REFILE-As rivers dry up, Chile copper mines turn to the Pacific for water – by Anthony Esposito and Fabian Cambero (Reuters U.S. – April 12, 2015)

http://www.reuters.com/

(Reuters) – Alvaro Badillo remembers a time when his dad would take him fishing in the stream just a stone’s throw away from the dusty streets of their small hometown of Caimanes in central Chile.

Now, like countless communities that dot the arid valleys north of the capital, Santiago, Caimanes is left with a dry riverbed. The culprit? That depends on who you ask.

For many in the town of 1,200 people, the answer lies just a few miles upstream: a 470 foot tall wall that stretches nearly a half-mile straight across the valley. It is the tailings dam for Los Pelambres, Chilean miner Antofagasta Plc’s flagship copper mine, which holds enough leftover processed rock to fill some 140,000 Olympic swimming pools.

For its part, Antofagasta blames an eight-year drought in Chile for the evaporation of already slim water resources, and says the canals it built to redirect rain water have minimized the impact on the stream.

Both sides have findings that support their arguments and are thrashing them out in a court battle that could stop work at one of the world’s biggest copper mines.

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PolyMet CEO: Copper can help Iron Range diversify – by John Myers (Duluth News Tribune – April 15, 2015)

http://www.duluthnewstribune.com/

You could understand why the mood might be dour at the annual Society for Mining, Metallurgy and Exploration conference in Duluth this week. With the price of iron ore less than half what it was when last year’s conference was held, layoffs rampant and foreign steel flooding the U.S.economy, the 600 or more regional mining industry folks gathered here weren’t exactly whooping it up.

But Jon Cherry, president and chief executive officer of PolyMet Minerals, said copper may be the balm that soothes what ails northern Minnesota’s mining industry.

Iron ore that sold for $180 per ton in 2011 and $100 one year ago now is going for about $47. And while Cherry said he understands his brothers and sisters in the iron ore mining industry are facing “difficult challenges” with predictions of sub-$40-per-ton iron ore prices, he was happy to proclaim that “these are exciting times for PolyMet” and copper in Minnesota.

Cherry, the conference’s closing plenary speaker, said his company is projecting that both global supply and demand for copper will remain relatively stable through 2017 before both start to increase. In the meantime, he predicts stable prices, and nothing like the free-fall of iron ore prices, on the horizon for copper.

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Copper Kings Look Past China Wobbles to Looming Scarcity – by Matthew Craze and Agnieszka de Sousa (Bloomberg News – April 14, 2015)

http://www.bloomberg.com/

As forecasters debate copper’s next price move, the world’s biggest producers say they can extend a decade of profits as mines struggle to keep up with demand.

Even with Chinese growth slowing, aging mines will fail to keep pace with electrical equipment demand in developing countries, according to Jean-Sebastien Jacques, head of Rio Tinto Group’s copper business. He joined executives from Codelco, Freeport McMoRan Inc., Antofagasta Plc and Teck Resources Ltd. in Santiago this week for the industry’s annual get-together.

“I see a substantial supply gap opening up by the end of this decade,” Jacques said. “Now is the time to keep investing.”

Copper lost 11 percent in the past year and traded at three-week lows Wednesday after data showed China’s economy grew at the slowest pace in six years. The metal used in wiring and plumbing will avoid following oil and iron ore into a more abrupt slump as an anticipated surplus is erased by mine setbacks, mining executives including Antofagasta Chief Executive Officer Diego Hernandez and Teck CEO Don Lindsay told the World Copper Conference in Santiago.

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Antofagasta sounds warning on Chile copper industry – by Henry Sanderson (Financial Times – April 14, 2015)

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

Santiago – Chile’s copper industry risks losing its competitiveness, as productivity declines to levels last seen in the early 1990s due to ageing mines and higher labour costs, miner Antofagasta has warned.

Chile, the world’s biggest copper producer, has invested roughly the same amount in its mining industry since 2004 as it did in the previous decade, yet there has barely been any growth in production, Diego Hernandez, chief executive of UK-listed Antofagasta, said in an interview at an industry gathering in the country’s capital.

Between 1990 and 2004 production grew 9.2 per cent annually while productivity almost doubled, he said. “Fifteen years ago Chile still had a competitive advantage in terms of labour as a component of our cash costs,” Mr Hernandez said, noting that labour at the time was cheaper than developed countries such as Australia, Canada and the US but less productive.

“Today we have similar salaries but we kept the same productivity we had before. Now we have a competitive disadvantage,” he said.

The fate of the copper industry is key for Chile, whose economy last year grew by the slowest pace in five years as demand weakened from its biggest customer, China. Chile alone produces about a third of the world’s copper, and in addition to Antofagasta, companies including BHP Billiton, Anglo American and Japan’s Sumitomo Corp all have operations in the country.

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

http://thehill.com/

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:

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

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Rumbles from the jungle as Bougainville mine stirs – by Rowan Callick (The Australian – 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.

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

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

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

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[Rouyn-Noranda Horn mine] Shuttered mine in Abitibi may live again – by Robert Gibbens (Montreal Gazette – 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.

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Southern Copper Cancels Peru Project Over “Anti-Mining Terrorism” (Latin American Herald Tribune – 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.

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

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 Teck, Antofagasta Said to Explore Copper Mining Merger – by Matthew Campbell and Dinesh Nair (Bloomberg News – 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.

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Copper price falls as Chile brings 1.6mt back on line – bt Frik Els (Mining.com – 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.

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