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Kathleen Wynne’s reality: Ontario’s massive debt cannot be ignored – by Theresa Tedesco (National Post – June 13, 2014)

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

Now that voters have returned Kathleen Wynne to power, the premier will need to find a way to manage a debt load that is larger than California’s while continuing to keep the credit rating agencies mollified long enough to avoid a dreaded downgrade.

With a net debt of $267.5-billion that is growing at a faster rate than the economy, the challenge is just beginning for the party that emerged victorious from the provincial election. “They are still going to be facing pressures from the credit agencies to get the province’s fiscal finances in order,” said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. “There’s no way to avoid it. The reality is there and it can’t be wished away.”

Put simply, Ontario is increasingly dependent on tapping lines of credit because it spends more than it collects. Currently, the province pays $11-billion annually in interest payments to finance its debt — money that is not going toward paving roads, building public transit, hiring more teachers and shortening wait times in hospitals.

During the 40-day election campaign, which focused predominantly on the economy, the three main parties offered a stark choice: Conservative leader Tim Hudak vowed to cut 100,000 public-sector jobs over four years and lower corporate taxes to kick-start the creation of one million jobs in eight years while balancing the budget in two.

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World’s largest asset manager rails against companies’ short-term thinking – by Boyd Erman (Globe and Mail – May 24, 2014)

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.

Larry Fink is in an odd spot. He runs BlackRock Inc., the world’s biggest money manager. His New York-based company oversees assets greater than 20 times those of the mammoth Canada Pension Plan Investment Board. He should have more influence than just about anybody over how companies behave.

Yet he lacks the big stick that other fund managers have when they talk to chief executive officers. He can’t threaten to sell shares of a company when he doesn’t like its strategy.

Most of the more than $4-trillion (U.S.) that BlackRock oversees on behalf of clients is in index funds that passively track market benchmarks. Because it can’t sell individual stocks in index funds, BlackRock is, by necessity, in it for the long haul.

So instead of threatening, Mr. Fink cajoles. He writes letters. Very, very well-read letters. His latest went to the heads of all the biggest companies in the United States and Europe, hundreds of them, urging CEOs to think long term.

“As the largest index player in the world, we have to own companies, even if we hate ‘em,” Mr. Fink said in an interview on a recent visit to Toronto.

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Corruption in Canadian organisations ‘disturbingly high’ – EY survey – by Henry Lazenby (MiningWeekly.com – June 11, 2014)

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

TORONTO (miningweekly.com) – One in five Canadian executives believe that bribery and corrupt practices take place widely in the country, advisory firm EY’s latest Global Fraud Survey has found.

“That’s disturbingly high,” EY partner and Canadian fraud investigation and dispute services leader Mike Savage said.

He noted that corruption interfered with fair competition for business and, to overcome that, companies needed to create a culture where ethical behaviour was at the core of their operations – not just at home in Canada, but also at their overseas operations.

“They also need to encourage people to speak up if they think something isn’t right,” Savage said. The survey found that while 74% of Canadian organisations had whistleblowing hotlines in place, this number was still much lower than countries such as the US (96%) and the UK (82%).

The head of corruption risk management at Canadian risk mitigation firm CKR Global Margaret Wilkinson recently told Mining Weekly Online that the resource extraction industry as a whole was at an extreme risk to bribery and corruption of officials, especially owing to the often isolated and foreign underdeveloped locations of the companies’ projects.

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Palladium futures hit highest level since 2001 amid South African mining strike – by Peter Koven (National Post – June 12, 2014)

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

Palladium futures have soared to their highest levels since early 2001. And with no end in sight to a key supply disruption, many experts predict there is still room for prices to run.

Prices for the silvery-white metal have jumped about 20% this year, with the key futures contract hitting a 13-year high on Wednesday of US$864.60 an ounce. The main reason is a strike in South Africa, which began in January and is now the longest mining strike in the country’s history.

Recent talks to end the dispute failed, and it is not clear when they will restart. South Africa accounts for nearly 40% of global palladium production, second only to Russia.

“It’s quite conceivable that palladium could really pop if the mines in South Africa don’t restart soon,” said Patricia Mohr, vice-president and commodity specialist at Scotiabank.

Not surprisingly, uncertainty about Russia is also causing jitters in the palladium market. There are some concerns that sanctions could be placed on Russian companies — including key palladium producer OAO Norilsk Nickel — in response to the seizure of Crimea.

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Joe Oliver says national securities regulator could become reality by fall 2015 – by Gordon Isfeld (National Post – June 10, 2014)

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

MONTREAL — Canada’s finance minister believes the government’s long-sought goal of a single national securities regulator could become a reality by the next federal election, scheduled for the fall of 2015.

“I think it is very positive that Canada, British Columbia and Ontario entered into this agreement in principle [on a national regulator]. We’re expecting there will be a number of other provinces coming on board soon,” Joe Oliver told the Financial Post on Monday.

“I don’t use the word ‘soon’ unless I mean ‘soon’. The Ontario election [set for Thursday] obviously delayed the matter. But it really makes sense for everyone to join in.”

Mr. Oliver, the former natural resources minister who was named finance minister in March, was speaking on the sidelines of the International Economic Forum of the Americas in Montreal.

“I think it will be well on its way” by the next federal election, he said in an interview. “It won’t be viewed as a promise as much as an accomplishment, in my opinion,” added Mr. Oliver, 73. “I believe we will have achieved a lot. I’m not saying every province will be in — although the door is always open,” he said.

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Next Ontario government will only have bad news to deliver as debt pile grows – by Jack M. Mintz (National Post – June 10, 2014)

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

No matter who wins the Ontario election, the newly elected government will be faced with a fiscal hole that gets only wider and deeper. If the province is to gets its fiscal situation under control, either revenues need to increase or spending restrained by billions. There are no quick and easy solutions.

Let me detail Ontario’s house of debt to understand the gravity of the situation. The 2014 Liberal budget projected gross debt is expected to increase from $296-billion in 2013-14 to $311-billion by 2014-15. After subtracting financial assets, net debt will rise from $269-billion in 2013-14 to $289-billion in 2014-15.

Ontario’s net financial liabilities will be $20,500 per person or $82,000 for a family of four. This mortgage is in addition to federal, local and household debt liabilities borne by Ontario residents. It does not include other unfunded liabilities such as health care and elderly benefits that will increase sharply as baby boomers retire.

The $20-billion increase in net debt this coming year is a good measure of the real Ontario deficit. The debt problem is a bigger issue than suggested by a recent “educational” analysis provided in the Globe and Mail, which focused on the $12.5-billion operational deficit of the province, ignoring net liabilities to finance broader government operations, including $10-billion in capital spending.

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San Gold Corp’s new chief Greg Gibson sees smaller mines as key to survival – by Peter Koven (National Post – June 11, 2014)

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

San Gold Corp.’s new chief executive faces a straightforward challenge: mine much less gold, and make it profitable.

Greg Gibson was named CEO of San Gold on Tuesday, a formerly high-flying company that has fallen into a cycle of losses and liquidity problems like many other small gold miners. He said in an interview that his mandate is to shrink output to where it should have been in the first place.

“I see a small producer that always had ambitions to be a big producer. And when you take small mines and try to make big mines out of them, they don’t work,” Mr. Gibson, 52, said.

Winnipeg-based San Gold is one of many small gold miners operating in Canada that emerged last decade, when gold prices were going up every single year. In order to attract investors and capitalize on rising prices, some of these firms set aggressive production targets. San planned to churn out more than 100,000 ounces a year from its Rice Lake mine in Manitoba.

“When you went to see the fund managers, the more ounces you could tell someone you were going to discover, the bigger the cheque you got,” Mr. Gibson said.

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Vancouver company pitches $10B oil sands refinery on the B.C. coast it says would be ‘world’s greenest’ – by Claudia Cattaneo (National Post – June 11, 2014)

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

CALGARY – For a province that likes natural gas a lot more than oil, British Columbia is attracting lots of oil plans to link growing production in Alberta with Asian markets.

The latest one is a $10-billion oil sands refinery on the northern coast headed by a Miami-based telecom executive for Mexico’s Groupo Salinas and using engineers from Italy.

Vancouver-based Pacific Future Energy Corp. said Tuesday the refinery, which could be sited in the Prince Rupert area, would be built in partnership with First Nations and be the world’s greenest by using advanced European refining technology.

It would take bitumen from Canada’s oil sands and process it into gasoline, diesel, kerosene and other products that would be less harmful to the environment if there is an accident. It would also capture and store greenhouse gases.

“This is a plan that absolutely must happen,” said Samer Salameh, chairman of Pacific Future Energy and head of telecommunications businesses for Groupo Salinas, a large conglomerate based in Mexico owned by billionaire Ricardo Salinas with more 100,000 employees and operations in 12 countries.

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Ontario’s lost swagger: It’s now a have-not province with a don’t-want election – by Roy MacGregor (Globe and Mail – June 11, 2014)

A Place To Stand: The 1967 centennial theme for Ontario, Canada. A time when the mining sector was booming, well respected and an integral part of a booming economy, once of the most successful in the world. How did we let it slip away? – Stan Sudol

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.

Something happened to Canada’s largest province well before this June 12th election was even called.

Ontario lost its swagger.

One former provincial cabinet minister likens the mood to what Keith Spicer found more than 20 years ago when his Citizens’ Forum on Canada’s Future took the pulse of the nation and found it very weak indeed.

But this is no case – as was clearly the situation in Ontario back in 1990 – of taking such delight in kicking David Peterson’s Liberals out of office that no one considered that Bob Rae’s NDP government would thereby win a majority by default. Remember Mr. Rae’s line to the CBC when it was apparent he had won? “I’m having difficulty getting used to it.”

So, too, did those who kicked him into office, a sentiment repeated after they voted Mr. Rae out in 1995 and replaced him with the ideologically opposite Mike Harris. That may well explain why there seems such reticence among Ontario voters to act in any direction.

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Breakdown in platinum strike talks propels South Africa closer to recession – by Geoffrey York (Globe and Mail – June 10, 2014)

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.

JOHANNESBURG — Wage talks have collapsed again in South Africa’s 20-week platinum strike, the latest ripple in a cascade of bad news that has pushed the country closer to recession and threatens to trigger a major restructuring of its platinum industry.

The strike has already inflicted huge damage on South Africa’s economy, the traditional African powerhouse and second biggest on the continent. The economy declined by 0.6 per cent in the first quarter of this year, its first contraction since 2009, and there are growing fears that the decline will continue in the next quarter.

The strike by 70,000 workers, the longest in South African mining history, was a key reason for the shrinking gross domestic product in the first quarter, since mining is still a huge contributor to the economy. Without a resolution to the strike, a recession is nearly inevitable, analysts say.

Equally inevitable are the closing of mine shafts and a shift toward mechanized mining in an industry that produces about 40 per cent of the world’s platinum output.

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Opinion: First Nations, mining for change – by Russell Hallbauer (Vancouver Sun – June 9, 2014)

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

Agreement would give new meaning to New Prosperity mine’s name

Russell Hallbauer is president and CEO of Taseko Mines

Many readers likely will have read that the British Columbia government has now signed 14 economic development agreements with First Nations across the province. These agreements commit the provincial government to share up to 37 per cent of the B.C. mineral tax from B.C. mining operations collected within First Nations’ traditional territories.

Over the past four years, $12 million has been shared with various First Nations. The most recent agreement was the one signed May 21 on the Huckleberry Mine, a few hundred km from Williams Lake.

A similar agreement is being developed between the government and those bands in proximity to our Gibraltar Mine.

These agreements, over the next 25 years of Gibraltar’s life, will allow First Nations communities to benefit directly over and above employment and other opportunities, in the financial success of the Gibraltar Mine.

Taseko personnel were some of the earliest advocates of revenue sharing when the process began with government and the Mining Association of British Columbia a number of years ago.

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INFRASTRUCTURE: Quebec Liberals promise $20M rail study under revived Plan Nord – by Marilyn Scales (Canadian Mining Journal – June 9, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Fresh off last month’s election win, Quebec’s new Liberal government has boosted its commitment to Plan Nord. Once again the province is throwing its weight behind plans that recognize now vital natural resources development is to the provincial economy.

On June 4, Quebec finance minister Carlos Leitao pledged over a billion dollars to the Plan. The 2014-15 budget will pump $63 million into major road infrastructure. A whopping $1 billion has been set aside for the province to acquire equity interests in mining, oil and gas companies so that the province can share in potential profits. A total of $100 million will be invested in educational facilities to train northern residents and, in particular aboriginals, in the skilled trades. Over $600 million will go to the forestry industry for silviculture, new equipment, and biomass projects. The promotion of Northern Quebec as a tourist destination will get a $3.2 million boost.

Of particular interest to Quebec’s growing iron ore industry is the $20 million pledged to study the feasibility of creating a new multi-user rail line providing access to the Labrador Trough. Two rail lines now connect the iron mines with the port of Sept-Iles: the Cartier Railway is a subsidiary of ArcelorMittal and serves the Mont-Wright mine; and the Quebec North Shore and Labrador Railway serves the Iron Ore Company of Canada.

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Gold fix under scrutiny as regulators probe archaic system – by Rachelle Younglai (Globe and Mail – June 9, 2014)

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 cozy little world of gold trading is getting less comfortable. A handful of bankers in London currently set the world standard for gold prices, a practice that started in 1919 and is widely used by governments, miners and brokers to buy and sell the precious metal and its financial derivatives.

But regulatory probes have shone an unwanted spotlight on the benchmark known as the London gold fix, and prompted calls for change.

The five banks that set the standard – Barclays, Bank of Nova Scotia, Société Générale, Deutsche Bank and HSBC – have been hit by multiple lawsuits from investors alleging they colluded to rig the price for their own benefit. Deutsche Bank, which gave up its seat on the gold-ixing panel, said the lawsuits had no merit. Barclays, SocGen and HSBC had no comment, and Scotiabank could not be reached.

“This is a setting that is very easy to be manipulated either by one individual bank or by a group of them,” said Rosa Abrantes-Metz, an associate professor with New York University’s business school, whose research identified a series of unusual trades before the gold benchmark was announced. “It completely lacks oversight and involves a very small group of competitors, so it is easy to co-ordinate behaviour,” she said.

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Igniting the Ring of Fire: no one has a plan – by Robert B. Gibson (Toronto Star – June 9, 2014)

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.

Robert B. Gibson is a professor of Environment and Resource Studies at the University of Waterloo.

None of the major party leaders in Ontario has assessed the overall opportunities and risks of developing the province’s Ring of Fire.

Last week in the Ontario election campaign, the three major party leaders fell over each other competing for the mining booster award — the ribbon for being the most enthusiastic expediter and/or public funder of Ring of Fire development.

There was plenty of loose talk of superfast approvals and heaps of taxpayer funding for mine-enticing infrastructure, and plenty of starry-eyed anticipation of huge provincial revenue.

But no one has a plan. No one has assessed the overall opportunities and risks of Ring of Fire development. No one has prepared a considered vision of the desirable future for the region or how to get us there. And so far, none of the booster ribbon contestants has promised to try.

Ore bodies are inevitably depleted. They bring lasting benefits only if the mines, associated projects and revenues are used to build foundations for sustainable livelihoods after the mining ends. That does not happen automatically. Lasting benefits depend on far-sighted effort from the outset.

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Quebec backs federal ‘publish-what-you-pay’ plan for resource companies – by Shawn McCarthy (Globe and Mail – June 7, 2014)

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.

OTTAWA — The newly elected Liberal government in Quebec has endorsed a plan to require resource companies to publish payments they make to governments as part of a national effort to increase transparency and combat corruption.

The Quebec move comes as mining associations warn the Harper government that its insistence on including First Nations bands in a national “publish-what-you-pay” plan will likely mean Ottawa will fail to meet its pledge to have such a system in place by next year.

In his budget this week, Quebec Finance Minister Carlos Leitao said the government would work with the Quebec securities commission to require so-called extractive companies that are based in the province – mainly miners – to reveal payments made on a project by project basis, both domestically and in foreign countries.

Mr. Leitao’s announcement should provide some momentum to get other provinces and the federal government to move on a promise made by Prime Minister Stephen Harper last year to adopt such rules across Canada.

“We hope this will provide some momentum,” Pierre Gratton, president of the Mining Association of Canada, said in an interview Friday. “We hope that there will be a domino effect” on other provinces and the federal government.

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