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Canadian/International Media Resource Articles

Gold Miner Writedowns at $17 Billion After Newcrest – by David Stringer & Liezel Hill (Bloomberg News – June 24, 2013)

http://www.bloomberg.com/

Newcrest Mining Ltd (NCM).’s decision to write down the value of its mines by as much as A$6 billion ($5.5 billion) will lead to the biggest one-time charge in gold mining history. It also heralds pain for competitors.

Barrick Gold Corp. (ABX), the biggest producer, Newmont Mining Corp. (NEM) and Gold Fields Ltd (GFI). may be next, according to Jefferies International Ltd. Nouriel Roubini, professor of economics and international business at New York University and known as Dr. Doom for predicting turmoil before the global financial crisis began in 2008, says gold may drop to $1,000 an ounce by 2015. The metal traded as low as $1,277.20 in New York today.

Gold companies that spent $195 billion on acquisitions in a decade-long price boom are at risk of taking writedowns like Newcrest’s. Producers face more stresses with brokers from Goldman Sachs Group Inc. to Citigroup Inc. cutting price forecasts as bullion heads for its first annual drop since 2000.

“We would expect that there would be several, if not many companies, who would also in the next reporting period be coming to a list of impairments,” Michael Elliott, sector leader for Ernst & Young LLP’s global mining practice, said in a phone interview from Sydney. “It’s just a question of timing, and who had the largest exposures.”

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Is green energy fading to black in Ontario? – by Martin Regg Cohn (Toronto Star – June 23, 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.

Queen’s Park has downsized its supersized Samsung renewable energy deal. Once hailed as the miracle cure for Ontario’s ailing industrial sector, it has been cut down to size — by a hefty $2 billion.

Is green energy fading to black? The outlook has certainly dimmed since Dalton McGuinty placed a big bet on a high-cost, high-risk, hybrid strategy that blended energy diversification with industrial incubation in 2010. Our then-premier promised to revive Ontario’s hollowed-out heartland with high-tech wind turbines and solar panels that captured the wind and the sun’s rays — riding the wave of green energy.

Three years later, McGuinty is gone. So too is George Smitherman, the ambitious energy minister who steered the strategy through a skeptical cabinet — and then bailed out. Now, Kathleen Wynne’s government wants to “bend the cost curve.” And cut its losses with damage control. The world has changed since 2010.

Industrial demand for power is down, while electricity prices have soared — stoking ratepayer resistance to expensive energy experiments. Low-cost competition from Chinese solar panels is also undercutting the green energy industry here and abroad.

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Mackenzie River, the ‘Amazon of North,’ under threat – by Paul Watson (Toronto Star – June 23, 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.

Scientists say the Mackenzie River and its tributaries play a crucial role in cooling a warming climate, acting as a ‘climate stabilizer.’

VANCOUVER—Alexander Mackenzie kept a careful record of his troubles 224 summers ago, scribbling about torments like cold, driving rain and clouds of ravenous mosquitoes as he paddled a bark canoe north to the Arctic.

For days on end in early June 1789, he journeyed along the shores of Great Slave Lake, blocked at each turn by ice, searching with native guides for a route to the river that would eventually take his name.

Some 600 kilometres south of the Arctic Circle, lake ice was a constantly shifting barricade, frustrating Mackenzie’s breakout on an epic voyage that would carry him 4,241 kilometres north to what he called the Frozen Ocean.

Today the country’s longest river is a vague memory from social studies class for most Canadians, a remote place out of sight, out of mind. But international scientists say the Mackenzie River and its tributaries, stretched across a sprawling basin that occupies nearly 20 per cent of Canada, plays a crucial role in cooling a warming climate.

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China’s Great Uprooting: Moving 250 Million Into Cities -by Ian Johnson (New York Times – June 15, 2013)

http://www.nytimes.com/

Articles in this series look at how China’s government-driven effort to push the population to towns and cities is reshaping a nation that for millenniums has been defined by its rural life.

BEIJING — China is pushing ahead with a sweeping plan to move 250 million rural residents into newly constructed towns and cities over the next dozen years — a transformative event that could set off a new wave of growth or saddle the country with problems for generations to come.

The government, often by fiat, is replacing small rural homes with high-rises, paving over vast swaths of farmland and drastically altering the lives of rural dwellers. So large is the scale that the number of brand-new Chinese city dwellers will approach the total urban population of the United States — in a country already bursting with megacities.

This will decisively change the character of China, where the Communist Party insisted for decades that most peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability. Now, the party has shifted priorities, mainly to find a new source of growth for a slowing economy that depends increasingly on a consuming class of city dwellers.

The shift is occurring so quickly, and the potential costs are so high, that some fear rural China is once again the site of radical social engineering.

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Minnesota must keep a close eye on sand mining – (Minneapolis Star Tribune – June 22, 2013)

http://www.startribune.com/

Even in a legislative session marked by pitched battles over taxes, the health care exchange and child care unionization, the debate over how to regulate an industry poised for rapid growth in southeastern Minnesota — frac sand mining — stood out in emotion and intensity.

In packed Capitol hearing rooms, citizens and local government officials from this environmentally fragile part of the state pleaded for a mining moratorium and broad state regulatory authority to protect scenic bluffs, cold-water trout streams and picturesque towns. Industry advocates championed mining’s economic development potential as demand grows for the region’s desirable sand — a key ingredient in hydraulic fracturing, a process used to unlock deposits of oil and natural gas.

Over the course of the session, sweeping environmental protections such as a moratorium or a sensible ban on mining within a mile of region’s trout streams fell by the wayside, a testament to industry lobbying strength.

But a deal brokered late in the session with Gov. Mark Dayton’s leadership yielded smaller, yet potentially valuable new safeguards. Among them: a new permitting role for the state Department of Natural Resources for mining operations proposed near sensitive trout streams, the creation of air quality rules for particulate emissions by the Minnesota Pollution Control Agency, and development of “model ordinances” to help local government, which still shoulders much of the responsibility in the state for approving sand mines, to better regulate the industry.

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Bob Rae jumps into Ring of Fire – by Gloria Galloway (Globe and Mail – June 24, 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.

OTTAWA — Bob Rae has had a few tough assignments in his life, but the job he faces as he departs his federal political career could be one of the most challenging.

Mr. Rae will represent nine different native governments as chief negotiator for the Matawa First Nations in talks with the Ontario government about the opening of their land to the massive Ring of Fire mineral development. There are varying ideas about how to proceed, and even about what his role should be.

The huge impact the mining projects in the remote northwest part of the province could have on the native communities’ environment, social welfare and long-term prosperity means there is an imperative to get it right – to ensure that the First Nations walk away from the negotiations with deals that will leave them richer, not poorer.

Mr. Rae, who has been interim leader of the federal Liberals for the past two years, says he recognizes the potential harms and benefits that could befall the people who have trusted him to fight on their behalf.

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UPDATE 1- Barrick to lay off up to a third of its corporate staff – sources -by Euan Rocha (Reuters U.S. – June 24, 2013)

http://www.reuters.com/

TORONTO, June 24 (Reuters) – Barrick Gold Corp will lay off up to a third of its corporate staff at its headquarters in Toronto and other offices, sources said, as the world’s top bullion producer intensifies a downsizing plan amid a slump in the price of gold.

Barrick and miners such as Newmont Mining and Newcrest Mining are shaking up operations and taking measures like shutting down development projects, slashing exploration spending and cutting jobs due to the sliding gold price.

The cuts were announced by Barrick’s Chief Executive Jamie Sokalsky at a town hall meeting with staff in Toronto last week, said the sources, who asked not to be named as they are not officially authorized to speak about the matter.

One source said this is the first ever round of across-the- board layoffs for the company at its corporate headquarters in Toronto. Besides the falling gold price, it is also facing operational and regulatory issues at some of its mines and projects.

Barrick has over 400 people working as corporate staff with the vast majority of those located in Toronto, said the sources. A spokesman for Barrick was not immediately able to comment on the matter.

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Abe Offers $32 Billion to Africa as Japan Seeks Resources – by Isabel Reynolds & Takashi Hirokawa (Bloomberg News – June 1, 2013)

http://www.bloomberg.com/

Japanese Prime Minister Shinzo Abe pledged 3.2 trillion yen ($32 billion) to Africa as his government seeks to catch up with China in pursuing resources, markets and influence on the continent.

Abe announced the five-year commitment of public and private support in a speech today at theTokyo International Conference on African Development. Officials from about 50 nations are attending the meeting, held every five years, which is the biggest African development event outside the continent since it began in 1993.

Africa’s economic growth is luring Japanese exporters, while the government wants to tap the natural gas and oil there after the 2011 Fukushima disaster led to the closing of Japan’s nuclear plants. Chinese firms helped fuel $138.6 billion in China-Africa trade in 2011, almost five timesJapan’s commerce with the continent, according to the Foreign Ministry, citing International Monetary Fund data.

“China has become a far greater presence than Japan in Africa — it’s overwhelming,” said Kazuyoshi Aoki, a professor at Nihon University in Tokyo who specializes in African matters. “The difference lies in the level of determination. There’s a different perception of Africa’s importance.”

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UPDATE 3-Mongolia tells Rio Tinto to delay Oyu Tolgoi copper exports (Reuters India – June 21, 2013)

http://in.reuters.com/

ULAN BATOR, June 21 (Reuters) – Rio Tinto said its plan to start exporting copper from the $6.2 billion Oyu Tolgoi mine on Friday has been delayed at the request of the Mongolian government, heightening investor concerns about the risks of mining in the country.

Uncertainty over what was behind the delay sparked an exodus out of shares in other Mongolian miners on Friday, with Canadian and Australian listed miners exposed to the country sliding between 10 and 20 percent.

Journalists had been invited last week to attend a ceremony at the copper and gold mine on June 14 to mark the first exports. That was postponed to June 21, but the event was again cancelled at the last minute. Mongolia is due to hold a presidential election on June 26.

“Oyu Tolgoi is ready to start its first shipments of copper concentrate from its Mongolian mine and all necessary permits to do so have been received from relevant authorities,” Rio Tinto spokesman Bruce Tobin said on Friday.

“However, plans to start shipping on Friday 21 June have been postponed at the request of the government of Mongolia.” The company declined to comment on what was behind the latest delay.

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CORRECTED-UPDATE 2-Two dead in suspected Renamo attacks in Mozambique – by Marina Lopes (Reuters India – June 21, 2013)

http://in.reuters.com/

MAPUTO, June 21 (Reuters) – Gunmen killed two people in ambushes on vehicles in Mozambique on Friday, two days after the opposition Renamo party threatened to sabotage transport routes in the mineral-rich southern African country.

Just before the attacks, police arrested Renamo information chief Jeronimo Malagueta, who on Wednesday had announced that the ex-guerrilla group would halt traffic on main roads and the Sena railway linking the northwest coal-fields to the sea.

Persistent tension between Renamo and the ruling Frelimo party, who fought each other in a 1975-92 civil war, has alarmed citizens and investors just as the former Portuguese colony enjoys a boom driven by bumper coal and gas discoveries.

“We urge all Mozambicans to stay vigilant to premeditated and spontaneous attacks and threats to public safety,” Interior ministry spokesman Pedro Cossa told a news conference in Maputo.

Cossa said a truck driver and his passenger were killed and five others wounded in Friday’s attacks. He denied reports that a bridge was damaged in the central province of Sofala, a Renamo stronghold.

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Caisse de dépôt provides shot in the arm for mining – by Peter Hadeke (Montreal Gazette – June 20, 2013)

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

MONTREAL — The mining industry in Quebec has been reeling since the Parti Québécois government made the provincial royalty regime more onerous.

The government’s decision to impose royalties on both production and profits was seen by industry players as the wrong move at the wrong time, given the volatility in metal prices and the scarcity of investment capital these days.

Now, an arm of the provincial government is stepping in with more positive news. The Caisse de dépôt et placement, Quebec’s giant pension fund manager, announced Thursday that it’s injecting $250 million to invest in Quebec mining companies through a fund known as Sodémex Développement. Its mandate will include investing in all stages of mining activity.

It will purchase stakes of between $5 million and $20 million, primarily through debentures or equity. The announcement comes at a time when many voices in the industry are complaining about a brutally tough investment climate that has made it extremely difficult to raise financing. The appetite for risk has diminished sharply.

“It might be the global economy, it might be the situation in China, it might be the decline in gold prices,” said Dany Pelletier, a senior Caisse executive who will be involved in the new fund.

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Mining in Minnesota — regulation needed – by Rolf Westgard (Minneapolis Star Tribune – June 21, 2013)

http://www.startribune.com/

Rolf Westgard is a professional member of the Geological Society of America and is adjunct faculty on energy subjects for the University of Minnesota’s Lifelong Learning program.

This is a potentially significant industry for the northeastern part of the state. Regulation is needed, and can succeed.

Josephine Marcotty’s June 16 article “Minnesota’s next mining boom” focused on the environment-vs.-economics dispute that hangs over Minnesota’s world-class deposits of copper, nickel, cobalt, gold and platinum group elements.

They lie in a band, meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range. They arrived more than a billion years ago in the magma that featured northern Minnesota’s active volcanic history. They are concentrated out of the magma by liquid sulfur, which acts as a “collector,” because these elements prefer the sulphide liquid to the magma by a factor of 1,000 times more. This process is responsible for forming the world’s economically mineable magmatic nickel-copper sulphide deposits, like those found in Canada, Russia and the United States.

Demand for these elements is soaring. One reason is their use in renewable energy systems that provide transmission, rechargeable batteries and wind turbine technology.

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Plunging prices put squeeze on gold miners – by Peter Koven (National Post – June 21, 2013)

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

Another steep drop in gold and silver prices is forcing mining companies to look at severe cost-saving measures that would have been unthinkable at the start of the year.

When bullion plunged 13% in two days back in April, miners evaluated contingency plans they would adapt if prices continued to weaken. Those included major production cuts, dividend cuts, layoffs and mine closures.

With gold sinking another 6.4% on Thursday to below US$1,300 an ounce (along with an 8% drop for silver), those contingency plans no longer feel like such a longshot. Numerous analysts have warned that if prices fall much below US$1,200 for a prolonged period, even the large companies would consider large restructuring initiatives.

Many gold miners have curtailed capital spending, delayed projects or both. However, some development companies are already starting to overhaul their business in more dramatic ways. It is a potential sign of things to come if the bear market gets worse.

One example came this week, when Ottawa-based Orezone Gold Corp. tossed out its entire development plan for a project in West Africa and replaced it with a cheaper option that has a better shot at being financed.

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Mining’s relationship with First Nations has matured – by Zoe Younger (Vancoucer Sun – June 20, 2013)

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

Opinion: We see aboriginal people choosing the mining industry and building careers with us

Zoe Younger is vice-president, corporate affairs at the Mining Association of B.C.

As we celebrate National Aboriginal Day across Canada, it is timely to reflect on the evolving relationships between the mining industry and First Nations, in particular with respect to employment in the industry.

With a long history of working together, it is interesting to note how the partnerships between our industry and First Nations have matured, and the mutual respect for each other has deepened. Parallel to the evolving case law that has dictated changes in the regulatory process, and has better defined the relationships between the Crown and First Nations, the mining industry and aboriginal leaders across Canada have been reshaping their own relationships not based on what they have to do, but based on common interests, shared goals and values, and most importantly, communication grounded in mutual recognition and respect.

Aboriginal communities across B.C. have high levels of unemployment, and many of these communities are located in parts of the province that are economically depressed. In particular, rural and remote communities that were once dependent on a thriving forestry sector faced hardships as that industry waned.

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Exxon joins West Coast LNG race, seeks 25-year export permit – by Jeff Lewis (National Post – June 21, 2013)

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

CALGARY – ExxonMobil Corp. has joined the race to export liquefied natural gas from British Columbia with a monster proposal that would process the equivalent of nearly one-third of Canada’s current daily production.

The world’s largest energy company is seeking approval from Canada’s National Energy Board to export up to 30 million tonnes annually of liquefied natural gas, or four billion cubic feet a day, over 25 years from a prospective terminal in the vicinity of Kitimat and Prince Rupert, B.C., it said in an export application filed with the regulator Wednesday.

Exxon, which has optioned land from the B.C. government at Grassy Point, north of Prince Rupert, said the project would initially produce 10 million to 15 million tonnes of chilled fuel per year, beginning in the 2021-to-2023 time frame. At full capacity, the facility would include six processing units. It would draw gas from fields owned by Exxon and Imperial Oil Ltd., its Canadian subsidiary, the company said.

No capital cost for the project was given, but the application is the biggest export scheme proposed for Canada’s West Coast yet. It comes in the same week as the U.K.’s BG Group Plc asked Canadian regulators for permission to export up to 21.6 million tonnes of LNG per year, or roughly 2.9 billion cubic feet of a day. Canada’s natural gas production, by comparison, stood at 14.1 billion cubic feet per day in 2012.

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