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Europe Mining

Mick Davis is cash heavy and hunting for mining deals – maybe in Canada – by Eric Reguly (Globe and Mail – March 31, 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.

ROME — The new company set up by Mick Davis and other former Xstrata executives, X2 Resources, has raised $2.5-billion (U.S.) in funds and is set to buy mining assets in the belief that the commodities cycle is set for a revival.

X2 announced Monday that it had secured the commitment from five investors, each of which have contributed $500-million. The same five have have agreed to contribute another $1.25-billion in conditional equity funding, raising the potential total to US$3.75-billion.

The identifies of only two of the five investors, Noble Group and TPG, have been disclosed. Noble Group, based in Hong Kong and listed on the Singapore exchange, is one of the world’s largest commodities trading and infrastructure companies. It competes with Switzerland’s Glencore, the new owner of Xstrata. Mr. Davis was CEO of Xstrata until early last year.

TPG is a private American investment firm, with more than $55-billion in assets under management in a broad range of businesses, from energy to biotechnology.

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The Mines Have Shut Down. The Miners Haven’t.- by Danny Hakimmarch (New York Times – March 29, 2014)

http://www.nytimes.com/

Down a homemade mine shaft in southwestern Poland, a would-be comedian sang in the faint glowing light. The strains of “Ob-La-Di, Ob-La-Da,” in rhythm with a pick ax, rose up from eight yards underground. The song stopped.

“A huge chunk of coal has fallen on my finger!” the miner yelled up the shaft. “Now I can’t pick my nose!”

The sky was black and the stars blazed, especially the constellation Orion. In the nearby city of Walbrzych, the bells had just tolled. It was 9 p.m., the temperature was below freezing, the wind bitter. But for many miners here, in a region known as Lower Silesia, work was just beginning.

The practice of digging coal illegally is often called “rathole mining.” It is better known in places like India, or in South Africa, where illegal mining accidents recently killed five men. But it’s also common in Lower Silesia, near the Czech border.

Poland is Europe’s largest producer of hard coal, and both black and brown coal mines flourish in other parts of the country, from abundant mines in Upper Silesia to the north, to the giant open pit mine in Belchatow, in the east.

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Canadian firms in Russia push Ottawa for support – by RACHELLE YOUNGLAI, JEFF GRAY AND RICHARD BLACKWELL (Globe and Mail – March 25, 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.

Canadian companies operating in Russia are pleading with Ottawa to ensure they aren’t sideswiped by sanctions as the federal government puts global security ahead of commercial interests in the region. On Monday Prime Minister Stephen Harper said commercial interests are now secondary in the consideration of responses to the Russian moves.

“We don’t like seeing disruption to investment or to markets or to trade but the fact of the matter is when you are looking at it from the standpoint of a greater national interest … this is not something we can subordinate to economic interests,” Mr. Harper said.

One Canadian company with significant operations in Russia, Kinross Gold Corp., has told the federal government that Ottawa needs to take into account the impact on Canadian employees and shareholders when it takes action in response to the Russian annexation of Crimea. About 27 per cent of Kinross’s production comes from Russian mines.

“We have communicated to the government of Canada our desire to see a balanced approach to resolving this situation in a way that considers Canadian interests in Russia,” Kinross spokeswoman Andrea Mandel-Campbell said.

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History of Ukrainian Mining City of Donetsk [Coal-rich Donets/Donbas Basin]

This article is from: http://www.citylife.donetsk.ua/main/history

The year 1869 is traditionally referred to as the date of founding Donetsk (former Hughsofka). In contrast to many other large cities which were born of the advantages provided by geography and transportation, Donetsk sprang up and developed from a mining and metallurgical industry thanks to rich stores of minerals. In the upper regions of Kalmius river, where the city is located, there were large deposits of coal, and around the settlement of Alexandrovka, founded in 1779, the first coal mines appeared. The residents of other nearby settlements Semyonovka, Lyubimovka (Zakop), Nikolaevka, Ekaterinovka, Grigorievka (Georgievka), and Larinka also provided the labour force to work in the mines.

In 1866 Russian engineer A. Mevius proved the necessity of building iron works on the right bank of Kalmius, not far from Alexandrovka settlement. This site had everything that was necessary; in upper Kalmius there was coal; not far away in Karakuba (today the city of Komsomolsk, in Starobeshevskiy Region) there was iron ore; in the nearby village Elenovka there was lime; and right at hand was river water.

The Tsarist government was unable to deal properly with the land riches. And having estimated all possibilities for making huge profits on cheap coal by cheap labour, foreign concessionaires poured into Donbass. One of them was the English technician-metallurgist John James Hughes, a manager of a small plant near London. Having bought or leased the land at profitable terms, he made an agreement with the Committee of Russian Ministers to establish Novorossiysk Coal, Iron and Railway Society, and the Society of the Railway branch of Kharkov-Azov line.

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Rio set for potash push – by Matt Chambers (The Australian – March 24, 2014)

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

Rio Tinto could start building a Canadian potash project within three years, according to its joint venture partner, as the big miner chases a fertiliser push by BHP Billiton to position itself at the forefront of a global food boom.

There is also growing speculation Rio will make a bigger plunge into the sector through an acquisition or joint venture of neighbouring junior Western Potash, or even by joining BHP.

Last week, Rio revealed it had made a “tier-one” potash discovery at its KP405 lease near Regina, in Saskatchewan’s Elk Point Basin. This is the basin where BHP is spending $US3.8 billion ($4.2bn) sinking big mine shafts and building associated infrastructure about 200km to the north to be ready for expected growth in global demand for the crop fertiliser.

Rio’s Russian partner, Acron, has called the find “massive” and, based on a Rio report, capable of supporting a long-life, low-cost potash mine. Still, KP405 is lower grade, has been proved up to a fraction of the certainty and is less than a third the size of the resource BHP is targeting. It is also nearly twice as deep, meaning mining methods will be different and probably more expensive.

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INSIGHT-Russia’s leading role in the Indonesian mining revolution – by Randy Fabi and Fergus Jensen (Reuters U.S. – March 23, 2014)

http://www.reuters.com/

JAKARTA, March 24 (Reuters) – Russia’s two metal giants have emerged as big winners from Indonesia’s new mining law, after leading a drive to get Jakarta to stick to its controversial mineral ore export ban in the face of opposition from miners and Asian buyers.

In its six-month lobbying campaign last year, United Company Rusal and Norilsk Nickel delivered a blunt message to Indonesian officials: We will only invest billions of dollars in smelters if you ban bauxite and nickel ore exports.

The effort seemed to have paid off, despite a denial by Indonesia that it was influenced. When the law came into effect this year, Indonesia enforced a water-tight export ban for only two major minerals – nickel ore and bauxite.

The halting of $3 billion of annual nickel ore and bauxite exports has already lifted the price of nickel and helped support aluminium, boosting the fortunes of Rusal and Norilsk, the world’s top aluminium and nickel producers, respectively.

At the same time, it has strengthened the case for the pair to invest billions of dollars in Indonesia to build smelters to replace costly capacity in Russia, a key part of a recovery plan for struggling Rusal and in line with Indonesia’s own aims to earn more from its minerals resources.

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Nickel prices affected in wake of Ukraine-Russia crisis – by (CBC News Sudbury – March 18, 2014)

http://www.cbc.ca/sudbury/

A recent upswing in nickel prices is being attributed to Russian President Vladimir Putin’s policies towards Ukraine — and the threat of international sanctions against the Putin regime could have big ramifications for the commodity.

Monday’s sanctions by Canada and the United States were mostly aimed at individuals, but some observers suspect Russia’s nickel exporters, and other industries, will be next on the list.

Sudbury representatives for nickel mining companies like Vale declined a request for comment, but analyst Donald Rumball, a Toronto-based analyst who studies the Sudbury mining market, said the price fluctuation probably won’t last.

“Well, the problem with sanctions is very porous,” he said. “If Russia was stopped from selling nickel, what would stop it from selling to China and Indonesia and Vietnam and who else.”

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How Europe is turning to North America to wean itself off Russian energy exports – by Yadullah Hussain (National Post – March 19, 2014)

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

As Russia moved at lightning speed to annex Ukraine’s Crimea region, a hapless Europe continued to move at an oil tankers’ pace to wean itself off Moscow’s formidable energy resources.

A handful of EU nations, however, are waking up to the energy abundance of their NATO allies in North America. Ambassadors from Czech Republic, Hungary, Slovakia and Poland sent a letter to U.S. House Speaker John Boehner this month to help expedite approval for liquefied natural gas export licences to their countries, and help reduce their dependence on Russia.

Joe Oliver, Canada’s Minister of Natural Resources, said he has not received a similar request from the countries, but noted that Canada can be part of the solution by exporting energy products to the European Union.

“Europe’s strategic need to diversify its sources of energy points to Canada and complements our strategic imperative to diversify our markets,” the minister said in a statement sent to the Financial Post.

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PUTIN’S POWER PLAY – by James Surowiecki (The New Yorker – March 24, 2014)

http://www.newyorker.com/

Vadimir Putin, in his campaign to restore Russian dominance over post-Soviet states, has an unconventional weapon in his arsenal: vast supplies of natural gas. In 2006 and 2009, Gazprom, the Russian gas company, cut off supplies to Ukraine (the second time, this created shortages in Europe, too). In 2010, it reduced supplies to Belarus, and last fall Russia threatened Moldovans with the same if they didn’t abandon plans to sign a free-trade accord with the European Union. “We hope that you will not freeze,” a Russian deputy foreign minister said ominously.

During the current crisis in Crimea, Putin’s readiness to use natural resources for strategic ends has made it difficult for Europeans to take a hard line against him, since Europe gets roughly thirty per cent of its gas from Russia, mostly via pipelines running through Ukraine. “One big difference between the U.S. and Europe on this issue is energy,” Jeffrey Mankoff, a Russia expert at the Center for Strategic and International Studies, told me. “The assumption that, because of the energy relationship, Europe was not going to risk a major confrontation over Ukraine was surely part of Russia’s calculations.”

You might take Putin’s brandishing of the gas weapon as a shrewd geopolitical move. But it’s a classic case of putting short-term interests ahead of long-term gain. Although the region’s need for Gazprom supplies may strengthen his hand in the present, the strategy is forcing Europe to end its reliance on Russia. After the crises of 2006 and 2009, Europe increased imports from Norway and Qatar.

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In Ukraine’s coal-fired industrial east, some see a better past, and future, as part of Russia – by John-Thor Bahlburg (Associated Press/Montreal Gazette – March 12, 2014)

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

LUHANSK, Ukraine – Lidia Gany had some tea and bread, all she can afford these days for most meals, put on her duffel coat with the fake purple fur collar, and came down to the main square of this down-at-the-heels industrial city at Ukraine’s eastern edge to join fellow ethnic Russians in urging Moscow to send troops across the border and protect them.

“Only Russia can save us,” said the 74-year-old pensioner, crossing herself.

Since Russian troops rolled into Crimea, and lawmakers there scheduled a referendum for Sunday on whether to join Russia, the world’s attention has focused on the fate of the lush peninsula that juts into the Black Sea. But here in Ukraine’s coal-fired industrial east, where huge numbers of Russians have lived for more than two centuries, a potent mix of economic depression, ethnic solidarity and nostalgia for the certainties of the Soviet past have many demanding the right to become part of Russia as well.

“I’m for living in one country, with no borders, like we used to. Like the fingers on one hand,” said 60-year-old Lyudmila Zhuravlyova, who signed a petition asking for Russian President Vladimir Putin’s military invention to stop “political persecution and physical annihilation of the Russian-speaking and Orthodox population.”

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Poland Proposes Tax Breaks for Shale Gas Industry – by Patryk Wasilewski (Wall Street Journal – March 11, 2014)

http://online.wsj.com/home-page

The Country is Trying to Reduce Its Reliance on Russia

WARSAW—Poland offered six-year tax breaks to the shale gas industry on Tuesday to speed up exploration work and reduce the country’s reliance on Russian gas amid rising tensions in Ukraine.

Over the past few years Poland has been building pipelines connecting it with European Union neighbors to the west and south, as well as a liquefied natural gas port on the Baltic coast allowing it to bring in imports from Qatar.

It has also awarded shale-gas exploration licenses and urged domestic state-controlled companies to drill. Concern over the tax system and future regulation has prompted some international majors to leave.

In an effort to address this, Prime Minister Donald Tusk said the government decided not to charge special taxes, specifically designed for the shale gas industry, before 2020. The proposal will be sent to parliament within two weeks and Mr. Tusk said he hoped for “speedy proceedings” on the issue, especially given the Russian-Ukrainian tensions next door.

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Amur Will Use Zeppelins to Ship Ore From Remote Siberia Mine – by Firat Kayakiran (Bloomberg News – March 10, 2014)

http://www.bloomberg.com/

Amur Minerals Corp. (AMC), a copper and nickel explorer in Russia’s Far East, plans to fly equipment to its Siberian operation by zeppelin to bypass snow-clogged roads.

Amur will use two airships from Worldwide Aeros Corp. to carry loads of as much as 250 metric tons, the company said today in a statement after signing a memorandum of understanding with the U.S. manufacturer. The aircraft will also be used to transport production from the mine.

Zeppelin manufacturers need mining contracts to revive their business, 77 years after the U.S. Hindenburg airship crash ended most buyer interest for decades. With better designs and a buoyant gas that can’t ignite, makers such as Aeros and Hybrid Air Vehicles Ltd. are hammering out their first sales deals with the mining industry to complement truck and rail transport.

The airships can be used on rough terrain because they take off and land vertically. For Amur, their use will reduce the estimated $140 million expense of building a 320-kilometer (200-mile) road to the nearest rail station, as well as “substantially” cutting freight costs, it said.

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Norilsk Nickel Turns its Attention to the Environment and Tier 1 Assets – by Vladislav Vorotnikov (Engineering and Mining Journal – February 2014)

http://www.e-mj.com/

Something happened on the road to the Voronezh project; environmental activists backed by Putin convinced Russian nickel miners to clean up their act

MMC Norilsk Nickel, the largest mining company in Russia and one of the world’s largest nonferrous base-metal miners, faces very serious pressure from the community and Russian environmental protection organizations. They claim that the company’s activity harms the health of surrounding citizens and nature. These pressures combined with weaker prices for metals are raising future performance standards for the company.

In terms of total world production, Norilsk Nickel mines palladium (41%), nickel (17%), platinum (11%), cobalt (10%, concentrate) and copper (2%). Domestically, the company accounts for all of the platinum production, most of the nickel (96%), cobalt (95%) and a majority of the copper (55%). As an industrial leader, it plays a crucial role in the Russian economy, accounting for about 4.3% of all Russian exports, 1.9% of GDP, 2.8% of total industrial output and 27.9% of output of the non-ferrous metallurgy industry.

Recently Norilsk Nickel updated its development strategy, which, as confirmed by top management, dramatically changes its course for the coming years. The primary focus of development in accordance with the new plan will be on large assets, possibly including Voronezh, the last large non-developed nickel deposit in Europe.

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Greenland building closer US relations, prime minister says – by Philip Stephens (Financial Times – March 6, 2014)

http://www.ft.com/home/us

Greenland is building closer ties with the US as the international scramble for mineral and energy resources in the Arctic turns the region into an area of great strategic importance, according to its prime minister.

Aleqa Hammond told the Financial Times that the opening in January of a representative office in Washington was part of her strategy to deepen Greenland’s relations with the US.

Ms Hammond, who last year became Greenland’s first female prime minister, said she was committed to building on the Nuuk government’s direct ties with Washington.

The “pivot” towards the US forms part of wider geostrategic manoeuvring in the Arctic region as melting ice sheets reveal large deposits of oil, gas and minerals.

By US estimates, the Arctic may hold 13 per cent of the world’s undiscovered oil and 30 per cent of its untapped gas as well as untold mineral resources including iron ore, zinc and gold.

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In Europe, Dirty Coal Makes a Comeback – by Stefan Nicola and Ladka Bauerova (Bloomberg News – February 28, 2014)

http://www.businessweek.com/

From the baroque castle where Beethoven premièred his Eroica symphony two centuries ago, Vladimír Buřt gazes down on giant excavators that eat into the ground around the clock, loading brown coal onto conveyor belts that fill waiting railroad cars. “There used to be a lake where we’d go swimming every day,” says Buřt, the deputy mayor of Horní Jiřetín, a 750-year-old village in the Czech Republic that could be destroyed if the coal mine is allowed to expand. “The Communists started this devastation, and this government wants to finish it.”

Horní Jiřetín and other small villages along Europe’s mining belt may soon succumb to the continent’s quest for cheaper electricity. Alarmed that energy prices in Europe are about double what they are in the U.S., governments in the Czech Republic, Poland, and Germany are green-lighting the expansion of mines that produce lignite, a moist, brown coal used to fuel power plants.

While lignite is plentiful and cheap, it packs less energy and releases more greenhouse gases than hard coal. The dirty coal’s resurgence runs counter to European Union efforts to limit emissions and promote cleaner energy. “It’s absurd,” says Petra Roesch, mayor of Proschim, a 700-year-old German village that could be entirely leveled if authorities in the state of Brandenburg allow the expansion of a lignite mine owned by the Vattenfall power utility. “Germany wants to transition toward renewable energy, and we’re being deprived of our land.”

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