Copper – Page 100 – Republic of Mining

Got copper? New pentagon report spotlights key role of critical metals – by Daniel McGroarty (The Hill – April 12, 2015)

April 15, 2015

A new national security report has just been released: The 2015 National Defense Stockpile Requirements Report documents projected shortfalls in various metals, minerals and materials required for the U.S. defense industrial base and, in this day of dual-use technologies, the “essential civilian economy.”

In all, the new report details shortfalls that, in classified crises scenarios, would affect 30 metals and minerals – about 1/3 of the naturally occurring elements in the Periodic Table. Many of the metals and minerals used in U.S. defense applications aren’t exactly household names. There’s bismuth, used in defense thermo-electrics to capture ‘waste heat” and channel it back into weapons systems power sources. Weapons builders need iridium – used in aircraft engines, satellites and rocket propulsion– as an alternative to America’s present reliance on Russian supply.

In the case of tellurium, used in thermal imaging and navigation systems, present tellurium production, already sharply limited, will soon drop to zero, increasing U.S. dependency on China, Russia and Japan. Rhenium and molybdenum are essential to high-performance alloys used in jet turbines and other defense systems – as is more cobalt, used in jet engine super-alloys and samarium-cobalt permanent magnets. As the Pentagon study notes:

Freeport Bets Copper’s No Oil With Growth to Grab Top Spot – by Matthew CrazeAgnieszka de Sousa (Bloomberg News – April 12, 2015)

April 14, 2015

http://www.bloomberg.com/

Freeport McMoRan Inc. is testing the nerve of the copper industry, and its own investors, with an expansion that has it poised to become the world’s biggest producer at a time of slowing China growth.

The Phoenix-based company will close the gap with current world No. 1 Codelco next year after expanding mines in Peru and the U.S. and as the Chilean state-owned company runs out of profitable ore at a mine in the Atacama Desert.

For those predicting a more precipitous demand slump as China shifts to a consumer-driven economy, Freeport’s growth makes little sense. But for the company — whose 76-year-old Chairman Jim Bob Moffett oversaw the discovery of the world’s biggest copper-gold operation in the jungles of Indonesia 27 years ago — the industry’s aging mines will struggle to keep up with even moderate global demand growth. It’s a view shared by Goldman Sachs Group Inc., Morgan Stanley and Macquarie Group Ltd., which predict shortages emerging beginning 2017.

“They are making the right bet,” said Christopher LaFemina, an analyst at Jefferies LLC, who recommends buying Freeport stock. “If you are going to be leveraged to a commodity price, this is the right one. If you compare to iron ore or coal, copper is better.”

As Freeport readies a $4.6 billion expansion at the Cerro Verde mine in Peru, Chief Executive Officer Richard Adkerson will join a debate on the supply side’s reaction to slowing demand at the industry’s annual get-together in Santiago this week.

Rumbles from the jungle as Bougainville mine stirs – by Rowan Callick (The Australian – April 13, 2015)

April 13, 2015

http://www.theaustralian.com.au/

Even the long-suffering Bougainville Copper board, which has witnessed cargo cults, wars, and the closure of its own vast mine, was puzzled when its share price soared 50 per cent a week ago.

For this sudden surge of confidence appeared, oddly, to have been triggered by troubling news for the company — the commencement of a new Mining Act passed by the Bougainville autonomous region’s parliament, which hands back control of all resources to landowners.

The future of the Bougainville mine, which still contains copper and gold worth about $50 billion, is tied up with its complex past, with the long geopolitical shadow cast by the 1989-2001 civil war on the island — and with cargo-cultist hopes held out by local leaders allied to eccentric foreigners constantly seeking to seize control of the resources from BCL.

The ASX issued a “speeding ticket”, asking the company to explain the April 2 share price leap. BCL replied that it couldn’t. The price had slid back down to 28c by Friday.

The directors of the company, which is 53.58 per cent owned by Rio Tinto, 19.06 per cent by the Papua New Guinea government, and 27.36 per cent by other shareholders, are trying to juggle an enormous range of unknowns and variables, without even the compensating benefits of having a mine to run.

New reckoning for copper miners now running in the red – by Josephine Mason (Reuters U.S. – April 12, 2015)

April 13, 2015

http://www.reuters.com/

(Reuters) – Nearly a quarter of the world’s major copper mines are running in the red, even after producers including Codelco and BHP Billiton engage in their deepest cost-cutting in years, according to a Reuters analysis.

A 17-percent slump since last July has pushed copper futures on the London Metals Exchange to under $6,000 a tonne, the lowest since 2009, is the first major test of producers’ margins since the global economic crisis, forcing a new reckoning after five years of relatively consistent profitability.

Codelco, the Chilean state miner that produces about 8 percent of the world’s copper, will review the cost reduction plan at its Salvador mine as it prepares to restart operations there after torrential rains shuttered the complex in March, said a source close to the state-run miner.

The company has an ambitious target to slash total costs by as much as $1 billion this year. Salvador produced copper at a cost of some $11,439 per tonne in the fourth quarter last year, the highest out of 91 mines analyzed by Thomson Reuters unit GFMS as part of its Copper Mine Economics database.

The mines account for more than two-thirds of global output, and almost a quarter of them had production costs late last year above current prices.

Tax breakthrough at Rio Tinto’s Mongolia copper mine -source – by Terrence Edwards (Reuters U.S. – March 31, 2015)

March 31, 2015

http://www.reuters.com/

ULAN BATOR – (Reuters) – Rio Tinto and Mongolia have made a breakthrough in a tax dispute that has been among issues stalling development of the $6.5 billion Oyu Tolgoi copper mine, according to an official familiar with the government’s position.

Disputes over costs and taxes have delayed an expansion of the mine that would extend its life beyond an estimated 15 years.

“Misunderstandings and issues surrounding the tax climates have been resolved,” the official told Reuters, without specifying the terms of an agreement or what other issues needed to be resolved for the next underground phase of the project to go ahead.

“The parties are working towards agreeing on the commercial terms of the underground project,” added the official, who asked not to be named because no announcement had been made yet. A Rio Tinto spokesman and a spokesman for Mongolia’s mining ministry declined to comment.

A spokesman for Rio’s Turquoise Hill Resources, which owns 66 percent of the mine, also declined to comment and pointed to a statement last week that said Oyu Tolgoi was appealing a ruling by Mongolia’s Tax Dispute Resolution Council to the country’s Administrative Appellate Court.

Teck Resources Ltd, Antofagasta Plc deny merger talks – by Peter Koven (National Post – March 30, 2015)

March 31, 2015

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

Investors got excited at the prospect of a merger between Teck Resources Ltd. and Antofagasta PLC on Monday, but any deal would likely require major compromises by the families in control of each company.

Vancouver-based Teck is controlled by the Keevil family and Japanese firm Sumitomo Metal Mining Co. through multiple-voting shares. Antofagasta is under the thumb of Chile’s Luksic family, which owns 65% of the shares.

Both companies denied they are in merger talks, but Bloomberg reported that they held early-stage negotiations.

A merger would create a dominant copper producer with more than one million tonnes of output per year, vaulting it into the top five producers worldwide. It would also reduce Teck’s reliance on coking coal, where it is is facing very weak market conditions.

Their valuations are quite similar, as Teck is worth $11-billion while Antofagasta is worth slightly above $13-billion. Any deal is likely to be all-stock or very close to it, which puts the family share ownership in the spotlight. No deal will happen unless the families endorse it and loosen their respective grips on the companies.

[Rouyn-Noranda Horn mine] Shuttered mine in Abitibi may live again – by Robert Gibbens (Montreal Gazette – March 30, 2015)

March 30, 2015

http://montrealgazette.com/

A team of mining engineers and geologists is determined to relaunch the historic Horne mine in northern Quebec, which produced 11.6 million ounces of gold and 2.5 billion pounds of copper from 1927 to 1976, when reserves ran dry.

They believe the Horne 5 deposit, located immediately below the old Horne mine workings, holds reserves that could make it one of Canada’s top gold-silver-copper producers.

Their company, Falco Resources Ltd., in 2012 acquired a 100-per-cent interest in 74,000 hectares and effective control over most of the historic Noranda mining camp at Rouyn-Noranda, the Abitibi regional centre 630 kilometres northwest of Montreal.

Last year, Horne 5 exploration showed an initial inferred mineral resource of 2.8 million ounces, with an average grade of 3.4 grams per tonne of ore. An initial mine information report was based mainly on pre-1976 drilling data generated by Noranda geologists.

This year Falco plans 16,000 metres of drilling down to about 1,500 metres to confirm existing data and assess Horne 5’s silver content. Metallurgical tests will show new mineral recovery rates and studies will begin into hydrology (the old mine may have to be dewatered), ore hoisting and rock mechanics.

Southern Copper Cancels Peru Project Over “Anti-Mining Terrorism” (Latin American Herald Tribune – March 30, 2015)

March 30, 2015

http://www.laht.com/index.asp

LIMA – Southern Copper Corp. has decided to cancel its Tia Maria copper project in southern Peru because of “anti-mining terrorism” in the area.

“After evaluating the complete politicization of the (Tambo) Valley and the lack of decisiveness by the relevant authorities … I’m here to announce the cancelation of the Tia Maria project and the total withdrawal of our investment from the Arequipa region,” Southern Copper’s spokesman in Peru, Julio Morriberon, told RPP Noticias radio.

The announcement will be made official by top management via the “relevant procedures before the relevant agencies,” he said. “We’ve done our best as a company and as people to carry out a project that was going to bring great benefits for Tambo and for Peru,” Morriberon said.

Southern Copper, a unit of Mexico City-based Grupo Mexico, had been planning to invest some $1.2 billion in the construction of Tia Maria, which has an estimated mine life of 18 years and had been projected to produce 120,000 metric tons of copper cathodes annually from the start of operations in 2016.

The project had been halted for two years after peasant protests in 2011 in the small town of Islay left three dead and 44 wounded, and as a result the Peruvian government did not award construction permits until the beginning of this year.

Murdochville looks to tourism to shake ghosts of mining past – by Marika Wheeler (CBC News Montreal – March 29, 2015)

March 30, 2015

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

Former copper town banking on outdoor recreation to secure its future

Like many small communities that once dotted Quebec’s landscape, Murdochville was born a company town, built on the back of a mining boom.

Rich in copper ore, the mine was in operation for more than 50 years, an exceptionally long run compared to the average life span. But when the mining company pulled out more than a dozen years ago, the town’s economy crashed.

Now many believe the community’s future lies in another natural resource: the nature that surrounds the Gaspé Peninsula town.The mono-industry community has at least once been on the brink of becoming a ghost town.

It was served blow after blow when the open pit mine shut down, then the underground mine, and finally the smelter in 2002. In two referendums, a majority of unionized workers, then residents, voted to shut down the town. Those results scarred the towns history.

When Audrey Lévesque-Lecours, a high school human sciences teacher who has been living in Murdochville for five years, visits her family in Baie Comeau, people are surprised to learn the town still exists.

Teck, Antofagasta Said to Explore Copper Mining Merger – by Matthew Campbell and Dinesh Nair (Bloomberg News – March 30, 2015)

March 30, 2015

http://www.bloomberg.com/

(Bloomberg) — Teck Resources Ltd. and Antofagasta Plc are exploring a merger that would create one of the world’s largest copper producers, people with knowledge of the matter said.

The companies have held early-stage talks, and any agreement hinges on the approval of the families that control both miners, the people said, asking not to be identified discussing private information. There’s no guarantee they will reach a deal, which would be primarily stock based, the people said.

Teck shares in Toronto rose as much as 15 percent Monday, the most since April 2009 and were trading at C$20.03 ($15.78) as of 3:13 p.m. local time.

A combination of Teck, based in Vancouver, and London-based Antofagasta would be the first major mining transaction since an across-the-board slump in commodity prices hammered the industry. Both companies have extensive copper operations in Chile which could be combined by a merger, potentially reducing costs. Representatives for both companies declined to comment.

With a market value of about C$11.3 billion, Teck is Canada’s third-largest mining group after Goldcorp Inc. and Barrick Gold Corp.

Copper price falls as Chile brings 1.6mt back on line – bt Frik Els (Mining.com – March 27, 2015)

March 27, 2015

http://www.mining.com/

Some 1.6 million tonnes of copper capacity is being restarted in Chile following torrential rains in the north of country which halted production at a number of the country’s largest operations.

The price of copper in New York fell on the news with May futures trading on the Comex market giving up 1.8% to $2.756 a pound. Copper is down 7.6% compared to a year ago, but up sharply from five-and-half-year lows struck in January.

Chile is responsible for a third of the world’s mined output of copper with many of the largest mines located in the Atacama desert. Before the unusual weather this week, a drought was reducing production as a result of water restrictions imposed by the authorities. In April 2014 a major earthquake also temporarily halted output at a number of large mines.

State-owned giant Codelco confirmed it had restarted mining operations at its Chuquicamata, Ministro Hales, Radomiro Tomic, Gabriela Mistral, and Salvador mines after a three-day hiatus due to the state of access roads, power problems and safety concerns following the downpours.

Codelco was forecast to produce 1.6 million tonnes of copper this year – already down 5% from 2014 – and the affected mines represented some 60% of the Santiago-based company’s production capacity.

COLUMN-Bauxite and the limits of resource nationalism – by Andy Home (Reuters U.S. – March 27, 2015)

March 27, 2015

http://www.reuters.com/

(Reuters) – It’s been over a year now since Indonesia imposed its ban on the export of unprocessed minerals. The aim of the January 2014 lock-down is to generate greater value for the country and its citizens by forcing operators to build processing plants and export value-added product not raw materials.

Other resource-rich countries, such as the Democratic Republic of Congo, are travelling the same road but Indonesia is way out in front.

The country’s high-stakes strategy, implemented in the face of considerable opposition from both its own mining sector and overseas buyers, does appear to be largely working.

At a practical level flows of nickel ore and bauxite to Chinese buyers have been halted. Indonesia’s mining ministry says there are now 11 nickel-processing projects under way, many of them backed by Chinese nickel and stainless steel producers.

The country’s two top copper miners, Freeport McMoRan and Newmont Indonesia, have been successfully cajoled into committing to a new copper smelter in return for keeping their mining rights.

Police clash with opponents of $1.4 bln copper mine in Peru – by Mitra Taj and Marco Aquino (Reuters India – March 25, 2015)

March 25, 2015

http://in.reuters.com/

(Reuters) – Police in Peru fired tear gas and rubber bullets on Tuesday at opponents of Southern Copper’s $1.4 billion proposed Tia Maria mine in protests that threatened to further delay the project.

The company said early last month that it expected to receive a building permit by the end of March following the government’s key approval of its environmental plan last year. Peru had rejected Southern Copper’s first environmental plan amid a wave of protests that turned deadly in 2011.

Protesters on Tuesday called for the government to nix the project because they say it will pollute agricultural valleys, said rice farmer and activist Juan Carrasco, 58. “We’re going to keep protesting tomorrow and everyday until Tia Maria leaves,” Carrasco said.

Three protesters were wounded and two arrested in the clashes in Peru’s southern region of Arequipa, said local police chief Enrique Blanco. TV images showed police firing tear gas at a crowd on a highway and protesters running into nearby fields.

Blanco said between 600 and 700 protesters, mostly women, took part in the march on Tuesday – the second day of protests. Carrasco said there were at least 3,000.

UPDATE 2-Protests, lawsuit at Chile mine cloud Antofagasta outlook – by Silvia Antonioli (Reuters India – March 17, 2015)

March 17, 2015

http://in.reuters.com/

LONDON, March 17 (Reuters) – Environmental protests and a court ruling affecting Antofagasta’s Los Pelambras mine in Chile have clouded the outlook for its copper production this year and driven the company to slash its dividend.

Antofagasta, majority owned by Chile’s Luksic family, is grappling with weaker copper prices and falling metal grades, as well as the protests and lawsuit affecting Los Pelambres, which produces more than half the miner’s copper.

A court in Chile ruled last week that the firm must demolish a mine tailings dam at Los Pelambres, which protesters say is affecting water availability. Antofagasta is appealing the ruling but said it casts doubt over the outlook for the mine.

“Local protests have reduced expected copper production at Los Pelambres by some 8,000 tonnes of copper,” the company said in a statement on Tuesday announcing 2014 results.

“These protests, along with the adverse ruling from the Civil Court of Los Vilos, mean that there is some inherent uncertainty as to the potential impact on Los Pelambres 2015 production levels,” the London-listed company said.

Lessons from Rio’s Mongolian adventure – by Neil Hume and James Wilson (Financial Times – March 13, 2015)

March 13, 2015

http://www.ft.com/intl/companies/mining

How to minimise the risks of joint ventures with governments

If Rio Tinto could start again with Oyu Tolgoi, a $12.6bn copper and gold mine in Mongolia, what would it do differently? The question is addressed in an academic paper that examines ways to reduce the risks resource groups take when investing in frontier markets.

OT, which has already cost more than $6bn, is expected to be one of the biggest copper producers in the world and to last for decades. However, development has stalled as the Anglo-Australian mining group and the Mongolian government argue over how to pay for the second underground phase.

Rio is refusing to proceed until disagreements over cost overruns and taxes have been ironed out, while the cash-strapped Mongolian government wants to cut its 34 per cent equity stake in the project in return for higher royalties from the mine.

Much is at stake for both sides. For Rio, the expansion of OT will bulk up its copper business and reduce its dependence on iron ore. For Mongolia, it needs cash quickly from the mine to meet spending commitments.

So what can be done to prevent this situation happening again? The paper, written by Henry Steel, a special adviser at Rio, and Stefano Gatti, of Bocconi University Milan, focuses on the investment agreement between Rio and the Mongolian government as a key source of tension.