Australia and Canada: Two resource-driven economies on divergent paths – by Richard Blackwell (Globe and Mail – August 7, 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.

Australia’s central bank has cut its key interest rate again, to a record low, underscoring concern that a global commodity slump and slower growth in China will weaken its resource-based economy.

The country is trying to kickstart consumer and business spending with the cuts because the mining sector has peaked and capital spending in that industry is falling, while economic growth posted by the country’s key trading partner, China, is slowing.

That’s a cautionary tale for Canada, which has a similar resource-based economy, dependant on exports. Weaker commodity prices help to explain, for example, a near-one-third drop this year in the share price of Vancouver-based Teck Resources Ltd., which ships about 15 to 20 per cent of its coking coal output to China.

Still, there are enough differences between the two countries, economists say, to insulate Canada from the economic turbulence facing our antipodal cousin.

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A nuclear reactor that burns its own waste? – by Shawn McCarthy Globe and Mail – August 7, 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.

Bill Gates has invested some of his considerable fortune in a nuclear reactor developer that is promising to deliver cheaper power while operating more safely and dramatically reducing radioactive waste.

The Microsoft founder is looking for an “energy miracle” – or several – that can power a 21st-century economy without emitting greenhouse gases that contribute to catastrophic climate change.

And nuclear energy is high on his list of solutions. Especially if the next generation of reactor technology can reduce electricity costs while addressing the risks from radioactivity that leave many people deeply concerned about any growing dependence on nuclear.

Mr. Gates is chairman of TerraPower LLC, a Seattle-area company that is developing a travelling-wave, liquid-sodium reactor (TWR) that, the company says, provides an answer to those problems by essentially burning its own waste.

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BHP CEO says taking long view on potash – by Sonali Paul (Reuters Canada – August 7, 2013)

http://ca.reuters.com/

MELBOURNE (Reuters) – BHP Billiton’s new boss on Wednesday shrugged off Russian potash producer Uralkali’s exit from one of the world’s two big potash cartels, saying BHP (BHP.AX: Quote) (BLT.L: Quote) was taking a long-term view on its planned entry into the industry.

In the wake of Uralkali’s (URKA.MM: Quote) surprise move, there has been speculation it may make more sense for BHP to take over U.S. potash producer Mosaic Co (MOS.N: Quote) instead of building a $14 billion potash mine in Canada, up for a decision this year.

“We think very long term. This is something that’s happened short term,” BHP CEO Andrew Mackenzie told reporters, when asked whether the company may delay development of Jansen with potash prices expected to slump.

“We’ve always said that potash is a business which will lose some of its cartel-like structure and become in time globally traded like everything else, so we, to some extent, predicted what’s happened,” he said. Mackenzie said he would have more to say about the outlook for potash and Jansen at the company’s results on August 20.

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Canadians still waiting on oilsands emissions targets – by Les Whittington (Toronto Star – August 7, 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.

No date set for Harper government’s long-promised curbs on oilsands

TTAWA—Canada’s ability to control pollution from the oilsands will sway U.S. President Barack Obama’s high-stakes decision on building the Keystone XL pipeline. But Ottawa’s new regulations — due July 1—have been delayed again and federal officials won’t say when they’re expected. Late this year, Obama will give a yes-or-no ruling on the proposed $7.6-billion project to carry oilsands derived crude from Canada to the U.S. Gulf Coast.

The decision has huge political implications for Obama and Prime Minister Stephen Harper. The planned Keystone XL pipeline is the most prominent of a number of current proposals to give Canada’s oil and gas industry better access to export markets, which is crucial to the Harper government’s energy policies and the development of the oilsands in Alberta.

But Keystone has run into fierce opposition from environmentalists who say it will open the way for a vast expansion in oilsands production, which the greens say will increase the greenhouse gases contributing to global warming.

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Energy East pipeline the oil sands’ last exit? – by Peter Foster (National Post – August 7, 2013)

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

With Energy South and Energy West mired in delay, or even dead, Energy East has appeared as something of a last resort

While not wishing to rain on anybody’s “nation building” parade, last week’s announcement by TransCanada Corp. of its $12-billion Energy East project is hardly cause for wild celebration. While the proposal — to pipe 1.1 million barrels per day of Alberta oil to Eastern refineries and to the East Coast for export — may represent a marvel of technology, in a rational world it would be a non-starter (as opposed to a “no-brainer”).

What Energy East really reflects is the extraordinary success of radical environmentalists in blocking more economic export routes. It also appears to embed dodgy Suzukinomics, such as the notion that domestic upgrading is always a “good thing.” Apparently support from the NDP and labour unions is conditional on this autarchic canard.

It is astonishing that so many Canadians remain enamoured of Barack Obama, although he is perhaps more inimical to Canadian interests than any president in history. He holds the ultimate veto on TransCanada’s Keystone XL project, to take more than 800,000 barrels of diluted bitumen from the Alberta oil sands to the refineries of the Gulf Coast.

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Xstrata-Glencore merger prompts name change (CBC News Sudbury – August 6, 2013)

http://www.cbc.ca/sudbury/

Sudbury’s Xstrata Nickel to become Sudbury Integrated Nickel Operations

One of Sudbury’s major mining companies is going through another rebranding exercise. Xstrata Nickel operations in Sudbury — formerly known as Falconbridge Ltd. before it was bought by Xstrata in 2006— will now go by the name Sudbury Integrated Nickel Operations, or Sudbury I-N-O.

The name change comes as a result of Xstrata’s merger with another Swiss mining company — Glencore. The vice president of Sudbury I-N-O said the takeover means more independence for local operations.

“The interesting thing about Glencore is that it really relies on its local management to develop the business opportunities, [and that’s reflected] in the naming nomenclature,” Marc Boissonneault said. The company’s short-term plans include revitalizing its Fraser Operations near Onaping and to work on a joint project with Vale.

Future rebranding will continue to take place for the next few months, Boissonneault added. “You’ll see our signs change in coming weeks, those are the more visible ones. Other things will just take weeks and, in some cases, maybe a couple of months.”

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Potash news a wake-up call for government: NDP – by Scott Larson (Saskatoon StarPhoenix – August 1, 2013)

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

The jolt experienced in the potash industry should be a wake-up call for the provincial government, NDP Opposition Leader Cam Broten says.

“A wake-up call that shows that we need long-term savings, that we need investments in infrastructure while we can, and a wakeup call to this government that we need to diversify the economy,” Broten said.

Shares in potash companies like Saskatoon-based PotashCorp, Mosaic and Agrium have plunged over the last couple of days after Russia’s potash giant OAO Uralkali said it would exit the export marketing group Belarusian Potash Co. and increase output to full capacity.

Experts say potash prices could fall by 25 per cent, which would impact the royalties the province takes in from the industry. “(That) has the potential to be significant, if you look at the contributions it makes to the provincial coffers as well as the thousands of jobs, the homes that are purchased and the spinoff industries,” Broten said.

“What we’ve seen with this government is an approach to have all of the eggs in one basket.

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Saskatchewan potash can be billed as the Porsche of fertilizers – by Les Mapcherson (Saskatoon StarPhoenix – August 3, 2013)

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

There was a time not so long ago when the Russians threatened us with nuclear annihilation. That they now are only threatening our potash revenues is a big improvement. This, we can handle.

Stuck with piles of surplus potash, the Russians have withdrawn from an international producers’ cartel that helped stabilize prices. They now will unload their potash for a lower price, compelling producers elsewhere to do likewise.

In Saskatchewan, it’s a swift kick right in the potash revenues. The precipitous drop in share prices for Saskatchewan potash producers could foretell the future for provincial royalties.

Potash Corp. of Saskatchewan shares fell overnight by 25 per cent, Mosaic shares, likewise. If provincial potash revenues are similarly reduced, we’ll have to turn in our New Saskatchewanembroidered silk underwear and go back to the old, cotton flour bags with the corners cut off for our legs to go through. Good thing we saved them.

Don’t panic, counsels Premier Brad Wall. Of course, urging us not to panic is the premier’s job. When the time does come for panic, Wall still will be saying don’t panic.

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Ring of Fire talks off to ‘productive’ start, Bob Rae says (CBC News Power and Politics – August 2, 2013)

 

http://www.cbc.ca/news/politics/

Northern Ontario mining negotiations a chance to ‘do development differently’

Former Liberal MP Bob Rae said negotiations between Ontario and First Nations over mining in the Ring of Fire region are off to a good start and mark an opportunity to “do development differently.”

Rae was named chief negotiator for the Matawa Tribal Council, representing nine First Nations communities in northern Ontario, in May while he was still the MP for Toronto Centre. In mid-June he announced he was quitting politics in order to focus on the Ring of Fire job.

The Ring of Fire area, about 540 kilometres northeast of Thunder Bay, has one of North America’s biggest deposits of chromite, used in stainless steel. It’s also rich in nickel, copper and platinum. The federal government estimates the mineral content is worth $30 billion to $50 billion and will create up to 5,000 direct and indirect jobs.

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The ‘new world order’ of mining isn’t pretty – by John Shmuel (National Post – August 3, 2013)

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

If there was a stock market discount bin, it would be overflowing right now with mining stocks of all shapes and market caps.

The TSX materials sector is down more than 30% so far this year, with gold miners being particularly clobbered, having lost 38% of their value since January. It’s been the worst year for global mining stocks since the financial crisis.

The last bastion of safety for mining investors — potash stocks — collapsed this week to join their digging and drilling brethren in the basement. The break-up of a Belarusian-Russian cartel that was responsible for 43% of global potash exports is to blame. Its demise led to a potash price collapse, resulting in a sharp pullback for fertilizer stocks such as Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc.

The bad news didn’t stop there. A day later, Barrick Gold Corp. revealed the second-worst loss in Canadian corporate history. The miner announced it lost US$8.56-billion in the second quarter, after a massive US$9.3-billion writedown at its Pascua-Lama development in Chile.

All of that ensures Canadian mining stocks are well on their way to posting a third-straight annual decline. It’s no wonder many fund managers, despite seeing a lot of value in the sector, are proceeding cautiously.

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Disquiet in Québec as govt proposes tax, mining law changes – by Simon Rees (MiningWeekly.com – August 2, 2013)

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

TORONTO (miningweekly.com) – Like others across Canada, exploration and mining companies operating in Québec are suffering fierce economic headwinds and depressed metal prices, particularly so for gold. However, the gloom is doubly deep as concern mounts over the province’s newly proposed mining tax and Mining Act, both unveiled in May.

Under the current system, mining operations pay a 16% tax on net profits. The rate was pushed up from 12% during the previous Liberal government’s tenure. But for the Parti Québécois (PQ), led by Premier Pauline Marois, the increase was not extensive enough – it went on to call for a 5% tax on all mining activity and a 30% supertax on companies achieving profit margins over 8%.

“I think the PQ was looking towards the Australian model of increasing taxes on the mining sector, reasoning it could be applied to Québec . . . But most of our mines are smaller-scale operations. While some might have made good money, almost all reinvested profits into upgrading or expanding existing operations,” Institut de la statistique de Québec mining and natural resources specialist Raymond Beullac tells Mining Weekly.

“KPMG fairly recently released a report on Québec’s mining sector, highlighting the number of small-scale mines in production but unable to produce a taxable profit under the current mining tax regime,” Norton Rose Fulbright partner with specialist knowledge of the mining, oil and gas sectors Jean-Philippe Buteau tells Mining Weekly.

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Pipeline builders struggling to keep up with producers – by Shawn McCarthy (Globe and Mail – August 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.

OTTAWA — As pipeline companies and railways race to add capacity for moving oil and natural gas around North America, two concepts are key: “plumbing” and “market options.”

Until about eight years ago, the North American industry faced a predictable, undramatic pathway, with steady declines in conventional oil and gas production and a measured growth in the oil sands that would require only incremental increases in pipeline capacity. But in a few short years, that picture changed dramatically, as drilling advances resulted in booming gas and tight oil production and triple-digit prices fuelled increasingly by ambitious expansion plans in the oil sands.

But the plumbers have struggled to keep up. Until recently, there was a blockage at Cushing, Okla., that resulted in deep discounts for North American crude compared to international sources. While new pipelines and rail capacity have cleared that logjam, producers fear others will develop if new pipelines cannot be approved and built quickly enough.

The support for TransCanada Corp.’s Energy East proposal shows how desperate producers and refiners are to expand their market choices – for sellers to find potential buyers and for the customers to have as many sources of supply as possible.

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Saint John to get much-needed jolt from TransCanada’s $12-billion Energy East pipeline plan – by Theresa Tedesco (National Post – August 2, 2013)

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

Canada’s oldest incorporated city will likely emerge the big winner in the wake of TransCanada Corp.’s decision to build a $12-billion pipeline to transport crude oil from Alberta to refineries and export terminals in Quebec and New Brunswick.

The 228-year-old city of Saint John, nestled along the north shore of the Bay of Fundy, clings stubbornly to its historic Maritime past of shipbuilding. Home to North America’s first deep-water oil terminal, the city named after the Biblical figure John the Baptist, once boasted Canada’s largest shipyard and one of the biggest dry docks on the planet, but it has seen far more traffic from cruise ship visitors than the industrial kind in recent decades.

That moribund existence will get a much-needed jolt if TransCanada secures the necessary regulatory and environmental approvals to forge ahead with building its Energy East pipeline that would deliver 1.1-million barrels of crude a day from Western Canada to the East, passing through Montreal, Quebec City and Saint John.

Under the plan, TransCanada would convert about 3,000 kilometres of existing natural gas pipeline in Ontario and Quebec and construct an additional 1,400 kilometres extending to an ice-free, deep-water port in Saint John owned by Irving Oil Corp. Built in the 1950s, the TransCanada natural-gas pipeline is currently operating at only half capacity.

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Barrick looks to cut high-cost mines – by Tim Kiladze (Globe and Mail – August 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.

After its second major writedown in just six months, Barrick Gold Corp. is trying to wooing back shaken investors by focusing on assets closer to home.

The world’s largest gold miner announced a hefty $8.7-billion (U.S.) after-tax impairment charge, leaving the company with a second-quarter loss of $8.6-billion.

Barrick also slashed its dividend by 75 per cent as part of its second quarter earnings. In response to the losses, the Toronto-based company plans to shed, suspend or shut high-cost mines and continue to cut costs.

Chief executive officer Jamie Sokalsky said he is considering changes to his lineup of high-cost mines, most of which are in Africa and Australia. On a conference call Thursday, he said is already “well-advanced in a process to sell certain Australian assets.”

The miner will also continue to slash expenses where possible, having already cut or deferred $4-billion in capital spending over the past year, half of which came in the first six months of 2013.

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PotashCorp N.B. unfazed by potash stock slump – (CBC News New Brunswick – August 1, 2013)

 

http://www.cbc.ca/nb/

Changes to the global potash market threaten Canadian price stability

The collapse of a potash cartel in Eastern Europe earlier this week caused panicky selling in the stock market, and raised fears about potash revenue and royalties in New Brunswick. However, the general manager of PotashCorp in New Brunswick appears unfazed.

Shares of major North American potash producers fell sharply Tuesday on word that the Russian company, OAO Uralkali is pulling out of a marketing group and is expected to undercut competitors’ prices for the fertilizer.

The company announced it was withdrawing from a joint venture with another company from Belarus that set the price for about a third of the world’s potash supply. Instead, it plans to sell more potash to China, which buys about one fifth of the world’s supply of the fertilizer.

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