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Our view: ‘Eyes wide open’ on metals mining – Duluth News Tribune Editorial (June 19, 2013)

http://www.duluthnewstribune.com/

A guest speaker in Duluth yesterday long has been a dark cloud over any prediction of economic benefit related to the coming mining of precious metals in northern Minnesota.

A guest speaker in Duluth yesterday long has been a dark cloud over any prediction of economic benefit related to the coming mining of precious metals in northern Minnesota. And he was brought here by Friends of the Boundary Waters Wilderness, a Minneapolis-based anti-mining nonprofit.

So the expectation, naturally, was for a mining-is-evil message. And that’s just what Thomas Power, a Princeton-educated economics professor of 40 years at the University of Montana, delivered. But at least he did so with a history lesson rather than with half-truth propaganda or with picket-sign catch phrases that too often have been the weak tools of the doom-and-gloom, anti-mining crowd.

“My message is to go in with eyes wide open,” Power told the News Tribune Opinion page before speaking over the lunch hour Tuesday at Clyde Iron. “I’ve been doing economic research and teaching courses on Montana’s and on the western states’ economies for 45 years. … It wasn’t possible to study the Montana economy without paying attention to the mining part of it.”

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Copper mining economics questioned by Montana economist – by John Myers (Duluth News Tribune – June 19, 2013)

http://www.duluthnewstribune.com/

University of Minnesota Duluth geologists call it the largest untapped copper-nickel deposit in the world, with millions of tons of valuable metals worth billions of dollars sitting in the Duluth complex of rock under Minnesota’s Arrowhead.

University of Minnesota Duluth geologists call it the largest untapped copper-nickel deposit in the world, with millions of tons of valuable metals worth billions of dollars sitting in the Duluth complex of rock under Minnesota’s Arrowhead.

Supporters and economic reports point to hundreds of new mining jobs if Minnesota’s first-ever copper mines become a reality, along with spinoff employment, huge payrolls and millions in taxes and royalties paid. Mining, already one of Northeastern Minnesota’s largest industries thanks to taconite iron ore, has the potential to become even bigger with copper, nickel, palladium, platinum and gold.

But Thomas Power, former chairman of the University of Montana’s economics department, warned Northland residents Tuesday to be careful in the rush into copper.

At a Duluth lunch forum sponsored by the Friends of the Boundary Waters environmental group, the professor said mining’s economic costs are often overlooked in the luster of a promised boom time. He said many economic reports released around proposed mining projects are ripe with benefits but fail to address costs. That should cause economists, and the public, to bristle, he said.

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SA platinum industry could shed 145 500 jobs by 2015 – by Idéle Esterhuizen (MiningWeekly.com – June 18, 2013)

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

JOHANNESBURG (miningweekly.com) – South Africa’s embattled platinum industry is at risk of losing 145 500 jobs by 2015, an analyst from Nomura said on Tuesday.

Assuming a breakeven platinum price of $1 500/oz for 2014 and 2015, Peter Attard-Montalto said in a report that about 24 000 jobs would be at risk next year, growing to 121 500 in 2015.

He stated that the number of job losses was linked to about 64-million ounces of production in 2014, or 14% of South Africa’s total supply, and about 277-million ounces, or 59% of the country’s output, the following year.

“We can therefore see that the necessity and effects of restructuring will spread widely beyond Amplats [Anglo American Platinum],” Attard-Montalto said in a statement, adding that the political clampdown on Amplats that banned restructuring job losses was only postponing the inevitable.

“Put simply, we do not believe that platinum mines will produce at a loss for more than two years…the jobs at risk could be shed after the election, when the mines will be under greater pain and the government will not be in the same place in the electoral cycle,” he put forward.

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Peru protesters push to stop $5 billion Newmont mine project – by Mitra Taj (Reuters India – June 17, 2013)

http://in.reuters.com/

PEROL LAKE, Peru – (Reuters) – Thousands of opponents of a $5 billion gold project of Newmont Mining circled a lake high in the Andes on Monday, vowing to stop the company from eventually draining it to make way for Peru’s most expensive mine.

Lake Perol is one of several lakes that would eventually be displaced to mine ore from the Conga project. Water from the lakes would be transferred to four reservoirs that the U.S. company and its Peruvian partner, Buenaventura, are building or planning to build.

The companies say the reservoirs would end seasonal shortages and guarantee year-round water supplies to towns and farmers in the area, but many residents fear they would lose control of the water or that the mine would cause pollution.

“Hopefully, the company and the government will see the crowd here today and stop the project,” said Cesar Correa, 28, of the town of Huangashanga in the northern region of Cajamarca. He was one of some 4,000 protesters who arrived at Lake Perol on foot or on horseback, many wearing ponchos, as well as traditional broad-brimmed straw hats or baseball caps.

Some carried blankets and bags of potatoes and rice – planning to camp out at the site for weeks to halt the project. “Why would we want a reservoir controlled by the company when we already have lakes that naturally provide us water?” asked Angel Mendoza, a member of a peasant patrol group from the town of Pampa Verde.

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Junior Watch: Permanent brain drain becoming a concern – by Kip Keen (Mineweb.com – June 18, 2013)

http://www.mineweb.com/

A dearth of junior financing has painful implications for the most important junior asset: brains.

HALIFAX, NS (MINEWEB) – It was fitting I caught John Kaiser a few hours before he was on his way to attend a meeting in Vancouver about the dire state of the junior market. I had called Kaiser, the California-based owner of Kaiser Research, to get the latest on junior finances. He gave me that. It’s not good.

751 out of 1,789 companies on the TSX Venture that Kaiser compiles data on (near all) have less than C$200,000 in the bank. This group has swelled by about 50 percent since about the same time a year ago. Many of these companies have marketcaps around C$1 million.

All this is a real problem for juniors because, as Kaiser and others have pointed out, it costs about C$200,000 a year for juniors companies just to exist: e.g., to pay listing fees, accountants and Vancouver and Toronto rent. Not only that, but if your marketcap is $1 million or so, you can’t really raise money to fund much if any exploration, Kaiser noted. Companies are only allowed to issue 25 percent of their share count a year in financings, without shareholder consent, making it difficult for these million dollar juniors to raise cash to be spent beyond the bare necessities, like salaries.

And the ongoing dearth of financing cannot be dismissed as a silly blip. According to Kaiser Research data you have to go back to 2008 or 2003 for a period where a financing drought persisted so long.

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Americans slowly realizing importance of Canadian oil, outgoing ambassador to Canada says – by Campbell Clark (Globe and Mail – June 18, 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.

Attitudes toward Canada’s oil have shifted dramatically in the United States in recent years, as Americans increasingly view it as a key part of their own energy independence, outgoing U.S. Ambassador to Canada David Jacobson says.

After four years in Ottawa, Mr. Jacobson steps down from his post next month with the fate of a key piece of cross-border energy politics, the Keystone XL pipeline, left hanging. In Washington, it is a charged and symbolic debate: For many environmentally-minded Americans, approving the pipeline amounts to approving more burning of Canada’s “dirty oil.”

But the outgoing U.S. envoy said Americans’ perception has changed in many ways – including the dawning realization that energy from north of the border, seen by many Americans as akin to domestic supply, is very important to the U.S.

“One of the ways it’s changed is that I think a lot more Americans understand how much of our energy comes from Canada,” Mr. Jacobson said in an interview at his Ottawa residence. “Clearly, there is an issue with respect to the oil sands, and I don’t want to diminish it. But I think another piece of the public perception in the United States is just how important a foreign supplier of energy Canada is.”

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Northern Gateway’s biggest risk to Canada is not approving pipeline: Enbridge – by Claudia Cattaneo (National Post – June 18, 2013)

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

TERRACE, B.C. – One of the most consequential choices facing Canada today is coming to a head in a modest hotel banquet room just off the CN railway tracks, where a few dozen people have assembled for a final shot at influencing a decision on whether the proposed Northern Gateway oil sands pipeline should reshape the country’s economic future or be cast aside for the angst it has provoked.

After 10 years of planning, recrimination and debate, proponent Enbridge Inc., First Nations leaders, union and provincial government interests, environmental organizations, are putting forward final oral arguments before a joint panel of the National Energy Board and the Canadian Environmental Assessment Agency.

In contrast to the pomp and ceremony that ushered the hearings’ beginnings in nearby Kitimat 18 months ago, the first day of the final hearings Monday was all business after an exhaustive process that drew in all those affected around the right of way, pitted Albertans against British Columbians and has cost Enbridge alone so far nearly half a billion dollars.

In its final words to the panel, Enbridge said the proposed oil sands pipeline from Edmonton to the northern B.C. Coast is making enormous and costly commitments to avoid accidents and that the biggest risk to the country would be to not approve it.

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Vale Sees China Slowdown Blunted by Brazil Real Depreciation – by Juan Pablo Spinetto & Laurie Hays (Bloomberg News – June 17, 2013)

http://www.bloomberg.com/

Vale SA (VALE5), Brazil’s largest exporter, said further local currency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto Group and BHP Billiton Ltd. (BHP).

The real, the worst-performing emerging-market currency in the past three months, probably will weaken to about 2.40 from 2.15 per U.S. dollar, bolstering Brazil’s competitiveness, said Jose Carlos Martins, Vale’s executive director for ferrous and strategy. China’s iron-ore and steel demand growth is set to slow to about 5 percent from 10 percent in the first five months of the year, he said.

“The Brazilian currency will devalue further,” Martins, 63, said in a June 14 interview at the company’s Rio de Janeiro headquarters. “The slowdown in China is negative, devaluation is positive because not only our costs in dollars will be reduced but also investments will be lower.”

Vale is seeking to return to profit growth and boost investor confidence by cutting costs, selling assets and focusing on the iron-ore business, its most lucrative unit. The company, the worst-performing major mining stock this year, posted first-quarter profit that surpassed analysts’ expectations for the first time in eight quarters.

The real lost 7.8 percent against the dollar in the past three months through yesterday to the weakest level in four years as faltering economic growth and speculation the U.S. Federal Reserve will pare back monetary stimulus lures money away from Latin America’s biggest economy.

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Is China backtracking on attempts to control iron ore? – by Clyde Russell (Reuters India – June 17, 2013)

http://in.reuters.com/

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

LAUNCESTON, Australia, June 17 (Reuters) – It may be too early to start beating the drums of victory for free-market capitalism, but there are signs that China is stepping back from attempts to control the iron ore market.

Just three months after accusing major iron ore producers of manipulating prices, China plans to scrap it’s decade-old import licensing system, a move that may eliminate middlemen in the market, lower costs for steel mills and improve transparency.

It also looks like a strategic retreat for the world’s biggest buyer of iron ore in its battle to win pricing control from the big three producers, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton .

The planned end of the licensing system will happen in the second half of the year, according to a Reuters report on June 13 that cited a source with knowledge of the matter. The current system requires import qualification licences to be granted by government-backed industry bodies like the China Iron & Steel Association.

It was designed to eliminate speculative traders from driving up prices and force the steelmaking industry to present a united front against the producers.

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Insecurity in Congo copper province a “serious concern” -UN – by Jonny Hogg (Reuters India – June 17, 2013)

http://in.reuters.com/

Rebels attack Congo Katanga mining province

KINSHASA, June 17 (Reuters) – Security in Congo’s copper-mining heartland of Katanga is a “very serious concern” that must be tackled politically and militarily, the outgoing head of the U.N. peackeeping mission said on Monday. The province, which sits on some of the world’s largest copper reserves, last year exported 600,000 tonnes. Miners including Freeport McMoRan and Glencore already operate there.

In March, hundreds of rebel fighters attacked the Katangan capital of Lubumbashi and then surrendered following bloody clashes with security forces. On Sunday, a soldier was killed during fighting between the army and insurgents 20 km (12 miles) from the city.

“It’s a quite significant problem, and I think it has all the prospects of becoming worse,” Roger Meece, the head of the U.N.’s peacekeeping mission in Congo, known as MONUSCO, said.

“One can do what is possible militarily and or with a police force but … the real solutions have to be found in these political factors,” Meece, who is leaving his post later this month, said in an interview.

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G8 shines world spotlight on mining transparency, or lack thereof – by Dorothy Kosich (Mineweb.com – June 17, 2013)

http://www.mineweb.com/

International and domestic mining’s penchant for secrecy may finally be coming to an end, as fed-up world leaders demand more public scrutiny of miners and their transactions.

RENO (MINEWEB) – As UK Prime Minister David Cameron launched the G-8 Summit at Lough Erne in Northern Ireland, he stressed the summit themes of Tax, Trade and Transparency, specifically the improvement of transparency in the use of natural resources.

During a panel session with African leaders at the Open for Growth event Sunday, Cameron announced that the G8 and 15 developing countries have agreed to work together to make sure the world’s poorest people benefit from the natural resources of their various countries by improving the transparency of their extractive industries and land rights.

The G8 members and their partners are Burkina Faso (France), Colombia (EU), Ghana (UK), Guinea (USA), Mongolia (Germany), Burma/Myanmar (USA), Peru (Canada), and Tanzania (Canada). Ironically, Rio Tinto, which is currently selling mining operations and properties in a number of nations, is backing partnerships in Peru and Mongolia.

“Many developing countries have vast extractive resources like oil, gas and minerals but they are often sold at below market prices, or the money made is misused or poorly invested,” said the Prime Minister’s Office.

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Minnesota’s next mining boom has picturesque Ely divided – by Josephine Marcotty (Minneapolis Star Tribune – June 16, 2013)

http://www.startribune.com/

ELY, Minn. – Every year Randy Stender and his family spend Memorial Day weekend at Birch Lake Campground, a tradition that ties him to the wild, unspoiled lands here on the edge of the Iron Range where he grew up. There was a time, he says, when he and his wife would have moved back — if there had been a job like the one his father once had at Reserve Mining.

So when he heard that Birch Lake’s shoreline could become the site of one of the largest copper mines in the country, he immediately grasped the conflict gripping this charming tourist town and spreading across Minnesota. “That’s the catch,” he said, opening his arms wide to the lake that shimmered in the morning light. “Because I kind of like it like this.”

The prospect of a massive new mining industry here is igniting long-simmering tensions — between those who long for the surge in prosperity it could bring and those who say it threatens the splendor of the North Woods and the tourism that relies on it.

At least a dozen companies are exploring for copper, nickel, gold and other precious metals in a vast geological formation called the Duluth complex, which stretches from Tamarack, Minn., to the nearby Kawishiwi River that feeds the Boundary Waters Canoe Area Wilderness. Company officials say hard-rock mining can — and will — be done safely, while creating thousands of jobs and spawning a new industry that could someday dwarf the state’s taconite and frac sand mining operations.

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Northern Gateway pipeline review panel to hear final arguments – by Kelly Cryderman (Globe and Mail – June 17, 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.

CALGARY — The proposed Northern Gateway pipeline project has spurred fierce national debate about whether heavy oil spilled in sea water floats or sinks, how much disaster insurance pipeline projects should carry and the economic rewards of shipping oil sands bitumen across the ocean to foreign markets.

On Monday, forces for and against the $6.5-billion project will gather at a hotel in Terrace, B.C., for the beginning of two weeks of final arguments.

While it’s by no means the end to the wrangling, it’s the last opportunity for arguments to be heard before the joint review panel – an independent body mandated by the Environment Minister and the National Energy Board – withdraws to write a report that will recommend for or against the project.

The report, due by the end of year, will help shape a federal cabinet decision on whether to green light the project. But even Ottawa’s approval, if eventually granted, could simply mean the beginning of years of legal appeals by First Nations and environmental groups trying to stop the project.

Northern Gateway lies at the centre of broader debates about treaty rights, the relationship between provinces and whether oil supertanker traffic will become part of the view in the coastal city of Kitimat, B.C.

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The repercussions of a shale revolution on oil-exporting nations – by Eric Reguly (Globe and Mail – June 17, 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 — In sweeping terms, the economic model of countries in North Africa, parts of West Africa and the Middle East comes down to this: Trading hydrocarbons for carbohydrates.

The oil-out, wheat-in formula has worked rather well for decades, the odd land war and revolution notwithstanding. Egypt is the world’s biggest single buyer of imported wheat. Saudi Arabia is giving up on its gruesomely expensive experiment to grow wheat in the desert; it is happy to swap oil for much of its food consumption. Ditto Nigeria, whose population is exploding and which produces almost no wheat itself.

And then came the shale revolution. Shale oil and gas production in the United States is soaring and American oil imports are falling fast. Oil and gas prices are down and the forecasts are bearish, a remarkable turnaround from 2007 and 2008, when $200 (U.S.) a barrel oil seemed somewhere between possible and likely (the benchmark Brent price is now about $104). The shale revolution is about to hit Britain and other parts of Europe.

What is good for the United States and Europe – less imported oil and gas and lower prices for both – is bad news for some of the one-product wonders in Africa, the Middle East and Latin America.

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Tempers flare at mine as leaders dither – by Loni Prinsloo (South Africa Business Day Live – June 16, 2013)

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

AS HIGH-level leaders of government, business and labour met on Friday to stabilise the troubled mining environment, tempers flared at one of South Africa’s biggest platinum mines in Rustenburg.

Chris Griffiths, CEO of Anglo American Platinum (Amplats), met Deputy President Kgalema Motlanthe, Finance Minister Pravin Gordhan and other senior stakeholders while about 2,400 workers were prevented by other employees from exiting underground operations at Amplats’ Thembalani mine near Rustenburg by shop stewards of the Association of Mineworkers and Construction Union (Amcu).

Amplats said this followed the suspension of four shop stewards “for inappropriate behaviour that is against our behavioural procedure”.

The battle between the National Union of Mineworkers (NUM) and Amcu that boiled over in August 2012 has not died. Tensions are running high with the first round of wage negotiations due in about two weeks. Amcu is determined to gain majority recognition at the platinum mines.

“While it is a positive move for leaders from different spheres to come together to address the issues, it will ultimately be the buy-in from workers that determines whether such a framework will make any difference. Therein lies the real challenge,” said Solidarity general secretary Gideon du Plessis.

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