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Canadian Media Resource Articles

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Stuck with piles of surplus potash, the Russians have withdrawn from an international producers’ cartel that helped stabilize prices.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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Gold miners Barrick, Kinross report huge losses as prices fall (CBC News Sudbury – August 1, 2013)

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

Barrick Gold will slash its quarterly dividend to 5¢ US per share

Barrick Gold Corp. and Kinross Gold Corp. have both taken billions of dollars of writedowns and taken an axe to their dividends as they struggle with lower metals prices that have savaged their bottom lines.

On Thursday, Barrick Gold reported an $8.56-billion US loss and slashed its quarterly dividend by 75 per cent to five cents a share as bullion and copper prices languish far below their previous highs.

It also signalled plans to cut jobs and lower capital spending. Barrick recognized an $8.7-billion impairment in the second quarter, mainly due to lower metal prices. The gold mining giant has also run into major delays in its efforts to build a big mine in South America.

“Over the past year, we have taken and are continuing to take a series of steps to reduce costs as part of our disciplined capital allocation framework, which allowed us to respond quickly to the new metal price environment,” said Jamie Sokalsky, Barrick’s president and CEO.

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Why Canada can, and must, pull off nation-building Energy East pipeline – by Claudia Cattaneo (National Post – August 2, 2013)

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

The $12-billion Energy East pipeline announced by TransCanada Corp. Thursday is the third nation-building project proposed by the Canadian energy industry in the past dozen or so years. The Mackenzie gas pipeline that would have opened and enriched the North failed, and the Northern Gateway oil pipeline to usher new trade with Asia is in trouble.

Many lessons were learned. Big losses were suffered. Changes were made. Today, Canada can and must pull off Energy East, which would truly make the country oil rich.

Started as an after-thought after the United States delayed approval of Keystone XL, the Alberta-to-New Brunswick pipeline promises the biggest benefits yet to Canadians from its energy patrimony, while ensuring the best environmental protection that can be had.

“This is a historic day for TransCanada and a historic day for our country,” said CEO Russ Girling said, comparing the project to other nation-building projects such as the Canadian Pacific Railway, the Trans-Canada Highway and the company’s own cross-country natural gas mainline, which will be the foundation of Energy East.

With the project gearing up to deliver up to 1.1 million barrels per day to refineries and export terminals in Quebec in late 2017 and New Brunswick in 2018, Alberta and Saskatchewan would get a new home for their growing production.

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The promise and the perils of a pipe to Saint John – by Shawn McCarthy and Jeffrey Jones (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 and CALGARY — TransCanada Corp. and Irving Oil Ltd. are joining forces to market Canada’s crude oil to the world, officially launching the proposed $12-billion Energy East pipeline and a $300-million deep-water marine terminal to be built off Saint John, N.B.

The Energy East pipeline, subject to regulatory approval, promises to unlock new markets for landlocked Western Canadian suppliers by giving them access to eastern refineries and global export markets through ports at Quebec City and Saint John.

TransCanada chief executive Russ Girling said the company expanded its original plan to 1.1-million barrels per day of capacity – about a third of current Canadian oil production – after Irving Oil successfully promoted the ambitious export option to energy producers.

Echoing politicians backing the plan, Mr. Girling described Energy East – the largest project ever undertaken by TransCanada – in nation-building terms, comparing it to the construction of the Canadian Pacific Railway or the Trans-Canada Highway.

“Each of these enterprises required innovative thinking and a strong belief that building critical infrastructure ties our country together, making it stronger and more in control of our own destiny, and this is true of Energy East,” he said.

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The [British Columbia] New Prosperity battle begins again – by Gwen Preston (Northern Miner – July 31, 2013)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. 

WILLIAMS LAKE, BC — Two very different scenes played out on opposite sides of the building hosting the public hearing on the proposed New Prosperity mine in the hours before the hearing got started.

On one side, the City of Williams Lake put on a barbecue for project proponent Taseko Mines (TSX: TKO; NYSE-Arca: TGB). Wearing blue scarves to show their allegiance, supporters chatted with each other and the media about what the huge copper-gold mine would mean for the small town. Taseko executives, representatives from the city’s business community and employees from Taseko’s nearby Gibraltar mine spoke of cautious optimism, quiet but strong support, and crucial economic benefits.

In the park on the other side of the building, chiefs and members of a dozen First Nations drummed and sang before a roster of speakers railed against the proposed mine. They spoke of the irreparable devastation the mine would bring to an area heavy with spiritual and cultural significance. They spoke of poisoned salmon, displaced grizzlies, disrespect for established First Nations’ rights, even of “cultural genocide.”

Then the two sides met. Carrying placards with messages like: “Chilcotin gold is more valuable in the ground,” and “Our fish equal our wealth,” the anti-mine group slowly and deliberately made its way into the quiet auditorium.

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Gold’s slide takes $2.4-billion toll on Kinross – by Tim Kiladze (Globe and Mail – August 1, 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.

Kinross Gold Corp. announced a $2.4-billion impairment charge because of lower gold price assumptions and a previously announced loss on an Ecuadorian project that the miner abandoned a few months ago. The latest charge brings the company’s writedowns to $8-billion over the past year and a half, exceeding Kinross’s market capitalization of about $6.1-billion.

The company cancelled its next semi-annual dividend payment, and raised the possibility that it would scrap the dividend altogether, depending on factors such as market conditions and its balance sheet strength.

Kinross also said Wednesday that it would delay a decision on whether to proceed with the construction of a new mill that processes the ore it mines at its Tasiast project in West Africa. That decision follows a commitment made just three months ago to proceed with the next phase of its expansion.

Kinross’s woes are emblematic of a struggling industry hampered by a slew of multibillion-dollar writedowns, cost cuts and share price slumps. Kinross shares are now worth just $5.34 apiece, down 78 per cent from their post-crisis peak, while Barrick Gold Corp.’s have fallen to $17 each – a low that was, until very recently, last seen in 1992.

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Changing potash landscape a boon for China, India – by Brenda Bouw (Globe and Mail – August 1, 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.

China and India are poised to gain greater control over global potash pricing now that the oligopoly that controlled the majority of trade in the crop fertilizer, a key Canadian export, has been dismantled.

This week’s breakup of Belarus Potash Co. (BPC), a joint venture between Russia’s Uralkali and Belaruss’s Belaruskali, puts the world’s two most populous countries in a much stronger position after years of resistance to prices set by both BPC and Canada’s Canpotex Ltd.

Until now, the two groups controlled more than two-thirds of global potash sales. Saskatoon-based Canpotex is owned by Potash Corp. of Saskatchewan, Agrium Inc. and Mosaic Co.

The new landscape is expected to lower potash prices, which would increase demand and crop yields, particularly in high-demand countries such as China, India and Brazil. That in turn could help contribute to lower global food prices, which economists say are falling on expanded crop planting.

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Down with [potash] cartels, comrade – by William Watson (National Post – August 1, 2013)

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

The hungry of the world, who clearly would benefit from a 25% lower price of a key fertilizer, shouldn’t count their cheaper meals before they’re grown

Belarus’s President Alexander Lukashenko, Europe’s last remaining dictator, seems an unlikely devotee of Adam Smith. Yet his Decree Number 566 last December — decrees are a large part of his leadership style — is what so annoyed his Russian partners in the Eurasian half of the world potash cartel that they announced Tuesday they would be letting their exports rip, as they claim the Belarussians have already done in sales to China and India.

The other third of this Putin-Lukashenko troika is, ahem, us. We run the North American half of the cartel through Canpotex, the Saskatchewan potash export consortium formed in 1972, just about the time in fact that we were also putting together domestic cartels over milk, cheese, eggs and poultry. Trudeau times, recall, were managed-economy times.

The consensus view seems to be that this jolt of Smithian competition into the long-cartelized world market will bring potash prices down from above US$400/tonne to something more like US$300.

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