Copper miners forecast years of surplus – by Jack Farchy (Financial Times – April 10, 2013)

It is hard not to be impressed by Escondida’s scale. From one edge of the world’s largest copper mine, the huge trucks crawling up the other side nearly four kilometres away look like ants scurrying up and down an anthill.

Every year, the mine’s 171 trucks move twice as much earth as was excavated to build the Panama Canal. “Did we think it would be so big? No, we didn’t,” says Edgar Basto, who runs the mine for BHP Billiton, the world’s largest mining group.

But Escondida is big – and growing: BHP has plans to relocate another plant to allow the mine to expand even further. As a result, after several years of falling production, the mine is on track to boost output by 20 per cent in the year to June.

The story is echoed across the copper industry. After a decade of struggling with ageing mines and troublesome new projects, the world’s copper miners are boosting supplies at the fastest rate in a decade.

“A lot of projects were stalled at the back end of 2008. We’re now getting the full effects of the catch-up phase,” says Richard Wilson, chairman of metals at Wood Mackenzie, a consultancy. But investors are not cheering the miners on.

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Prolonging the Life of the World’s Biggest Copper Mine – by Marianela Jarroud (Inter Press Service News Agency – April 10, 2013)

RANCAGUA, Chile, Apr 10 (IPS) – El Teniente, the world’s largest underground copper mine, has already been in operation since 1905, but the state-owned National Copper Corporation of Chile (CODELCO) wants to keep it running for another 50 years.

This, however, will require the acquisition of cutting-edge technology and an investment of 3.278 dollars – roughly equivalent to the total amount invested in the mine since it was first opened. El Teniente is located in the Andes mountain range, 150 kilometres south of Santiago. In 2010, it accounted for 25 percent of CODELCO’s total copper production.

The entire copper industry was nationalised in 1971 and is a major source of revenue for Chile, the world’s leading producer of the metal. The current production in Level 8 at El Teniente is 137,000 tons per day (TPD), which translates into 434,000 tons of fine copper a year.

But the copper is running out in this section, which only contains enough reserves to last until 2025. This is why CODELCO is undertaking the New Mine Level project, to reach the 2.02 billion tons of copper reserves located deeper down, at an altitude of 1,880 metres and 100 metres beneath El Teniente. The goal is for the new level to enter into operation in 2017.

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Mining Investment Won’t Switch from Chile to Peru – by Marianela Jarroud (Inter Press Service News Agency – April 2, 2013)

SANTIAGO, Apr 2 2013 (IPS) – The Chilean government has warned of the potential flight of mining and energy investments to Peru because of court rulings that have paralysed large-scale mining projects in the north of the country. But this fear is unfounded, at least in the short term.

Peru and Chile are in the top ten world destinations for investment in non-ferrous metal exploration, according to the Metals Economics Group, which collects information about the industry. In its 2013 report it places Chile fifth and Peru sixth, while Latin America heads the ranking of regions, receiving 25 percent of exploration investment capital.

Chile is the world’s top producer of copper and the country with the largest reserves for future extraction. Mining investment is concentrated mainly in the north, near the borders with Peru, Bolivia and Argentina, where mines are estimated to consume 80 percent of the area’s electricity.

Against a backdrop of rising energy demand, industry owners have expressed concern about several court rulings and administrative decisions against mining projects.

One high-profile case was that of the Castilla plant, a project of the MPX Energia company owned by Brazilian billionaire Eike Batista, that was to be the largest coal-fired generating plant in South America.

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‘Warning’ strike at copper giant Codelco sparks fear of supply disruptions – by Pav Jordan (Globe and Mail – April 9, 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.

A one-day strike at state copper miner Codelco of Chile may mark just the beginning of supply disruptions in a country producing about a third of the world’s copper.

Union workers at Codelco, which operates seven mines and expects to produce about 1.7 million tonnes of copper in 2013, launched the 24-hour strike on Tuesday with demands for better working conditions and pensions and an end to the use of sub-contractors.

While largely symbolic, the strike coincides with the CRU/CESCO week in Santiago, one of the world’s largest mining conferences dedicated to the copper industry.

Chile is the world’s largest copper producer. It is also host to such global mining giants as BHP Billiton Ltd., Anglo American PLC and Canada’s Teck Resources Ltd. It is a chief supplier to No. 1 consumer China. Codelco alone supplies more than 10 per cent of annual global supply.

The strike comes also as candidates launch presidential campaigns for elections in November, when Chile’s left will try to wrest power back from the right after conservative president Sebastian Pinera in 2010 ended 20 years of leftist rule.

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Mongolia Scolds Rio Tinto on Mine Costs as Yurts Replaced – by Michael Kohn and William Mellor (Bloomberg Businessweek – April 09, 2013)

Outside, it’s minus 30 degrees Celsius as a February wind blasts across the Central Asian steppe and through the Mongolian capital, Ulaanbaatar. Inside Government House, President Tsakhia Elbegdorj delivers a televised speech that simultaneously warms his people and chills foreign investors.

The country’s 76 legislators have convened to debate the future of one of the planet’s richest copper and gold mines, Oyu Tolgoi, which is 66 percent owned by London-based Rio Tinto Group (RIO) and 34 percent owned by the state. Elbegdorj tells them Rio Tinto has let the project’s total cost balloon by $10 billion. The higher expenses, which Rio Tinto disputes, would diminish and delay profits the government shares in, Bloomberg Markets magazine will report in its May issue.

“The time has come for the Mongolian government to take Oyu Tolgoi matters into its own hands,” Elbegdorj says to cheers from the lawmakers. His demands include giving Mongolian employees more management positions on the project, which is scheduled to begin exporting copper concentrate by June.

Few things matter more today in the political and economic life of this landlocked country of 2.8 million people than foreign investment to develop its mineral wealth.

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CORRECTED-CESCO-Joint ventures seen boosting Chile’s copper exploration – by Julie Gordon (Reuters U.S. – April 9, 2013)

(Reuters) – Chile could boost copper exploration by encouraging state-owned giant Codelco, the world’s biggest producer of the metal, to partner with private mining companies, industry executives said on Monday.

Chile sits on the world’s largest copper reserves and is also the world’s largest producer of the metal, but aged, tired deposits dragged Codelco’s output last year to its lowest level since 2008, while costs soared 40 percent on the year.

Codelco, and its smaller peer ENAMI, own large swathes of land with copper reserves which they are not currently exploiting.

To capitalise on these properties, the state-owned companies should form joint ventures with smaller firms to explore these assets, said Cristian Quinzio, a director of the Centre for Copper and Mining Studies (CESCO).

“We should encourage state-owned companies to put more mining properties into private company hands through partnerships,” Quinzio told an exploration forum in Santiago.

“Those companies should be leaders in promoting joint ventures – directly calling tenders or taking actions to invite mainly junior companies to explore, while still maintaining the buyback option – just in case.”

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Chilean Copper Mines Begin to Lose Favor – by Laura Clarke and Alex MacDonald (Wall Street Journal – April 8, 2013)

SANTIAGO, Chile—Global mining companies have extracted copper from rich seams high in mountainous Chile for decades, but they are now also considering new investments in North America as copper-ore grades decline at Chilean mines in step with rival nations, while production costs rise.

Chile became the world’s largest copper-producing nation after forming state-owned copper-mining concern Corporacion Nacional del Cobre de Chile, or Codelco, in 1976 and later luring large mining companies with its copper-rich resources and cheaper labor.

Today, however, Chile’s mining industry faces rising costs for developing new ways to unlock further ore potential from deposits. Mining companies’ costs are rising here for electricity and desalination of sea water, which is pumped to mines at elevations of up to about 4,000 meters (13,200 feet). Chilean wages have also risen above those in the U.S. for certain workers as their productivity lags behind, while the U.S. shale-gas boom offers the hope of cheap energy despite a tough mine-permitting environment.

Chile’s competitiveness in the global copper-mining business is waning, and North America is likely to benefit, said executives from BHP Billiton Ltd., BHP.AU +1.30% Anglo American AAL.LN +0.30% PLC and Antofagasta ANTO.LN +3.07% PLC as the industry gathered in Santiago for its annual CESCO Week event, which starts Monday.

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Copper’s slump a warning sign for economy – by Pav Jordan (Globe and Mail – April 8, 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.

Asharp drop in copper prices last week may be just the start of more woes for the industrial metal that has best weathered the global economic crisis.

Copper markets are threatening to move into surplus this year as demand is subdued by a slack global economy and new production comes into the market.

“One of the reasons why copper prices have been so incredibly strong in the past five years has been the fact that there’s been very little new mine supply come on stream,” said Patricia Mohr, vice-president of economics and commodity market specialist at Bank of Nova Scotia.

“Copper has been in a deficit until fairly recently, but it seems it may shift this year into a surplus,” she said, pointing to expansions and new mine construction in countries from Chile and Peru to Indonesia, the African continent and Canada.

Copper’s inability to maintain firm prices is a worrying signal that the outlook for the global economy is too weak to provide solid demand.

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CESCO-ANALYSIS-Labor unrest during electoral year could jolt Chile copper – by Alexandra Ulmer and Fabian Cambero (Reuters India – April 8, 2013)

SANTIAGO, April 8 (Reuters) – The costly port strikes that recently hit top copper producer Chile and detained an estimated 9,000 tonnes of the red metal’s exports per day were an unwelcome reminder for miners of the risk of labor action during an electoral year.

For copper powerhouse Chile, 2013 was set to be its year. With massive investment in troubled mines paying off, a rare
new deposit slated to come on line at the end of 2013 and fairly smooth contract negotiations at two key mines, Chile’s copper output seemed all set to reach a record 5.596 million tonnes.

But that was overlooking Chile’s hotly contested presidential election in November and the labor unrest it can
galvanize as unions seek to make their issues heard.

Leading copper miner Codelco is facing a potential 24-hour strike in all its divisions this month, and industry players now fear conflicts could flare up in more of the Andean country’s mega mines.

“This is going to be an intense year,” one Chile-based trader said. At stake is a third of the world’s copper supply. The potential uptick in labor unrest will likely be a major talking point on the sidelines of the CESCO/CRU copper conference in Santiago this week.

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‘Common ground’ sought in mega-mine dispute – by Don Cayo (Vancouver Sun – April 2, 2013)

Mongolia, Rio Tinto both have reasons to settle in time to meet June deadline

A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company such as Rio Tinto with sales last year topping $50 billion.

But to a “little” country like Mongolia – which may have a land mass about twice the size of B.C., but has barely more than half the number of people and a much smaller fraction of our wealth – it’s a staggeringly large sum. It accounts for fully a fifth of last year’s GDP – in relative Canadian terms, the equivalent of about $350 billion.

Which goes a long way to explain the tension between the company, a two-thirds partner in Vancouver-based Turquoise Hill Resources, which owns the just-opened world’s largest copper mine in remote Mongolia, and the country, which has a 34-per-cent stake.

Mongolia’s parliament signed on in 2009 to borrow a third of the money to fund a $4.2-billion project, says parliamentary president Zandaakhuu Enkh-bold, who was in Vancouver last week at the end of a cross-Canada visit.

“If at that time they had told us the cost will be $6.2 billion, then we would have thought twice,” he said in an interview with The Vancouver Sun.

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First Quantum starts cost-cutting at Cobre Panama mine, suspends SNC-Lavalin contract – by Pav Jordan (Globe and Mail – April 3, 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.

First Quantum Minerals Ltd. has suspended engineering contracts with SNC-Lavalin Group Inc. and other partners at Cobre Panama, taking a first swipe at cutting costs on the massive copper project acquired with the takeover of Inmet Mining Corp.

SNC-Lavalin said in a statement on its website that it was de-booking suspended and terminated work related to the process plant at Cobre Panama worth $120-million in anticipated services revenues.

“Subsequent to this acquisition, a joint venture led by SNC-Lavalin International Co. Inc., a member of SNC-Lavalin Group Inc., and including GyM S.A. and Techint International Construction Corp, has received a notice of suspension from Minera Panama S.A. (a subsidiary of Inmet) related to the majority of the work to be performed under its EPCM contract for the balance of plant of the Cobre Panama copper mine, “ the Canadian engineering firm said.

It did not state the value of business affected at engineering partners GyM S.A. and Techint. International Construction Corp.

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Mongolia investment slump pushes govt to move on new rules – by Sonali Paul (Reuters India – March 27, 2013)

MELBOURNE, March 27 (Reuters) – Mongolia is starting to take steps aimed at arresting a slide in investment in its crucial mining sector, looking to curb uncertainty over regulations that has been blamed for stalling copper and coal projects. Even so, miners remain cautious.

Regulatory concerns peaked last month when Rio Tinto threatened to delay the start-up of the $6.2 billion Oyu Tolgoi copper and gold mine, until it resolves a dispute with the government over their investment agreement.

The mine is due to start selling copper in June and could make up a third of Mongolia’s economy by 2020, producing 425,000 tonnes of copper and 460,000 ounces of gold a year.

“At the higher echelons…there’s at least the recognition that something’s wrong and needs to be fixed,” said Elisabeth Ellis, Ulan Bator-based partner at law firm Minter Ellison, which advises mining and mining services firms.

Foreign direct investment dropped 17 percent to $3.9 billion in 2012, according to the Bank of Mongolia’s balance of payments, coinciding with a string of moves by the government that deterred investments in copper and coal.

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[Minnesota] Iron Range’s copper-nickel mining poses opportunity and possible threat – by Dan Kraker (Minnesota Public Radio – March 26, 2013)

HIBBING, Minn. — After more than a century in which iron mining has played a central role in the economy and culture of northeastern Minnesota, a new kind of mining is poised to join the taconite industry.

Generally known as copper-nickel mining, for the two main metals companies want to extract, the process is hailed for bringing much-needed jobs to the region. But opponents prefer to call it “sulfide mining,” for the kind of ore the metals are found in — and because unearthing sulfide can cause toxic water pollution.

It’s a matter of mere geologic chance that northeast Minnesota could hold world-class deposits of both iron ore and copper and nickel.

Geologists have determined the Iron Range formed in what had been a tropical sea two billion years ago. The Duluth Complex, where most of the copper-nickel deposits lie, took form nearby a billion years after that, when North America tried to split apart near present day Lake Superior.

Those deposits formed when molten rock deep in the earth called magma encountered rocks containing sulfur, said University of Minnesota – Duluth geologist Jim Miller.

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Xstrata hoping to keep the Kidd deep mine running beyond 2020 – by Len Gilles (Timmins Times – March 22, 2013)

The Xstrata Kidd Mine in Timmins has a life expectancy of perhaps another eight years, but everything is being done to make the mine run as efficiently, as sunstainably and as profitably as possible.

And from that, there is the possibility that maybe, just maybe, another few years of mine life might be found.

That was part of the message Thursday from Xstrata Copper Kidd Operations general manager Tom Semadeni who was the guest speaker at the Timmins Chamber of Commerce luncheon event at the Dante Club.

He said the Kidd mine is still quite large, still quite rich and still expensive to run. The Kidd Mine is not only the deepest mine in Canada, it is the deepest base metal mine in the world at more than 9600 feet down.

Semadeni said that the copper, zinc and silver ore at Kidd is very rich. On the other side of the coin, because the mine is now so deep, everything involved in running the mine is more expensive.

It takes longer for the miners to get from surface down to the work areas. It takes longer to ship equipment and materials from surface to the lower levels. Ventilation and the cost of moving fresh air into the mine and removing stale air and blasting gases is significantly higher. And it takes longer to bring the ore to surface.

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Finding the Truth: Facts Behind Cyanide Beach Film – by Levi Rowe (March 22, 2013)

Levi Rowe is a Santa Barbara college student majoring in Entrepreneurship with a minor in Philosophy.

The recent film produced by John Dougherty, called Cyanide Beach, attempts to link Augusta Resource – and thereby Rosemont Copper – to a closed mine – the Furtei mine, in Sardinia, Italy. The producer aims to incite public fear and raise alarm over the proposed Rosemont Copper mine outside of Tucson, Arizona, with the goal of delaying and ultimately stopping the project.

The trouble with Cyanide Beach is that, like many “investigative” pieces, Mr. Dougherty started with a conclusion and worked backwards. When one starts research with a clear goal, or hypothesis, one must be extremely careful to adjust the hypothesis as their research disproves the original hypothesis. The investigator, or researcher, must resist the urge to become personally invested in their hypothesis lest they begin to distort facts and findings to fit the intended (hoped) result.

When these flawed, distorted findings are shared with the public as a means to inform, what we end up with is a grossly misinformed public.  And that’s the case with Cyanide Beach.

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