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Canadian/International Media Resource Articles

Massive Enbridge U.S. pipeline quietly on fast-track to approval as Keystone remains mired in debate – by Alan Scher Zagier (Associated Press/National Post – July 18, 2013)

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

MARSHALL, Mo. — A Canadian company’s plan to build an oil pipeline that will stretch for hundreds of kilometres through the U.S. Midwest, including through many sensitive waterways, is quietly on the fast-track to approval — just not the one you’re thinking of.

As the Keystone XL pipeline remains mired in the national debate over environmental safety and climate change, another company, Enbridge Inc. of Calgary is hoping to begin construction early next month on a 965-kilometre pipeline that would carry oil from Flanagan, Ill., 160 kilometres southwest of Chicago, to the company’s terminal in Cushing, Okla. From there the company could move it through existing pipeline to Gulf Coast refineries.

The company is seeking an expedited permit review by the U.S. Army Corps of Engineers for its Flanagan South pipeline, which would run parallel to another Enbridge route already in place. Unlike the Keystone project, which crosses an international border and requires State Department approval, the proposed pipeline has attracted little public attention — including among property owners living near the planned route.

Enbridge says it wants to be a good neighbour to the communities the pipeline would pass through, and it has been touting the hundreds of short-term construction jobs it would create.

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Global nickel supplies to remain in large surplus in 2013-2014–Macquarie – by Dorothy Kosich (Mineweb.com – July 18, 2013)

http://www.mineweb.com/

“Nickel remains the worst performer among the base metals this year,” say Macquarie Research commodities analysts.

RENO (MINEWEB) – The nickel market has been in large surplus this year and without significant production cuts will remain in alarge surplus this year, Macquarie Commodities Research advised Wednesday.

“The market is looking to China for further cuts in nickel pig iron production but this is not enough to rebalance the market and cuts outside China may well be a catalyst for a short-covering rally,” said Macquarie.

In their analysis, Macquarie observed, “Nickel remains the worst performer among the base metals this year. A large surplus between supply and demand has opened up and prices have collapsed.

“At current prices more than 40% of the industry is losing cash. Many nickel sellers are struggling to achieve the LME price,” said Macquarie commodities analysts. “In China, nickel pig iron has been selling at large discounts to LME prices this year (up to $2,500/t at one stage although this has been narrowed to under $1,000/t in recent weeks as NPI producers have cut production).” The analysts noted Ferronickel producers outside China have been forced to discount by $500-$700/t off LME.

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Gold price headed north of $2 000/oz, even $5 000/oz – gold bull McEwen – by Henry Lazenby (MiningWeekly.com – July 17, 2013)

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

TORONTO (miningweekly.com) – NYSE- and TSX-listed McEwen Mining chief owner Rob McEwen has plenty of faith that the gold price will, within the next two years, head north of $2 000/oz and even cross the $5 000/oz mark in the not too distant future.

In an interview with Mining Weekly Online, McEwen said that while there was a lot of sentiment out there that the gold price would go lower, he believed the price of the yellow metal would go much higher.

McEwen pointed to historical precedents where governments debased their currencies through monetary expansion in excess of their sustainable debt loads, which caused the currency to devalue relative to assets such as gold.

In the past, these happened in isolated cases, but were more commonplace these days, as many countries and regions, including the US and the European Union, were concurrently pumping cash into their economies to keep them buoyant.

In some cases, as in the US, debt was reaching unprecedented levels at around $17-trillion. He said it worked well when interest rates were low, but should rates climb to about 5%, the debt service costs alone would be about a trillion dollars, which would crowd out other essential public services.

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Australia’s carbon mess a warning to the world – by Clyde Russell (Reuters India – July 17, 2013)

http://in.reuters.com/

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

LAUNCESTON, Australia, July 17 (Reuters) – Any government thinking of introducing policies to limit carbon emissions should look at Australia for an example of how not to do it.

Australia’s efforts to combat climate change have been poison to politicians from all sides of the debate, contributing so far to the demise of two prime ministers and an opposition leader, and there may be more to come. The latest twist has seen Prime Minister Kevin Rudd decide to switch from a straight tax on carbon emissions to a floating emissions trading scheme (ETS) a year earlier than planned.

This has nothing to do with improving the workings of the scheme or limiting carbon emissions and everything to do with trying to win back voters angered by rising electricity prices and industries that have seen their international competitiveness eroded by the tax.

The theory is that power and other prices will decline as the cost of carbon permits is expected to be around A$6 per tonne – the level at which European permits are currently priced – compared to the tax of A$25.40 ($23.09) per tonne that had been planned from July 2014.

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UPDATE 2-ArcelorMittal abandons dormant Indian project – by Krishna N Das (Reuters India – July 17, 2013)

http://in.reuters.com/

NEW DELHI, July 17 (Reuters) – ArcelorMittal, the world’s top steelmaker, said it would scrap a planned steel plant in India due to delays in acquiring land and an iron ore mine, obstacles that have also caused South Korea’s POSCO to abandon plans.

The decision to scrap the planned 12 million-tonnes-a-year (MTA) plant in the eastern state of Odisha, comes a day after the world’s fifth biggest steelmaker, POSCO, said it was ditching a 6 MTA plant in the southern Karnataka state because of delays in receiving iron ore mining rights and opposition from residents which had held back land acquisition.

The failed projects will be a blow to India’s federal government, which on Tuesday relaxed foreign investment rules to draw in funds needed to turn around slowing economic growth and support a weak rupee.

ArcelorMittal India and China Chief Executive Vijay Bhatnagar said the company’s other two projects in mineral-rich states of Jharkhand and Karnataka were making “steady progress” and it would continue to pursue them.

The Jharkhand plant is expected to have an annual capacity of 12 million tonnes, while the one in Karnataka is expected to have capacity of 6 million tonnes.

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Copper: The metal that will build our future? – by Cole Latimer (Australian Mining – July 16, 2013)

http://www.miningaustralia.com.au/home

As we slowly come off the back of the mining boom, a number of questions are starting to be asked. Has the boom been played out, where to next, what will happen to iron ore? But what all are asking is what will be the metal of the future? What should we be digging that will provide the greatest return?

Perhaps the future is a metal which is a major part of humanity’s past – copper. Iron ore has been the metal that really drove Australia’s mining boom. It was the hero of the hour.

On the back of seemingly unending demand from Asia to fuel the growth of China we saw commodity prices skyrocket and essentially drag our nation out of the Global Financial Crisis.

Coal was also surging head, as both China and India required the energy needed to turn them into first world nations. As
a background to this gold prices also spiked, reaching never before seen heights.

But now the good times are over for these metals and the prices have steadily dropped, stabilising at more reasonable levels, or in some cases plummeting to just above cost levels.

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Gold Imports by India Seen Shrinking as Curbs Increase Costs – by Swansy Afonso & Pratik Parija (Bloomberg News – July 17, 2013)

http://www.bloomberg.com/

Gold imports by India, the world’s biggest consumer last year, may tumble in the second half as the government curbs shipments to contain a record current-account deficit and stem a slide in the currency.

Inbound shipments may drop 22 percent to 372.5 metric tons in the six months through December from 478 tons a year earlier, according to a median of estimates from 10 importers, jewelers, analysts and trade groups compiled by Bloomberg.

That may still boost full-year imports to about 902 tons from 860 tons in 2012, according to Bloomberg calculations based on data from the World Gold Council and the All India Gem & Jewellery Trade Federation.

Falling Indian demand for physical gold may deepen a bear market in bullion as some investors sell the metal amid signs of an improving U.S. economy. Shoppers from India to China and Turkey crowded retail outlets to buy jewelry, coins and bars in April after the precious metal posted the biggest two-day loss in three decades. Goldman Sachs Group Inc. says that gold will reach $1,050 by the end of 2014, while Credit Suisse Group AG forecasts $1,150 in about a year.

“I see no reason to buy more gold,” said Bharti Chandra, a 38-year-old housewife, dressed in a salwar, who was selling an old necklace in Mumbai’s Zaveri Bazaar, the largest bullion market in the country.

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Eldorado’s move to preserve capital signals what’s to come from other gold miners – by Peter Koven (National Post – July 17, 2013)

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

Falling gold prices have pushed miners to make drastic changes to their operating plans, but companies with healthy balance sheets and low cost bases should adapt without much trouble, experts said.

For the miners with marginal projects or weak balance sheets, it is a very different story. Precious metals companies have started to announce spending reductions, project deferrals and other adjustments in recent weeks as the gold price languishes below US$1,300 an ounce. Many similar announcements will be made when the senior and mid-size miners begin reporting second quarter results next week.

On Tuesday, Eldorado Gold Corp. provided a template for the types of moves its peers are likely to make. The Vancouver-based miner delayed three projects, deferred another and reduced its capital spending and exploration budgets for 2013 by a combined US$287.5-million (or 37%). Eldorado also said it will evaluate its dividend policy, though it did not announce any immediate reduction to the payout.

The company won praise from analysts and investors for making sensible moves that allow it to preserve capital while continuing to grow. “The revisions appear prudent and preserve balance sheet flexibility. More gold companies are expected to follow this trend given the low metal prices,” BMO Capital Markets analyst David Haughton wrote in a note.

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[KGHM] Ajax trolling city for ideas on convincing residents – by Bronwen Scott (Kamloops This Week – July 16, 2013)

http://www.kamloopsthisweek.com/

The recent KGHM Ajax survey (‘Yes, that phone poll was from KGHM Ajax,’ July 11) appears to be aimed at trolling the public for ideas on how the company can convince Kamloops residents its proposed open-pit copper and gold mine could be environmentally friendly.

At least, that’s the impression when the company’s pollsters terminate the survey if respondents don’t agree that mining is an “essential part of the Kamloops economy” and only bother interviewing potential allies.

In fact, KGHM Ajax admits the survey wasn’t designed to find any statistical information or quantitative results. It’s just casting a wide net in the hopes of getting “an overall perspective and understanding of the [mining-friendly] residents’ opinion towards mining.”

The in-house team at KGHM Ajax doesn’t seem to be doing a credible job of informing or persuading a decent majority of the public that the mine’s a good idea — and good PR firms are expensive.

So, while we’re all forced to wait patiently and asked to withhold judgment until KGHM Ajax releases its meters-high stack of information and intentions this fall, the company keeps throwing money at community organizations and conducting surveys of the converted.

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The race to ship liquefied natural gas to Asia – by Brenda Bouw (Globe and Mail – July 17, 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.

A huge transition is taking place in Canada’s natural gas industry. As natural gas exports to the United States drop as a result of a drilling boom south of the border, big plans are being made to ship Canada’s natural gas to growing markets in the Asia-Pacific, where it can be sold at a premium.

But getting the gas overseas is no small feat. The commodity needs to be condensed into what’s known as liquefied natural gas (LNG), stored in tanks and shipped to waiting customers in places such as Japan, South Korea, Taiwan and China. There are no LNG terminals in Canada today – a gap some of the world’s largest energy companies are vying to fill.

About a dozen multibillion-dollar proposals are on the table to build export terminals on the coast of British Columbia, many linked through proposed pipeline routes from natural gas fields across northern British Columbia and Alberta.

“What we are talking about here is a complete reorientation of Canada’s natural gas supply chains,” said Peter Tertzakian, chief energy economist and managing director with Arc Financial Corp., a private equity firm. Of the proposals being considered, Mr. Tertzakian says the market likely can support only three, maybe four. For the energy industry, it’s game on.

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UPDATE 3-Big iron ore miners go for volume even as glut looms – by James Regan (Reuters U.S. – July 17, 2013)

http://www.reuters.com/

SYDNEY, July 17 (Reuters) – Record iron ore output from BHP Billiton and other mining giants appears to defy logic, with demand for the steel-making raw material cooling in top customer China and a price-eroding supply glut looming.

But the sector’s heavy guns are digging more for less to tighten their stranglehold on the world’s second-biggest commodity market, as competitors struggle.

In mining parlance, this is known as a “rebalancing” strategy, designed to improve the operating margins of the majors to such an extent that smaller competitors or new projects may be all but squeezed out.

“The majors want to maximise those economies of scale,” said MineLife sector analyst Gavin Wendt. “As long as they keep margins well ahead of a declining iron ore price, they are winning.” BHP Billiton, Rio Tinto and Fortescue Metals Group, with their iron ore operations in Australia, and Brazil’s Vale are leading the charge.

Seaborne-traded iron ore prices, which have lost 10 percent so far this year, are forecast to hit their lowest in four years by the end of 2013 as these big miners dig deeper and faster.

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Critics of B.C.’s Ajax mine project press federal Environment Minister for review panel – by Wendy Stueck (Globe and Mail – July 17, 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.

A group fighting a Kamloops-area mine proposal says it will ask new federal Environment Minister Leona Aglukkaq to refer the Ajax mine to a review panel, even though previous minister Peter Kent turned down a request for that approach.

“We’re getting our ducks in a row and we are going to be asking for [the review panel],” John Schleiermacher, spokesman for the Kamloops Area Preservation Association (KAPA), said on Tuesday. Kamloops Mayor Peter Milobar is also seeking meetings with Ms. Aglukkaq and new provincial ministers of mining and environment to discuss the project.

The proposed Ajax mine would be an open-pit copper-gold mine that would fall partly within Kamloops city limits. Currently, the project is in the early stages of a joint federal-provincial assessment called a comprehensive study.

KAPA, formed in 2011 by residents worried about potential health impacts of the mine, would like to see the project go to a review panel – a panel of independent experts that, among other things, can hold public hearings and summon witnesses.

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AngloGold poised to write down value of assets by up to $2.6bn – by James Wilson and Andrew England (Financial Times – July 15, 2013)

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

London/Johannesburg – AngloGold Ashanti joined other goldminers in responding to the sharp fall in the price of the precious metal by writing down the value of assets by up to $2.6bn and curbing production plans.

The South African miner will take a writedown charge of $2.2bn-$2.6bn in its most recent quarter, which included the steepest one-day drop in the gold price in more than three decades.

Goldminers around the world have cut the value of their assets by billions of dollars in recent weeks. AngloGold, the third-largest producer by volume, joins rivals including Barrick and Newcrest in acknowledging the deterioration in prospects for the sector.

AngloGold would “tighten up on costs, overheads and capital”, said Srinivasan Venkatakrishnan, chief executive, after a $220 drop in the average quarterly gold price. Output this year would now be 4m-4.1m oz, AngloGold said, cutting previous guidance of 4.1m-4.4m oz.

The fall in the gold price has squeezed margins for miners, with South Africa’s Chamber of Mines on Monday warning that about 60 per cent of the nation’s gold mining operations are lossmaking at current prices as the sector enters critical wage talks.

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Troubles at Northland Resources deter Nordic mining investment – by Silvia Antonioli and Simon Johnson (Reuters India – July 16, 2013)

http://in.reuters.com/

LONDON/STOCKHOLM, July 16 (Reuters) – A financial crunch at iron ore miner Northland Resources demonstrates the impact of metal price falls on small-scale mine exploration in the Nordic region and is scaring away already rattled investors.

The sector had been flourishing since the mid-2000s, drawing in foreign and domestic companies and investment, until the price falls of the last two years in iron, base metals such as nickel, and more recently in gold. The reversal in fortunes was driven home when the Swedish unit of Norway-listed Northland Resources, one of the region’s best-known new iron ore miners, filed for bankruptcy protection in February.

In January it revealed a $425 million funding shortfall, about four times its then market capitalisation, to cover higher than expected capital and operating costs for its Swedish mine. Small Nordic miners and explorers found their efforts to raise funds suddenly got much harder, threatening to cause serious delays or even halt some projects completely.

“It doesn’t help at all. It certainly affects local confidence, adding to the lack of confidence worldwide across the industry in terms of return of capital,” Michael Hudson, the CEO and President of Mawson Resources, a Canadian firm operating in Sweden and Finland, said of Northland’s difficulties.

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Mining company expected to finish exploratory drilling this week – by The Associated Press (Green Bay Press Gazette – July 15, 2013)

http://www.greenbaypressgazette.com/

MADISON — A company looking to dig a huge iron mine just south of Lake Superior is set to finish exploratory drilling, setting up a lull that could dampen tensions with protesters, at least for a while.

Wisconsin Department of Natural Resources officials say Gogebic Taconite workers should finish drilling their eighth and final test hole in the Penokee Hills within three or four days. The test boring is designed to help the company determine if mining in the area is economically feasible as well as what minerals lay within potential waste rock and the pollution risk they might pose, said Ann Coakley, director of the DNR’s waste and materials management bureau.

Gogebic Taconite officials next want to remove larger rock samples from five sites in the area, an effort known as bulk sampling. The company would haul those samples to a test plant, where they would be processed into final taconite pellets to give the company an idea of total processing time, Coakley said.

The DNR hasn’t granted a permit for that operation yet, though. Agency officials asked the company two weeks ago for more details on the plan, including what kind of explosives would be used, air emission estimates, a site wetland inventory and anti-erosion and anti-pollution measures. Coakley said the company had not responded to the request as of Monday morning.

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