Commodity Super-Cycle and Decline – Page 64

Quadra FNX agrees to $3.5-billion takeover [by Polish miner KGHM Polska] – by Peter Koven (National Post – December 6, 2011)

December 7, 2011December 6, 2011

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

Canadian copper miner Quadra FNX Mining Ltd. has agreed to be acquired by Polish mining giant KGHM Polska Miedz S.A. in a $3.5-billion all-cash deal. The offer is worth $15.00 a share and is a 32% premium over Quadra’s closing price on Monday. However, Quadra shares traded at higher levels early this year.

The stock jumped 36% to $15.40 in early trading in Toronto, just slightly above the KGHM offer, as investors speculated on the possibility of a higher bid.

Paul Blythe, Quadra FNX’s chief executive, said in a statement that the two companies held talks earlier this year about a joint venture to develop Quadra’s giant Sierra Gorda project in Chile. Then in recent weeks, KGHM made a proposal for the whole company.

“The proposal represents a significant premium to the current share price and we are recommending that our security holders vote in favour of the transaction,” he said.

NEWS RELEASE: KGHM begins process of acquiring Canadian mining company [QuadraFNX]

December 6, 2011

Lubin, 6 December 2011

KGHM Polska Miedź S.A. intends to acquire the mining company Quadra FNX, listed on the Toronto, Canada stock exchange. As a result of entering into today’s agreement, the process of friendly acquisition of this company has begun. KGHM will come into possession of world-class ore bodies and
operating copper mines situated in Canada, the USA and Chile. The value of
this transaction amounts to USD 2,83 billion, and will be financed by the cash resources of KGHM.

The acquisition of Quadra FNX will increase production next year by the KGHM Group by approx. 25%, i.e. 100 thousand tonnes of mined copper, and ultimately by nearly 50%. Total mineral resources will increase by more than 8 million tonnes of copper, i.e. by 28%, putting KGHM into fourth place globally. KGHM is also considering the production of other metals, such as nickel and molybdenum.

There will also be a significant increase in the production of gold and other precious metals. Thanks to the acquisition of attractive mining projects, over several years the KGHM Group will substantially reduce its costs of production. This acquisition will strengthen the position of KGHM on the copper market, and will enable the growth of the company, as foreseen by the Company’s strategy, in the mining sector.

Consulting sector buzzing – by Norm Tollinsky (Sudbury Mining Solutions Journal – November, 2011)

September 7, 2018December 4, 2011

Sudbury Mining Solutions Journal is a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury.

Euro zone debt, American stagnation and a slowdown in China paint a picture of economic doom and gloom, but Northern Ontario’s mining engineering consulting firms have never been busier.

Sudbury and North Bay staff with Hatch, Stantec, Wardrop, AMEC and Knight-Piésold are busy working on projects across Canada and around the world, and are bullish about the next few years.

The engineering consulting sector in northeastern Ontario constitutes an important sub-section of the region’s mining cluster, employing upwards of 600 engineers, scientists, technicians and administrative staff.

This wasn’t always the case. Wardrop, now part of Pasadena, California-based Tetra Tech, started out with a three-man operation in 2001 and today has 50 employees at its Sudbury office. Stantec, formerly McIntosh Engineering, had one or two people in Sudbury in 2008 and now has 92, with approximately 100 more in North Bay.

From camels to flying carpets – by David Robinson (Sudbury Mining Solutions Journal – November, 2011)

December 4, 2011

Dr. David Robinson is an economist at Laurentian University in Sudbury, Canada. His column is from Sudbury Mining Solutions Journal a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury. drobinson@laurentian.ca

Mining and the trade in metals shaped the ancient world. And in almost every case, the transportation system for the metal industries was the most advanced you could find at the time.

Whether it was camels moving copper to Jerusalem from mines in Edom, or Phoenician ships ferrying tin from the Tin Islands to the growing cities of the eastern Mediterranean, mining and advanced transportation have gone together like love and marriage. Transportation innovations of the 19th century shaped the mining industry of the 20th century. Without rail, for example, the vast interior deposits of iron, copper and other metals would have been far more costly to deliver to a growing global market. Cities like Sudbury simply could not exist.

The shipping needs of one modern company show the scale of the transportation services required by miners. Vale exports iron ore to China in “capesize” freighters (too large to pass through the Suez Canal) that carry up to 400,000 deadweight tons – the equivalent of 4,000 ore cars. In 2006, Vale ordered a dozen of these for $1.6 billion.

World’s Largest Miners [Rio Tinto, BHP-Biliton and Vale] like Potash – by Richard (Rick) Mills (Aheadoftheherd.com – November, 2011)

December 1, 2011

Richard Mills is host of www.aheadoftheherd.com and invests in the junior resource sector.

As a general rule, the most successful man in life is the man who has the best information

Miners are looking to enter the potash business, or expand existing operations, as they look for increased demand from developing nations such as China, India and Brazil.

BHP Billiton – In the spring of 1869 a German Chemist named Charles Rasp immigrated to Australia for his health. Unable to find work in his chosen trade Charles learned to ride a horse and began wrangling sheep. One day, while out riding his horse at Broken Hill, he discovered mineralized rock. He took out a mining lease, punched holes in the ground and eventually found rich veins of silver. The Broken Hill Proprietary Company – BHP – was incorporated in 1885 while mining silver and lead at Broken Hill in western New South Wales.

Billiton was a mining company that got its start in September 1860 when the articles of association were approved by a meeting of shareholders in the Groot Keizerhof Hotel in The Hague, Netherlands. Shortly afterwards the company acquired the mineral rights to the tin-rich islands of Banka and Billiton off the eastern coast of Sumatra.

York University to offer mining-focused MBA – by Brenda Bouw (Globe and Mail – November 28, 2011)

November 28, 2011

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 Schulich School of Business at York University is capitalizing on the looming leader shortage in the mining sector by offering a first-of-its-kind MBA specialization in global mining management starting next fall.

The two-year program, expected to be announced Monday, aims to appeal to future executives, investment bankers, analysts and other professionals eyeing a top-level career in the risk-driven resources sector.

“It’s great succession planning for the industry,” said Richard Ross, an executive in residence at Schulich and former chief executive at Inmet Mining Corp. The Toronto-based MBA program is expected to crank out future mining executives at a time when many of the current, often colourful, company founders are poised for retirement.

Mining industry faces labour crunch, volatility, high costs: Deloitte – by Lauren Krugel (Canadian Business Magazine – November 27, 2011)

November 28, 2011

Founded in 1928, Canadian Business is the longest-publishing business magazine in Canada.

To view the report, please visit http://www.deloitte.com/ca/mining-trends

The Canadian Press – The global mining industry is facing a severe labour squeeze, which means companies must be creative in finding enough talent to run their operations, says a report released Sunday by a major professional services firm.

Deloitte Touche Tohmatsu Ltd. said there simply are not enough workers to power the huge growth expected in the mining sector — capital expenditures this year are estimated to be US$113 billion, 50 per cent higher than 2010 — and firms must look at unconventional ways to fill the gap, like doing more work remotely.

“Given the acute shortage of key talent, delivering on all these projects may be near impossible,” said the report, called Tracking the Trends 2012. Glenn Ives, Deloitte Canada’s Americas mining leader, said demographics are at the heart of the problem.

“There is a 20-year gap in the mining industry. If you think about it, mining was not that great an industry to join in the 80s and the 90s, and so there weren’t a lot of new graduates joining the mining industry in that time frame,” he said in an interview.

Slowdown in Chinese manufacturing fuels global fears – by Andy Hoffman (Globe and Mail – November 24, 2011)

November 24, 2011

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’s massive manufacturing sector is slowing, raising fears of a hard landing for the Asian economic superpower that would deliver a devastating blow to a struggling global economy.

Confirming concerns that Europe’s sovereign debt crisis is crimping demand for Chinese exports, a key measure of China’s manufacturing activity has slipped to its lowest level since March, 2009.

The HSBC China Manufacturing Purchasing Managers’ Index fell to a reading of 48 in November, down from 51 in October. A reading below 50 indicates contraction.

“The drop suggests that the economy has taken a turn for the worse after a few months in which conditions seemed stable,” Mark Williams and Qinwei Wang of London’s Capital Economics said in a report.

Why the world is burning more coal – by Fred Pearce (The Guardian – October 31, 2011)

November 21, 2011

http://www.guardian.co.uk/

The inconvenient truth is that coal remains a cheap and dirty fuel — and the idea of ‘clean’ coal remains a distant dream

This year’s UN climate negotiations are in Durban, South Africa. Many delegates will already be looking forward to the chance of going on safari after their labors, visiting Kruger National Park or one of the country’s other magnificent game reserves. But I have another suggestion. Visit the enemy. Just two hours’ drive up the Indian Ocean coast from Durban is Richards Bay, a huge deep-water harbor that is home to the world’s largest coal export terminal.

Anyone seduced by the conference exhibition halls in Durban, filled with the latest renewable energy technology, will get a rude awakening at Richards Bay. For it may tell the real story of our energy futures — and it is scary.

King coal is extending his kingdom. So dysfunctional is the world’s response to climate change that every year, the dirtiest fuel of them all is generating a growing proportion of the world’s energy.

[Manitoba] Province mining bright future – by Martin Cash (Winnipeg Free Press – November 19, 2011)

November 19, 2011

http://www.winnipegfreepress.com/

Many projects could start up in next few years

In the next five years the mining industry in Manitoba could find itself in a challenging position — trying to find people to fill 2,000 additional jobs that might be created. That’s because a number of development projects that have been percolating for years may be coming to fruition.

With employment up almost 25 per cent over the past five years to 6,100 and capital spending up 25 per cent in the past year, the industry is booming. Base metal prices continue to hold their own and gold prices continue to rise as global economic uncertainty persists.

It means that a number of projects — some that could be among the largest ever developed in the province — continue to progress, creating the potential for several new mine openings over the next few years. It will take billions of dollars to make that a reality, which means it’s far from a foregone conclusion.

But the current optimism — manifested by registration numbers at this week’s annual Manitoba Mining and Minerals Convention hitting 1,000 for the first time ever — does not come out of the blue. Typically, new mines take up to 10 years to develop. Leading off the development bonanza in Manitoba is one of the fastest discovery-to-development projects in the country — HudBay Minerals’ Lalor project.

The $200,000-a-Year [Australian] Mine Worker – by John W. Miller (Wall Street Journal – November 16, 2011)

November 19, 2011

http://online.wsj.com/home-page

Resources Boom Fuels Demand for Underground Labor, Spurs Skyrocketing Pay; a $1,200 Chihuahua.

MANDURAH, Australia — One of the fastest-growing costs in the global mining industry are workers like James Dinnison: the 25-year-old high-school dropout from Western Australia makes $200,000 a year running drills in underground mines to extract gold and other minerals.

The heavily tattooed Mr. Dinnison, who started in the mines seven years ago earning $100,000, owns a sky-blue 2009 Chevy Ute, which cost $55,000 before a $16,000 engine enhancement, and a $44,000 custom motorcycle. The price tag on his chihuahua, Dexter, which yaps at his feet: $1,200.

A precious commodity himself, Mr. Dinnison belongs to a class of nouveau riche rising in remote and mineral-rich parts of the world, such as Western Australia state, where mining companies are investing heavily to develop and expand iron-ore mines. Demand for those willing to work 12-hour days in sometimes dangerous conditions, while living for weeks in dusty small towns, is huge.

China and South Africa: An alliance of [mining] ‘pragmatism’ – by Kenneth Kidd (Toronto Star – November 12, 2011)

November 17, 2011

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

JOHANNESBURG—Jianke Gao strolls into the boardroom of Wesizwe Platinum Ltd. wearing casual trousers and a short-sleeved shirt, as if he were heading to the links. It’s a marked departure from the traditional dour suit of Chinese business. It may also be apt.

Gao is just a couple of months into his new job as Wesizwe’s CEO, installed after China’s Jinchuan Group Ltd. and the China-Africa Development Fund teamed up to buy 45 per cent of the company for $227 million.

The Chinese consortium is now arranging $650 million in financing to develop Wesizwe’s Frischgewaagd-Ledig platinum mine in South Africa’s North West province.

As part of the deal, the Chinese loaned $27 million to Micawber 809, one of South Africa’s black empowerment entities, so Micawber could buy a 6 per cent stake in Wesizwe.

Brazil’s Long Shadow Vexes Some Neighbors – by Simon Romero (New York Times – November 4, 2011)

November 13, 2011

http://www.nytimes.com/

LA PAZ, Bolivia — Sandal-clad indigenous protesters have excoriated their president, calling him a “lackey of Brazil.” Angry demonstrations in front of Brazil’s embassy here denounced its “imperialist” tendencies. Bolivian intellectuals lambasted the “São Paulo bourgeoisie,” likening them to the slave hunters who expanded the boundaries of colonial Brazil.

Such heated words used to be reserved for the United States, which has wielded extraordinary influence across Latin America. But as American dominance in the region recedes and Brazil increasingly flexes its newfound political and economic might, it has begun to experience the pitfalls of the role as well: a pushback against the hemisphere’s rising power.

“Power has shifted from one side of Avenida Arce to the other,” said Fernando Molina, a local newspaper columnist, referring to the street in La Paz where the Brazilian ambassador’s residence sits opposite the towering embassy of the United States.

Brazilian endeavors are being met with wariness in several countries.

A global business perspective on managing for growth in a volatile international environment – by Rio Tinto Chairman – Jan du Plessis (November 4, 2011)

November 6, 2011

Location: Australian Institute of Company Directors – Sydney, Australia

Jan du Plessis – Rio Tinto Chairman

Good afternoon ladies and gentlemen. It is a real pleasure to be with you today.

I’d like to begin by acknowledging the traditional custodians of the land we have gathered on today, the Gadigal people of the Eora nation. I pay my respects to elders past and present.

I first visited Sydney in November 1991 and, over the course of several subsequent visits, fell in love with the place. Twenty years later, having travelled around the world more than I care to remember, I still believe this is the most beautiful city in the world.

Now, before anybody says Sydney is not Australia, let me assure you that over the last two-and-a-half years since becoming Chairman of Rio Tinto, I have seen quite a lot of your country. And my visits have not been confined to stopping over in most of your major cities. I have visited several coal mines and (I confess) vineyards in the Hunter Valley; more coal mines in Queensland; and paid visits to our alumina refineries, aluminium smelters and other facilities in and around Gladstone.

Asian group bids $1-billion for Grande Cache Coal – by Brenda Bouw (Globe and Mail – November 1, 2011)

November 4, 2011

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 team of Asian buyers is paying $1-billion for Calgary’s Grande Cache Coal Corp, betting on steady long-term demand for coal used in steel making despite a recent pullback in production amid growing global economic gloom.

China’s Winsway Coking Coal Holdings Ltd. and Japan’s Marubeni Corp. said Monday they will pay $10 a share in cash for the metallurgical coal producer, a 70-per-cent premium to the miner’s Friday closing price of $5.87 on the Toronto Stock Exchange.

The bid comes just weeks after Grande Cache shares hit a 52-week low of $3.22, around the same time coal prices plummeted nearly 30 per cent to $240 (U.S.) per tonne on uncertainty over slower growth in China, the world’s largest steel maker.

Grande Cache’s stock has been trading below its industry rivals in part because of its higher-cost operations in west-central Alberta. Still, analysts say the bid values the company more in line with its peers.