to $1.8 billion of planned capital spending in 2013 and 2014. The company has not updated the market on capital costs, last projected to be up to $8.5 billion.

The delay was in-line with a scenario that Credit Suisse analyst Anita Soni outlined earlier this week, as the bank downgraded Barrick to ‘Neutral’ from ‘Outperform’.

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Mining group head sees tough times now, but better prospects ahead – by Josh Kerr (Globe and Mail – July 2, 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.

TORONTO — Trying to get a read on the mining industry may be like peeking in a crystal ball at this point, but Zoë Yujnovich believes the long-term outlook is still a good one. “Right now it’s a little bit like reading tea leaves to try to figure out exactly what’s happening,” says the new chair of the Mining Association of Canada.

“Certainly in the longer term the industry is still poised to be very successful, and when we look at it in a Canadian context I think we’re going to continue to see the extractive industry being a major contributor to Canadian GDP,” she said.

Ms. Yujnovich’s comments come as she takes the helm of the 78-year-old association, building on an impressive résumé. The first woman to hold the post, she first made waves when put in charge of the Brazilian operations for British-Australian mining giant Rio Tinto Inc. at the age of 34.

Ms. Yujnovich, the chief executive officer of Iron Ore Co. of Canada, which is majority owned by Rio Tinto, will chair the association for two years. Pierre Gratton the current president and CEO of the mining association said he is excited to have her heading up the board and isn’t surprised that Ms. Yujnovich, who he describes as a natural leader, has risen so far so fast in an industry long dominated by men.

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When the U.S. doesn’t need Canadian oil – by Jeffrey Simpson (Globe and Mail – June 29, 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.

Could it be that a keystone belief and a bedrock of prosperity in Canada might disappear over the next two decades? For a long time, it has been assumed that whatever surplus oil (and natural gas) Canadians could produce would be gladly purchased by the United States. “Pump it and they will come” has been an underpinning reality for Canada’s economy.

Recently, the U.S. Energy Information Agency produced an estimate that the U.S. has almost 60 billion barrels of “technically recoverable” shale oil. Now, “technically recoverable” does not mean that all this supply will be used. Nor does it mean, however, that supplies the agency knows about today will not increase, perhaps substantially, as new deposits are discovered or innovative technologies for discovery and extraction are found. All that can be said is that 60 billion barrels of “technically recoverable” oil is a godsend for the United States.

These barrels, or a portion thereof, could be a game-changer in a country with 7.4 million barrels of daily net imports of oil. U.S. dependence on imported oil has declined since peaking in 2005. The recession of 2008 and its aftermath knocked down consumption. So did improved energy efficiency measures, switching to natural gas, more renewable energy and consumers watching their pennies.

Forthcoming tighter mileage requirements for cars will drive down demand for oil, as will requirements for heavy-duty vehicles that President Barack Obama promised in his recent climate change speech.

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Kitimat vision of LNG boom clouded with uncertainty – by Claudia Cattaneo (National Post – June 29, 2013)

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

Kitamaat Village, B.C. – On the north side of Douglas Channel, a quick boat ride from the Haisla Nation’s town site, an old log dumpsite covered by forest is awaiting transformation as the first liquefied natural gas (LNG) export site on Canada’s West Coast.

While surveying the band-owned oceanfront location from a fishing boat, chief counselor Ellis Ross pondered the massive work ahead.

“We are not prepared for all the tanker traffic,” said the 48-year-old Aboriginal leader, donning a dark business suit and wingtip dress shoes, markers of his new role in the energy world, while checking a fishing net for crabs.

“We don’t even have docks for tugs and barges. We’ll need to sit down with governments and proponents, look at the impacts and come up with a framework.” Two years from now, as long as market conditions and financing terms remain supportive, the Haisla’s partly owned BCLNG project will be loading for the first time British Columbia natural gas into tankers headed for Asia from a floating platform moored next to land-based facilities.

The project is one of three planned for the coast near Kitimat, and one of nine announced for Northern British Columbia so far. The LNG opportunity emerged out of the blue three years ago after the tsunami and nuclear disaster in Japan triggered a rush by Asian countries to secure natural gas from Western Canada as a backup fuel.

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Is the global boom in commodity prices finally over? – by Linda Yueh (BBC News – July 2, 2013)

http://www.bbc.co.uk/

Like Graham Greene’s The End of the Affair, it is hard to believe it is over and let go. But, it has been an extraordinary run, a decade of what has been called the commodity super-cycle.

It started, and perhaps will end, with China. The global integration of an economy that has grown at double digits since China joined the World Trade Organization (WTO) in December 2001 perhaps marked the start. Will China also now mark the end?

Until the last decade, the real price – so, taking off inflation – of commodities had fallen for 150 years. It was the reason why developing countries wished to diversify out of natural resources and into manufacturing.

Because agriculture prices fall over time, countries like Brazil, where more than 90% of exports were coffee during the immediate post-war period, would experience worsening incomes. This is why.

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Commodity investors race to adapt on fear of supercycle end – by Barani Krishnan (Reuters U.S. – July 1, 2013)

http://www.reuters.com/

NEW YORK – (Reuters) – Investors who have plowed some $400 billion into raw materials markets over the past 10 years are accelerating efforts to change their strategies, if not their allocations, on the growing belief the commodities “supercycle” has come to an end.

While pension funds and other institutional investors have been quick to bail on gold as bullion fell deeper into bear market territory in the second quarter, they have yet to abandon other markets like oil and metals en masse, asset allocation experts and analysts say.

Instead, more and more funds are changing tack, abandoning the passive, buy-and-hold strategies that held sway in the previous decade to embrace a more active approach to picking winners and losers within the commodities sphere.

While the shift toward ‘active’ investing has been growing for several years, the pressure to adapt is mounting. The 19-commodity Thomson Reuters-Jefferies CRB index .TRJCRB fell 7 percent in the second quarter and 25 percent from a second-quarter 2011 peak, entering bear market territory.

Among individual commodities, the second quarter was gold’s worst on record due to fear the U.S. Federal Reserve will curb stimulus money crucial to bullion prices.

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Economy must return to sustainable footing after end of the mining boom – Brisbane Courier-Mail Editorial (June 29, 2013)

http://www.couriermail.com.au/

PRIME Minister Kevin Rudd yesterday stepped up his rhetoric in relation to China and what he has now definitively called the end of the boom.

The halcyon days of ever rising commodity prices and demand for the things we dig out of the ground are finished; now comes the long, hard recalibration of an economy back to a broader, more sustainable footing was the line Mr Rudd prosecuted.

There may be an element of political overreach in the sense that while the peak of the boom appears to have well and truly crested, in historical terms the demand and price we receive for our commodity exports remains relatively healthy.

Coming off once in a generation highs to more sustainable levels does not constitute a crash after all, but it does give you the opportunity to paint yourself as the only party with clear policy to boost manufacturing, innovation and agriculture within a lower Aussie dollar paradigm.

Mr Rudd, possibly Australia’s most renowned Sinophile, should be heeded though, for events in China in recent weeks give cause for some alarm in a country as dependent on their economic well-being as Australia is.

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Coal companies adjust to new realities as gas insulates Queensland from worst of global downturn – by John McCarthy (Brisbane Courier-Mail – June 29, 2013)

http://www.couriermail.com.au/

ABOUT 7000 jobs have been lost from the state’s coal sector in the past 15 months as the boom ends and companies shut mines and scale back production, according to the industry.

In the past week about 1000 jobs disappeared as some of the world’s biggest miners, Vale, Glencore and Peabody, adjusted to the new realities of the market in which the cost of producing coal is ”line ball” with prices.

Thousands more jobs have disappeared from service companies or contractors. Unions said the central Queensland towns of Tieri and Glenden would be devastated by the loss of about 450 jobs this week at the Oaky and Newlands mines, but have rejected any suggestion that big pay increases had been a factor.

The cost of abandoned coal and infrastructure projects is now about $10 billion in lost investment and the numbers of jobs that won’t be created would be in the thousands.

A handful of massive coal projects are also now extremely doubtful, particularly in the Galilee Basin, not just because of poor prices but also because of a lack of investment funds.

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He has one tough city to sell [Sudbury image] – by Stan Sudol (Globe and Mail – July 15, 1998)

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.

Paul Brokenshire’s message to visitors: look beyond the image

Poor old Sudbury. Nowhere else in the country has been as much maligned. Polluting smokestacks, acid rain, nickel mines, labour unrest and a scarred landscape resembling the backside of the moon, are all indelible images branded into the Canadian psyche, whenever anyone mentions Sudbury. A public relations nightmare.

And yet the city with the bad rep has a convention and visitor’s department, whose mandate is to attract conventions sporting events, trade shows and special events.

According to Paul Brokenshire, its manager: “Absolutely, one of my major hurdles is overcoming the negative views that the national media routinely portray about Sudbury. My job has always been an uphill battle with this city’s negative image.”

He concludes that over the past 20 years, he has heard all the jokes and putdowns; but he soldiers on, while he and the city politicians politely laugh all the way to the bank. The convention and sporting events industry brought in about $38-million for the local community in 1996.

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The case for $10,000-an-ounce gold – by Adam Mayers (Toronto Star – July 1, 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.

As gold continues its sell-off, a book by a Toronto bullion fund manager predicts better things lie ahead.

It’s been a dreadful stretch for gold bugs. The past three months have seen a record quarterly drop in gold’s price. In the bigger picture, gold is more than a third below its peak of $1,900 (U.S.) an ounce, reached in 2011. Last week, the spot price tumbled anew, settling near $1,225.

Goldman Sachs now sees a price of $1,050 by the end of next year. Barrick Gold, one of the world’s biggest gold miners trimmed 100 head office jobs mostly in Toronto. And Australia’s Newcrest Mining wrote down the value of its assets by $5.5 billion. With news like that who’s buying gold now? Nick Barisheff, CEO of Toronto’s Bullion Management Group for one.

Barisheff runs several precious metal mutual funds, so always likes gold’s lustre. His funds have been around since 2002 and own gold, silver and platinum bars, rather than mining stocks. BMG’s holdings are stored in bank vaults and the funds are RRSP and TFSA eligible.

Barisheff is the author of the recently published $10,000 Gold: Why Gold’s Inevitable Rise Is The Investor’s Safe Haven (Wiley, $39.95). As the title boldly predicts, he sees the metal at $10,000 an ounce, and soon — within seven or eight years. The timing of the book’s release couldn’t be worse, but even so Barisheff says bullion is down, but by no means out.

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Barrick faces new setback, more pressure – by Brent Jang (Globe and Mail – July 1, 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.

VANCOUVER — Barrick Gold Corp. has gained some breathing room with its decision to delay development of its Pascua-Lama project, but the company faces pressure to shrink its global mining operations amid tumbling metal prices.

Barrick says first production from the South American gold and silver venture will be postponed by more than 18 months, as the Canadian company forecasts taking a writedown of up to $5.5-billion (U.S.) on the project.

Toronto-based Barrick said it has opted to vastly scale back capital spending this year and in 2014 on the project, which is located in the Andes mountains and straddles the border between Chile and Argentina. While construction of the $8.5-billion project has suffered another setback, the venture remains strategically important to the world’s largest gold producer, analysts say.

“With all this talk about what Barrick could look like in the future, Pascua-Lama will be key to the company’s future operational performance, especially if Barrick wants to shed high-cost mines,” said Chris Thompson, a Vancouver-based mining analyst at Raymond James Ltd.

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Shale gives Obama elbow room on climate change – by Eric Reguly (Globe and Mail – June 29, 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.

ROME — Why did U.S. President Barack Obama launch his climate change fighting plans when he did?

The timing of his Climate Action Plan speech, on Tuesday at Georgetown University, was indeed curious. Climate change initiatives have all but died in the post-Lehman Brothers world. The 2009 Copenhagen climate change conference was a bust on a global scale and, since then, tapped-out governments have been obsessed with keeping their sorry treasuries intact, stemming job losses and, in southern Europe, keeping demonstrators from burning the place down. Preserving the environment has always been a rich country’s hobby.

To be sure, the United States is richer than most, but its recovery has been weak. The point being, fighting climate change is still a tough sell in the United States, especially among the Republicans who control the House of Representatives, where flat earth science is alive and well. Fixing climate change costs money. Even if most people suspect that carbon emissions from human activity are to blame for global warming, these same people also suspect that carbon-reducing policies are more likely to kill jobs than create them.

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