Sudbury ready to cash in [on mining investments] – by Carol Mulligan

The Sudbury Star, the City of Greater Sudbury’s daily newspaper. cmulligan@thesudburystar.com

“If we do the right things, mining can literally help
dig Ontario out of its debt.” (Chris Hodgson, President
and CEO Ontario Mining Association)

Sudbury is well-positioned to benefit from that mining
boom because it has the largest integrated mining complex
in the world and one of the largest nickel-copper
sulphide bodies. (Pierre Gratton, President and CEO,
Mining Association of Canada)

Sudbury stands to benefit from investments in mining operations to the tune of about $5.2 billion in the next five years. That’s a healthy percentage of the $136.4 billion in capital expected to be invested in mining projects throughout Canada from 2012 to 2017.

All of those billions will go into mining projects already in existence, says the president and chief executive officer of the Mining Association of Canada.

That doesn’t include private and public money that may be invested in projects to develop, mine, smelt and transport chromite from the Ring of Fire in northwestern Ontario.

Pierre Gratton was one of two guests who spoke to the Greater Sudbury Chamber of Commerce on Thursday about how the city can benefit from the current up cycle in the metals industry.

China will continue to be a mineral price driver as its econo my continues to grow at double-digit rates. That demand is long-term, with expectations its growth will still be in the 6% to 9% range from 2020-2025.

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Governments got $8.4B from miners in 2010 – by Peter Koven (National Post – August 4, 2011)

The National Post is Canada’s second largest national paper. Peter Koven is their mining reporter.

After a stunning drop-off in 2009, Canadian governments are once again swimming in mining-related revenues. And those revenues are expected to grow even more in the months and years ahead.

A study by the Mining Association of Canada (MAC), to be released Thursday, shows federal and provincial governments pocketed a whopping $8.4-billion from the mining sector in 2010, or $5.5-billion if oil sands is excluded. It is a dramatic 65% increase from 2009, though still below the record years of 2007 and 2008, when the total haul was more than $10-billion each year.

Those records could fall very soon, according to MAC president Pierre Gratton. His organization estimates that “well over $110-billion” could be invested in new and existing projects across the country over the next five years to expand production. If that happens, thousands of jobs will be created and the government revenue haul from mining will get much bigger.

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NEWS RELEASE (Ernst & Young): Value of mining M&A continues to climb

http://www.ey.com/CA/en/Industries/Mining—Metals

First half deal value doubles year-on-year

London 25 July 2011 – The thirst for natural resources from rapidly developing economies continues to drive M&A in the mining sector, but the pace of growth in deal-making is being tempered by uncertainty around global macroeconomic issues and resource nationalism concerns around the world.

Total deal value for January—June 2011 doubled compared to January—June 2010, up from US$47.9b to US$96.3b.

There were slightly fewer deals in the same period, with 573 for the H1 2010 compared to 511 to 30 June this year, reinforcing the view that while larger deals are being executed there is still a level of uncertainty around doing M&A given the current macro-economic backdrop.

The number of mining & metals sector IPOs globally was up 30% from 56 in H1 2010 to 73 in H1 2011. Total proceeds from IPOs were up 107% from US$6.3b to US$13.0b, although this is dominated by the US$10 billion Glencore listing.

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Africa’s Emerging Partners [China, Brazil and India]: Friend or foe? by Nicholas Norbrook and Marshall Van Valen (The Africa Report – June 2011)

The Africa Report: An insight into Africa, an outlook on the world.

Land grabs and exploited workers dominate the headlines, but Africa’s relationship with emerging partners is more complex and will boost the continent – if states negotiate wisely.

Fact or fiction? African mineworkers toil for peanuts, under the watchful eye of the gun-toting Chinese overseers. Guinea’s green savannah is etched ragged with intensive palm-oil plantations. Madagascan communities are pushed off their land as South Korean land merchants order the island’s ancestral earth to be ploughed up for export crops. Asian banks rush to sign up African governments for new loans they can ill afford, in exchange for poorly constructed buildings.

Indian gem merchants bribe politicians to gain access to huge diamond reserves, with profits spirited out of the country via anonymous Mauritian front companies. Taxes avoided, workers exploited, environments despoiled, resources bled, countries indebted. The dream deferred.


The bogeymen raised by the advance of Africa’s emerging partners are projections of post-colonial guilt. After decades of achieving little for Africa, the West has been shaken by the arrival of powerful emerging economies on the continent. Self-appointed Africa saviour Sir Bob Geldof says: “China is engaged in an entirely mercantilist expedition in Africa. They are driving huge amounts of growth. But at what cost?” Chinese officials deny the charge. “For China to sustain its development, we need to have a stable supply of energy and minerals. I don’t think that is something bad, or something evil,” says Liu Guijin, China’s special representative for Sudan. Geldof is currently raising $1bn to launch a private equity fund aimed at Africa.
 A new report from the OECD and the African Development Bank (AfDB) is more measured.


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CBC NEWS: In Depth – Rare earth metals (July 7, 2011)

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

A look at 17 chemical elements vital for gadgets of today, green technologies of tomorrow

What are they?

Rare earth elements, or REEs, are a group of 16 metals (or 17 if scandium is included) that share particular chemical and physical properties that make them indispensable to the manufacture of countless electronics, appliances, green technologies, weapons and medical devices. They are valued for their properties of luminescence, thermal and electrical conductivity, magnetism and ability to act as catalysts and polishing compounds.

They are considered vital not just for the many gadgets of today, such as cellphones, computers, stereos, flat-screen TVs and MRI machines but, perhaps more importantly, for the green technologies that many expect will define our future. They are a key component of manufacturers’ efforts to produce more efficient, less-polluting versions of their products, such as cars and light bulbs, and of the global fight to reduce greenhouse gas emissions.

One of the areas where REEs have made the greatest contribution is in the miniaturization of magnets used in the motors and generators that power electronics, electric cars and wind turbines. REE alloys reduce the weight of such magnets by up to 90 per cent and allow them to function at high temperatures.

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The [global] race for rare metals – by Geoffrey York and Brenda Bouw (Globe and Mail – July 16, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

VANRHYNSDORP, SOUTH AFRICA, VANCOUVER – Filled with radioactive waste, its buildings gutted and crumbling after 48 years of disuse, the abandoned Steenkampskraal mine would seem to hold little value to anyone.

Until recently, the decaying apartheid-era mine in a remote patch of South African desert was mainly of interest to scientists studying the effects of high radiation on the thousands of bats that hibernate in the empty mine shaft.

But soon the bats will be evicted, the radioactive waste will be buried and the shaft refurbished. The Canadian owners of this mine are scrambling to tap the mine’s rare-earth minerals – possibly the hottest commodity on the planet these days, with immense strategic and technological significance, and pivotal to a global geopolitical rivalry.

As prices soar, there is a frantic global rush to develop new sources of rare earths. These obscure minerals – 17 different elements with futuristic names such as neodymium, samarium, yttrium and lanthanum – are crucial for everything from guided missiles and hybrid cars to flat-screen televisions, iPods and BlackBerry phones.

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China growth spurs rebound in mining deals – by Brenda Bouw and Tamara Baluja (Globe and Mail – July 14, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

China is reigniting the mining sector with its near double-digit economic growth, working through inventories and triggering a rebound in commodity prices that is inspiring a new round of deal-making in the industry.

The world’s largest commodities consumer reported robust second-quarter growth of 9.5 per cent on Wednesday, surpassing expectations and helping send both stock markets and metal prices higher.

Copper, considered an indicator of global economic activity, slumped below $4 (U.S.) a pound in May amid widespread worries that China’s moves to tackle inflation could derail the country’s breakneck growth. But copper prices have rebounded sharply, reaching $4.40 Wednesday and closing in on the record $4.62 reached in mid-February, as the Asian superpower confounds skeptics.

China’s latest growth figures “should dampen fears that the economy is heading into a hard landing and they suggest that policy makers can afford to stay focused on tackling inflation for a while longer,” said Mark Williams, senior China economist at Capital Economics. That is expected to keep driving demand for commodities used to help build infrastructure and everyday goods such as appliances and automobiles.

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Flurry of metal deals signals bold outlook – by Brenda Bouw (Globe and Mail – July 12, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Brenda Bouw is the Globe’s mining reporter.

Miners bet commodities boom has legs by unveiling a handful of takeovers

A sudden rebound in mining acquisitions signals a return of confidence in the industry after weeks of uncertainty and volatile prices that froze deal activity in the sector.

As commodity prices begin to bounce back from a recent fall, miners are betting once again on strong and steady demand from fast-growing nations such as China, India and Brazil to prevent another severe global economic downturn.

The positive outlook driving these new deals comes despite worries that inflation and debt problems around the world will weigh on the economy and metal prices down the road. Stock markets dropped sharply Monday on renewed concerns about solving Europe’s debt crisis.

The largest deal announced Monday was Peabody Energy and ArcelorMittal SA’s joint $5-billion (U.S.) bid for Australia’s Macarthur Coal Ltd., the world’s biggest producer of pulverized coal, a type of metallurgical coal, amid strong demand forecasts for the steel-making ingredient.

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New commodity bull market ready to charge ahead – by Simon Avery (Globe and Mail – July 4, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media.

Resources

A resurgence in global growth will fuel a new bull market later this year for commodities ranging from copper to corn, according to a leading market watcher. While prices for several key raw materials have recently taken a tumble, “it’s always tricky to assume commodity prices have peaked, unless you get a major, major slowdown in global economic growth,” says Patricia Mohr, economics and commodity market specialist at Bank of Nova Scotia. “I think that what is probably occurring is a mild growth slowdown.”

The Scotiabank Commodity Price Index dipped 2.6 per cent in May from a month earlier, led by a 3.9 per cent decline in oil and gas prices. But it still remains 56 per cent above its low in April, 2009.

The most important factor determining future prices is the outlook for China. The country accounts for 40 per cent of world demand for the four key basic metals – copper, aluminum, zinc and nickel – while the U.S. consumes less than 10 per cent. “China really does dominate the commodity outlook,” Ms. Mohr says.

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[Resource Shortages] Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever – by Jeremy Grantham (GMO Quarterly Letter – April 2011)

GMO is a global investment management firm committed to providing sophisticated clients with superior asset management solutions and services. As of March 31, 2011, GMO managed nearly $108 billion* in client assets using a blend of traditional judgments with innovative quantitative methods to find undervalued securities and markets. (GMO website)

Jeremy Grantham, who co-founded GMO in 1977, is the chief investment strategist and is an active member of GMO’s asset allocation division.

Summary of the Summary

The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.

Summary

 Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply, ebbing and flowing in population.

 From about 1800 on the use of hydrocarbons allowed for an explosion in energy use, in food supply, and, through the creation of surpluses, a dramatic increase in wealth and scientific progress.

 Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at minimum.

 The rise in population, the ten-fold increase in wealth in developed countries, and the current explosive growth in developing countries have eaten rapidly into our finite resources of hydrocarbons and metals, fertilizer, available land, and water.

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NickelOdious – by Jon Nadler (Kitco Metals – June 13, 2011)

Jon Nadler is a Senior Metals Analyst – Kitco Metals

A further decline in crude oil prices conspired to drag most of the commodities’ complex to lower value ground as the new trading week commenced. Thus, precious metals lost chart altitude levels as well, despite the minor, 0.15 loss recorded in the US dollar index this morning.

Part of the early selling pressure was related to investors’ raising cash to cover margin calls incurred in the wake of the sixth consecutive losing session in the equity markets on Friday. However, at the end of the day (or, shall we say, the beginning thereof) reports that China’s economy is slowing (and perhaps more than just a tad) coupled with posturing by Saudi Arabia that it might ratchet supplies of black gold higher in coming weeks were the prime catalysts for the price dips we witnessed this morning.

As regards China, the prospects of a possible “hard landing” by that country’s economy were brought into discussion once again. NYU’s Dr. Nouriel Roubini said that he does not see the combination of China’s reliance on fixed investment (now running at about half of its GDP), its lurking “massive non-performing loan problem” plus its huge amount of overcapacity as resulting in any kind of a rosy outcome. For Dr. Roubini, the period after the year 2013 presents a “meaningful probability” for a Chinese economic “runway disaster” unless the aforementioned issues are tackled and resolved.

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Papua New Guinea [Ramu nickel laterite project] and China’s New Empire – by Geoffrey York (Globe and Mail – January 3, 2009)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous impact and influence on Canada’s political and business elite as well as the rest of the country’s print, radio and television media. Please note that this article was orginally published January 3, 2009.

MADANG, Papua New Guinea

When Chinese engineers landed in Papua New Guinea in 2006 to inspect their latest mineral acquisition, they faced an arduous journey through the tropical wilderness. They drove over crumbling roads to the Ramu River, then found natives with dugout canoes to paddle them upstream. Next, they hired another team of locals with machetes to slash a rough trail for eight hours through the steamy jungle, dodging poisonous snakes and malaria-carrying mosquitoes.

“It was terrible,” recalls Wang Chun, the chief engineer. “You couldn’t breathe.”

Today, less than three years later, a series of small Chinatowns has emerged in the jungle — complete with Chinese food, Chinese satellite television channels and crews of Chinese migrant labourers living in cheap dormitory huts. Where once was wilderness, you find the workers of China Metallurgical Group Corp., toiling seven days a week and chattering about their families back home in Beijing and Sichuan.

It hasn’t been easy. The state-owned mining company has dealt with violent clashes with local landowners, striking workers, attacks from the media and unfriendly police who arrested more than 200 Chinese technicians on charges of illegally entering the country.

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NEWS RELEASE: Rare earth supply crunch a wakeup call for mining companies everywhere: Ernst & Young

Click here for: Technology minerals: The rare earths race is on!

Demand for specific minerals set to jump more than 60% in the next five years

(Montreal, 11 May, 2011) Soaring demand for rare earth metals – used in the production of everything from smart phones to computer hardware to energy-efficient lights – is generating new but risky opportunities for mining companies in Canada and around the world, Ernst & Young says.

“Rare earth metals are feeding the production of high-tech and green products. Demand is expected to jump more than 60% in the next five years alone,” says Zahid Fazal, partner and leader of Ernst & Young’s mining practice in Quebec. “The problem is China accounts for virtually all rare earths production, and their export restrictions are driving prices higher. What’s more, Chinese domestic consumption of rare earth materials is predicted to outpace supply between 2012 and 2015.”

Fazal says the situation represents a unique opportunity for Canadian and other companies to rebuild the supply chain outside of China. While this could help prevent a supply shortage and keep a lid on soaring prices, these projects are higher risk and that brings additional challenges into the mix.

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Magnetic North: The Canadian (Mining) Miracle – by Mark P. Mills (Forbes – June 12, 2011)

www.forbes.com

Mark P. Mills is a founding partner in energy-tech-focused Digital Power Capital, a private equity firm focused on new technologies that arise from the convergence of power and the tools, materials and software of the digital age.

In child psychology birth order is often considered significantly determinative.  Younger siblings often learn lessons watching the elder ones, well, screw up.  Canada is almost a full century younger than its North American sibling.  What exactly is going on above the 49th parallel?  First quarter 2011 my Canadian brethren and sisters (full disclosure, je suis Canadien) delivered a 3.9 percent GDP growth rate against an enervating 1.8 percent U.S. rate.  Just a few short years ago, nobody would have predicted this.

Nearly one-third of Canada’s GDP is export-based with nearly half of that coming from minerals, metals and fuels.  It is a nation extracting value from its natural environment, not ‘plundering’, as Canadians’ respect for their land is deep and abiding.  And America benefits, receiving three-fourths of Canada’s exports.

Of particular interest these days is the re-invigorated gold rush in that vast northern expanse.  No surprise.  Gold is expensive again, bouncing around $1,500 an ounce.

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PwC Annual Review of Global Trends in Mining Sector – Mine 2011: The game has changed

07 Jun 2011 

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

For a copy of the report click here: Mine 2011: The game has changed

Excutive Summary

Welcome to PwC’s eighth annual review of global trends in the mining industry—Mine. These reviews provide a comprehensive analysis of the financial performance and position of the global mining industry as represented by the Top 40 mining companies by market capitalisation.

Last year we highlighted the growing optimism in the mining industry and demand fundamentals that were driving the industry back to boom times. The 2010 results have delivered on this expectation, but it is clear that the game has changed.

The mining industry has entered a new era. Demand continues to be stoked by strong growth in emerging markets. Supply is increasingly constrained, as development projects become more complex and are typically in more remote, unfamiliar territory. The cost base of the industry has permanently changed as lower grades and shortages of labour take effect.

To keep up with demand, the Top 40 have announced more than $300 billion of capital programs with over $120 billion planned for 2011, more than double the total 2010 spend.

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