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Copper Hunt Continues for First Quantum in Bet on Demand – by Firat Kayakiran (Bloomberg News – July 10, 2014)

http://www.businessweek.com/

First Quantum Minerals Ltd. (FM), which agreed to buy an Argentinian copper project last month, is on the lookout for more deals as it sees a supply shortage of the metal by the end of the decade.

“Copper remains our favorite long-term commodity,” Clive Newall, president of the Vancouver-based company, said in an interview in London. “The supply constraints are really going to start to hit home later in this decade and the supply-demand balance is going to roll over at some point in the not-too-distant future.”

First Quantum completed its biggest deal last year, acquiring Inmet Mining Corp. to add Cobre Panama. The company plans to invest $6.43 billion in the project to produce 320,000 metric tons of copper a year in 2018 and become the world’s fifth-largest provider of the metal. Last month it agreed to buy Lumina Copper Corp. for $430 million to add the Taca Taca deposit in Argentina.

The value of copper-mining deals this year has risen almost fivefold from the same period a year earlier, amounting to $7.1 billion, according to data compiled by Bloomberg. They were led by the $5.85 billion sale of the Las Bambas copper deposit by Glencore Plc to a group let by China Minmetals Corp. in April.

Newall sees the appetite for copper acquisitions rising amid a shortage driven by a lack of projects, the high cost of developing them, and declining grades.

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Copper miners’ paths diverge over Indonesia export tax – by Michael Taylor and Allison Martell (Reuters India – July 8, 2014)

http://in.reuters.com/

JAKARTA/TORONTO – (Reuters) – Six months into a dispute with Indonesia’s government that has halted copper exports, two U.S. mining giants are using very different tactics in a bid to resume shipments – behind the scenes talks or raising the stakes with an arbitration claim.

Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp account for 97 percent of Indonesia’s copper production, exporting tens of thousands of tonnes of concentrate a month before a row over a new export tax halted shipments.

As the latest bid to broker a deal runs up against Indonesia’s presidential election, Freeport is pushing on with government-led talks, with chief executive Richard Adkerson in Jakarta again last week.

Newmont, however, has filed for international arbitration, pushing to uphold the letter of the law on its contract but drawing a rebuke from the government which has questioned its “good will” in talks.

“Freeport is using the carrot and I guess Newmont is using the stick,” said Chris Mancini, analyst at Gabelli Gold Fund. Gabelli Funds holds stakes in both companies.

In an effort to push miners to build domestic smelters and processing plants, Indonesia introduced new mining export rules in January.

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Canadian company hopes to find copper in Methow Valley – by Craig Welch (Seattle Times – July 5, 2014)

http://seattletimes.com/html/home/index.html

Less than 2 miles from the heart of one of the most popular outdoor recreation spots in Washington, a Canadian company plans to drill holes to hunt for copper. The Forest Service says it doesn’t have the authority to stop the project.

MAZAMA, Okanogan County — Behind the general store and the outdoor gear shop — above the inn and horse corral — granite walls and pine-covered hills rise thousands of feet to form a towering nob called Goat Peak.

This fixture overlooking the North Cascades’ upper Methow Valley — one of the most popular outdoor playgrounds in the state — is where residents and visitors, including many from Seattle, walk dogs, run trails, cross-country ski, snowmobile, hike, bike and even paraglide.

Now a Canadian mining company wants to explore the earth beneath this recreation hot spot to see if metals marbled into the rock are plentiful enough for a copper mine. And despite mountains of opposition, the U.S. agency overseeing exploration maintains it’s powerless to stop the project.

Not 2 miles from the heart of Mazama, Vancouver-based Blue River Resources is proposing to drill as many as 15 bore holes 1,000 feet deep to see how much copper and molybdenum ore is there. The drilling could go on 24 hours a day for months, and would require the company to haul thousands of gallons of water up the mountain. The drilling could start later this summer.

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COLUMN-Copper is unexpected victim of Indonesian export ban – by Andy Home (Reuters India – July 3, 2014)

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters.

(Reuters) – When Indonesia banned the export of unprocessed minerals in January of this year, the consensus view was that the most significant impact would be on the nickel and aluminium raw material markets in that order.

Copper barely warranted a mention.

Analysts at Macquarie Bank, for example, issued a research note on January 14, two days after the ban came into effect, examining the implications in a question-and-answer format. The only reference to copper came in the 19th bullet point under the telling heading: “Have copper producers been let entirely off the hook?”

Six months on, though, and one of the country’s two giant copper mines is on care and maintenance and the other has cut production by half. There have been no concentrate exports since January.

Not only is this the single biggest hit to copper mine supply this year but it is acting to accelerate a fracturing of the copper concentrates pricing model.

Both Freeport McMoRan, which owns and operates the Grasberg mine, and Newmont Mining, major stakeholder in and operator of the Batu Hijau mine, appear to have been blind-sided by the January rule changes.

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Augusta Resource Corp agrees to HudBay Minerals Inc sweetened takeover offer – by Peter Koven (National Post – June 23, 2014)

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

It took four and a half months of hostilities and the sighting of a rare wild cat. But in the end, HudBay Minerals Inc. got just what it wanted.

The Toronto-based miner unveiled a friendly deal on Monday to buy Augusta Resource Corp. for about $555-million in shares and warrants. And to the surprise of many observers, it only had to boost its original hostile bid by 10% to get the deal done.

When HudBay made its initial offer in February, Augusta chief executive Gil Clausen said it had “no chance of success.” Augusta’s shares were trading far above the bid, and the company thought it would receive all the key permits for its Rosemont copper project in the first half of 2014. That was expected to be a key catalyst for the stock price.

HudBay maintained that Augusta’s permitting timeline for the Arizona-based project was too optimistic. That turned out to be correct — but not for any reason HudBay expected.

Last month, an ocelot was photographed near the Rosemont project site. It is highly unusual for these wild cats to be spotted as far north as Arizona, and as a result, the U.S. Forest Service requested a new round of consultations on the project before permitting would be granted.

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Resurgent China may be a boon to copper – by Scott Barlow (Globe and Mail – June 24, 2014)

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.

Stronger than expected economic data from China, specifically new orders for manufactured goods, suggest a tradeable rally in copper miners may be on the horizon.

The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index is designed to predict the government manufacturing report due for release on June 30. Released Monday, the Flash PMI came in well above expectations and provided a clear positive indicator for official numbers.

The reading of 50.8 for overall Chinese manufacturing activity, significantly above the 50 mark that signals business expansion, represented the first positive data point since December and hints that government efforts to loosen credit conditions are helping boost economic growth.

Manufacturing New Orders, a sub-component of the report, and is the most forward-looking part of the report because it indicates the future level of economic activity. As a result, it can also be used to forecast profits for resource-related companies that benefit from rising levels of Chinese manufacturing. The manufacturing new orders result released Monday was extremely encouraging. At 51.8, the survey result was the strongest in 15 months.

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Rio Disputes Mongolia Claim Over Unpaid Taxes – by Jesse Riseborough and Michael Kohn (Bloomberg News – June 23, 2014)

http://www.bloomberg.com/

Mongolia’s Tax Authority claims a Rio Tinto Group unit operating in the country has unpaid taxes, penalties and disallowed entitlements associated with the $6.6 billion Oyu Tolgoi copper mine development.

Rio’s Turquoise Hill Resources Ltd. (TRQ) says it has paid all taxes and charges required under its accord with the government and has complied with the country’s laws, the Vancouver-based unit said yesterday in a statement. The disputed amount is about $130 million, Ganbold Davaadorj, a director of the mine’s operating unit Oyu Tolgoi LLC, said yesterday in an interview.

“We strongly disagree with the claims in the audit report and are currently reviewing all options to resolve this matter,” Kay Priestly, Turquoise Hill’s chief executive officer, said in the statement. The company may need to seek resolution through international arbitration, it said.

The fresh dispute is evidence of further strains on London-based Rio’s relationship with Mongolia. Recent discord has centered on funding for a second-stage expansion of the mine, delaying the $5.1 billion proposed development.

A feasibility study into the underground expansion is likely to be delayed if the tax dispute isn’t resolved by June 30, Turquoise said yesterday. Missing the study’s deadline would heap pressure on negotiations between Mongolia and Rio to finalize a $4 billion financing package. Commitments from the participating banks are set to expire on Sept. 30.

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Ross Beaty’s decade-long copper dream comes to an end – by Dorothy Kosich (Mineweb.com – June 18, 2014)

http://www.mineweb.com/

With the proposed C$470 million sale of Lumina Copper to First Quantum Minerals, Ross Beaty finally closes shop on developing copper companies.

RENO (MINEWEB) – Over a decade ago, this reporter – who does not invest in stocks, and refrains from offering investment advice – was being tutored in the intricacies of financial journalism pertaining to the North American hardrock mining sector by one of the best, brightest and most successful North American gold and silver entrepreneurs.

My mentor at the time, renowned mining entrepreneur Ross Beaty, decided it was time he got into copper. His decision would provide a rare opportunity for a reporter to watch a mining company being born (in this case, actually three copper companies) and, eventually, to watch these companies pass into history.

During a conference call Tuesday, Beaty told analysts he was wistful at the prospect that he would be selling the last of those copper companies – Lumina Copper to First Quantum Minerals for C$470 million.

Back in January 2005, Beaty mesmerized his audience at the Northwest Mining Association convention with his theory that the mining sector may be approaching a “Hubbert’s Peak” for copper production. Globally, economic copper resources were being depleted with the equivalent production of three world-class copper mines being consumed annually; meanwhile, copper demand was increasing by more than 575,000 tons annually and accelerating, he observed.

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Pretenders vie for Chile’s copper crown but can’t replicate boom – by Rosalba O’Brien and Silvia Antonioli (Reuters U.K. – June 16, 2014)

http://uk.reuters.com/

SANTIAGO/LONDON – (Reuters) – As top copper producer Chile starts to lose market share, players are betting on fledging suppliers to help feed hunger for the red metal, but no single country is likely to replicate the South American nation’s boom of the last century.

Chile produces about a third of the global supply of copper, a key raw material for construction and power that is vital for industrialisation. With consumption rising 4 percent yearly, the country’s output growth is not enough to meet additional demand.

Its market share is being eroded by spiralling costs at ageing deposits, with neighbouring Peru and Africa’s Democratic Republic of Congo (DRC) and Zambia gaining ground.

While those countries are poised to become large suppliers in a more fragmented market, the emergence of a single, giant challenger to Chile is unlikely in the foreseeable future due to geological, political and infrastructure constraints.

“Is there ever going to be another source of supply as good as Chile? No,” Bernstein Research analyst Paul Gait said.

“Collectively Peru, the DRC and Zambia have half the geological endowment of Chile. They are great copper locations but they won’t be able to do what Chile did to the copper market in the 20th century.”

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Codelco Looks to 1st Female Director After CEO Fired – by Matt Craze and Javiera Quiroga (Bloomberg News – June 9, 2014)

http://www.bloomberg.com/

The success of a $20 billion plan to revive Codelco, the world’s largest copper producer, may rely increasingly on its first appointed woman director following the firing last week of Chief Executive Officer Thomas Keller.

Laura Albornoz was named in May by Chilean President Michelle Bachelet to defuse a growing feud between executives and workers at the company created in 1971 through the nationalization of foreign-owned mines. She participated in a six-hour board meeting until 2 a.m. on June 6 that decided to fire Keller, a former Anglo American Plc executive.

Consensus-building between workers, executives and the state at Codelco, which has generated $110 billion in profit since its creation, is a top priority as the company looks to maintain its No. 1 ranking in the global copper market, while cutting costs, Albornoz said in an interview in Santiago June 3.

“Codelco has had management issues that isn’t just down to the international price of copper,” Albornoz said. “We can take the company a lot further than where we have got it to now.”

Albornoz will visit next week the century-old Chuquicamata mine in the Atacama Desert where relations between Keller and the workers were at their worst.

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UPDATE 2-Board of Chile’s state-run Codelco removes CEO Keller (Reuters India – June 6, 2014)

http://in.reuters.com/

SANTIAGO, June 6 (Reuters) – Chilean state-run copper miner Codelco said it was removing Chief Executive Officer Thomas Keller to seek new leadership at a pivotal time for the company, but opponents said the decision was politically motivated.

Keller, a former retail executive, has earned plaudits for his efforts to overhaul old mines and cut costs at the world’s No. 1 copper producer, but his tough style triggered tensions with Codelco’s powerful unions and the new center-left government.

The board stressed the removal of Keller, seen as close to the right, was not politically motivated, while the conservative opposition decried what it said was meddling that could harm the miner in the midst of an ambitious investment plan.

“We asked Thomas Keller to tender his resignation as CEO as a result of the company’s move towards a new phase with new challenges that require new leadership,” new board head Oscar Landerretche told journalists after a more than five-hour meeting that ended early Friday morning.

The board voted 5-3, with one abstention, to remove Keller. “There were no arbitrary political motivations, though there were motivations surrounding the company’s politics, the politics of what Codelco should be in the future,” Landerretche said. ” … There was no single factor that formed board members’ opinion.”

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UPDATE 2-Newmont says declares force majeure at Indonesian copper mine – by Michael Taylor and Fergus Jensen (Reuters India – June 5, 2014)

http://in.reuters.com/

(Reuters) – Newmont Mining Corp said on Thursday it has notified the Indonesian government that it is invoking force majeure at its Batu Hijau copper mine and plans to put most of the mine’s employees on leave with reduced pay.

Newmont and fellow miner Freeport-McMoRan Copper & Gold Inc – accounting for 97 percent of Indonesia’s copper output – are in dispute with the government over an export tax imposed in January.

“Despite our best efforts, we have not been able to export copper concentrate since January, and we still do not have an export permit,” Martiono Hadianto, CEO of Newmont’s Indonesian operations, said in a statement. “We are left with no option but to declare force majeure.”

A declaration of force majeure, which literally means “higher power”, allows certain terms of an otherwise legally binding contractual agreement to be ignored. Newmont’s move came after the Indonesian government launched a drive this week to force a breakthrough in the dispute, which has contributed to slower economic growth.

Both Freeport and Newmont have previously argued that they should be exempt from the tax, which kicks in at 25 percent and rises to 60 percent in the second half of 2016, before a total concentrate export ban in 2017.

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Indonesian minister spearheads drive to restart copper exports – by Wilda Asmarin and Michael Taylor(Reuters India – June 4, 2014)  

http://in.reuters.com/

JAKARTA – (Reuters) – Indonesia’s chief economics minister is spearheading a series of high-level government and industry meetings on Wednesday, aiming to broker a deal with foreign miners to restart copper concentrate exports that were halted nearly five months ago over a controversial tax.

Billionaire businessman Chairul Tanjung, who was appointed to the role last month, has made restarting copper exports a top priority amid a widening trade deficit, a slowdown in first-quarter economic growth and the prospect of job layoffs at mines.

Tanjung was due to attend a cabinet meeting on Wednesday morning to thrash out a new tax deal that could potentially be put before miners, including Freeport-McMoran Copper & Gold Inc and Newmont Mining Corp.

“After the cabinet meeting I will receive a report from the negotiating team at the coordinating economic ministry,” Tanjung said on Wednesday, speaking ahead of the cabinet meeting in the capital Jakarta. “Let’s see the result. If the results are finalized, I will officially receive the Freeport and Vale CEOs,” he said.

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[KGHM] Company unveils new plan for controversial Kamloops B.C. mine to address concerns about health risks – by Cam Fortems (Vancouver Sun – May 29,2014)

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

KAMLOOPS – The company behind a controversial copper-gold mine near Kamloops has unveiled a new proposal in an effort to address concerns about potential health risks.

Members of the Kamloops Area Preservation Association have said an estimated 90,000 people could be exposed to toxic dust containing arsenic, lead and aluminum that would blow over the city from the open-pit mine that they fear is too close to homes.

Now, KGHM Ajax has come up with a plan to move the mine farther south and eliminate a tailings stack in favour of a conventional tailings pond to the southeast.

The tailings pond will cover Goose Lake, which the company described as a slough with a maximum depth of one metre. Ajax officials announced last August that they were working on a new mine plan. They also said the pit would be expanded, along with ore production.

The joint venture involves Poland-based KGHM and Vancouver junior partner Abacus Mining & Exploration Corp. The project must still be approved by the federal and provincial governments after environmental assessments have been done.

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Wild cat rips apart plans for giant Arizona copper mine – by Frik Els (Mining.com – May 24, 2014)

http://www.mining.com/

Vancouver firm’s timeline to build 3rd largest US copper mine in doubt after sighting of endangered ocelot restarts permit consultations amid bitter takeover fight.

Backers of Augusta Resource Corp (TSE:AZC) (NYSE MKT:AZC) in its fight against hostile takeover bidder Hudbay Minerals (TSE:HBM) suffered another setback on Friday.

After the close of trading Vancouver-based Augusta announced further complications in the permitting process for its Rosemont Copper Project in Arizona after the US Forest Service formally requested that the US Fish and Wildlife Service re-initiate consultation required under the Endangered Species Act.

“Additional information includes the documented evidence of the presence of ocelot within or near the project area and conferencing on the potential listing of species which were not considered in the original biological opinion. Additional information related to the effects of groundwater drawdown on aquatic and riparian species near the project area will also be included as part of this process,” the statement reads.

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