Cossacks Ramp Up Pressure on [nickel] Mining Firm After Riot – (RIA Novosti – June 25, 2013)

MOSCOW, June 25 (RIA Novosti) – A representative of a Cossack organization said that a mining company whose allegedly environmentally disastrous operations incited hundreds of locals to riot in central Russia has a month to stop the project or face the consequences, the Komsomolskaya Pravda newspaper reported Tuesday.

“We reserve the right to campaign against nickel exploration by any legal means,” Valery Davydov was cited as saying.
“And let them keep in mind that if they so much as insert a shovel into the ground, the entire region will explode,” he said, adding that the decision was endorsed by eight Cossack organizations.

The Cossacks, an ethno-social group in Eastern Europe known for their social conservatism and pre-revolutionary military exploits, were repressed under the Soviets for their loyalty to the tsar. Today the group is showing a revival, regaining prominence in Russian public life and sometimes performing vigilante police duties.

The 13-month-long standoff over a prospective nickel mine in the Voronezh Region exploded last weekend, when a crowd of several hundred stormed the premises of a geological exploration party and torched cars, construction trailers and drilling rigs.

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Serbia may be on cusp of mining revival after years of decline – by Aleksandar Vasovic and Stephen Eisenhammer (Reuters U.S. – June 13, 2013)

Reuters) – Serbia’s mining sector, stagnant since the wars that tore Yugoslavia apart in the early 1990s, looks set for a revival as volatile commodity prices increase the allure of countries in Europe with established infrastructure and skilled labor.

Once home to a core copper and gold mining facility for the former Yugoslavia, the town of Bor in the north-eastern corner of Serbia has a history of mining dating back to Roman times.

Canadian major Freeport and its smaller partner Reservoir Minerals are exploring the area’s underground reserves. Early results have impressed investors and analysts. “The grades they’re drilling are exceptional… These come around once a decade,” said Brent Cook, a geologist and private investor who writes an investment newsletter.

International mining firms are under pressure from increasingly cautious investors to move away from projects in non-traditional mining countries where a lack of good roads, railways, water and power, as well as skilled workers, can hike costs.

Eastern Europe, along with Spain and Greece, has emerged at the forefront of this shift, with governments that are eager to help boost jobs and growth.

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Russian city awaits potash boom but outlook fragile – by Agence France-Presse/Global (June 11, 2013)

At first sight, Berezniki looks a typically bland provincial Russian outpost with its decrepit housing blocks and factory chimneys.

But the city in the Perm region of the Urals sits on a vast and hugely valuable secret — one of the world’s biggest deposits of potash, a mineral that is now coveted across the world as a fertiliser for food crops.

Berezniki, 1,200 kilometres (750 miles) east of Moscow, sits on the Verkhnekamsk deposit, which was discovered in 1925 and which was developed after World War II.

Its proven reserves represent some 34.5 percent of the world’s total and the deposit is the second biggest in the world after those in Saskatchewan in Canada, according to the US Geological Survey.

A veritable army of miners march up and down the kilometres of passages that have already been carved out 450 metres (1,500 feet) underground. Their machines work day and night to mine the pink coloured rock where the mineral is contained.

This is then taken to the surface by conveyors to extract the precious mineral. Once turned into powder or crystalised as granules, potash is used as a fertiliser to help crops grow and increase their immunity to disease.

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Russia Stocks Sink 2nd Day on Bets Commodity Supercycle Fading – by Ksenia Galouchko (Bloomberg News – June 11, 2013)

Russian shares dropped for a second day on concern commodities may extend their decline, curbing growth in the world’s biggest energy exporter.

The Micex Index (INDEXCF) fell 1.4 percent to 1,317.20 by 11:31 a.m. in Moscow, the sharpest slide in almost a week. Basic materials companies led the retreat, losing 1.5 percent on average. The volume of shares traded on the gauge was 50 percent below the 30-day average, while 10-day price swings subsided to 16.497.

The Standard & Poor’s GSCI (SPGSCI) gauge of 24 raw materials retreated 0.5 percent as the Bank of Japan disappointed investors by failing to expand monetary stimulus and concern grew that the U.S. Federal Reserve will scale back debt purchases. Russian central bank Chairman Sergey Ignatiev, who presided yesterday over his last policy meeting after leading the regulator for more than a decade, kept key rates on hold for a ninth month.

“The market is falling on fears that we’re entering the end of the commodity cycle, that the rise of commodities is over,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone. “Russia is very closely correlated to oil.” The dollar-denominated RTS Index (RTSI$), which last week entered a bear market, declined 1.4 percent to 1,282.53. On the Micex, 3 stocks increased while 44 dropped, three were little changed.

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[Saskatchewan potash] Bethune Mine: Promises Lasting Legacy – by Ella McIntyre (Saskatoon StarPhoenix – June 11, 2013)

A promise of economic growth and employment, with an eye to ensuring long-lasting environmental and community well-being, is behind K + S Potash Canada’s $3.25 billion dollar solution mining Legacy Project planned for the Rural Municipality (RM) of Dufferin, near the village of Bethune. Bethune is approximately 50 kilometres from Regina.

“Not only is the Legacy Project Saskatchewan’s first potash mine in nearly 40 years, it is one of the world’s most economically attractive greenfield projects,” said Christine Stass, spokesperson for K+S Potash Canada and its parent K+S Group, a leading supplier of fertilizers and the world’s leading salt producer.

As Stass explains, with a potash price of between USD 400 and 450/tonne, the project achieves a Return on Capital Employed of 12 per cent and an attractive premium on K+S Group’s costs of capital. It also promotes important jobs and economic opportunities for Saskatchewan. By spring 2013, 200 to 300 people will be working on site which, at its peak, will provide over 1,100 jobs and roughly 6 million employment hours. The following two years will see rail construction, structures built and equipment installed and, by late 2015, plant commissioning and the site near completion. Once in full production, the mine will employ 320 permanent workers, with more jobs created through ongoing contract employment.

Potash production for the mine is anticipated for 2015. The operation will ramp up to full capacity of 2.86 million tonnes by 2023. With further expansion, production could increase up to 4 million tonnes per year.

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Arctic governments stand by as deadly pollution spews from Russia’s Nikel mine – by Alex Boyd (Nunatsiaq on -June 11, 2013)

“More profitable to keep polluting the region than modernize the production”

The nickel mine in the aptly named town of Nikel in northwestern Russia is usually notable for three things: it’s big, it’s a massive source of pollution, and, for more than 20 years, it’s defied all attempts to change.

Controversy is as constant in Nikel as the clouds of sulphur dioxide; the mine here is equal parts economic powerhouse and environmental scourge. Yet, criticism has kicked up a notch in recent weeks after European leaders met to discuss issues in the region — and failed to mention Nikel.

Last week’s Barents Summit in Kirkenes, Norway brought together leaders from all over northern Europe, but despite old promises to deal with the mine’s pollution and new commitments to environmental sustainability, the mine located just 50 kilometres away went unmentioned.

Amid the international hoopla over the Arctic, it’s easy to forget that the region is a relatively small place, with a small population. The presence of organizations such as the Arctic Council and the Barents Council means countries are increasingly trying to tackle Arctic issues as a group, but disagreements still arise.

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Germany seeks to develop relationships in mining – by Lindsay Kelly (Northern Ontario Business – June 10, 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

There’s such little awareness amongst German companies of the underground mining capabilities in Canada that one German company recently declared, “There’s no underground mining in Canada.”

It’s a misperception that needs to change in order for relationships to develop between Canadian and German companies in the mining supply and services sector, said Aarti Mona Soerensen, manager of the mining and mineral resources department at the Canadian German Chamber of Industry and Commerce.

Based in Toronto, the chamber is an official representative of German trade with more than 500 members. It focuses on establishing partnerships in the construction, food, medical technology and mining sectors. During a recent exploratory discussion with industry representatives in Sudbury, Soerensen said Canada has been underestimated as a partner for German companies, and she’s hoping to change that.

“The intent is to get into a discussion and hopefully, then, over the longer term, co-operation to work out partnership opportunities,” Soerensen said. “My idea is not to flood Sudbury with new companies and take over the market, because that’s not really what German companies do. We very much rely on collaboration with local companies.”

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[Eramet] Weda Bay Nickel May Miss Tax Holiday – by Tito Summa Siahaan (Jakarta Times – June 6, 2013)

France-based mining firm Eramet has been urged to spin off the processing facility of its planned Indonesian nickel mine if it wishes to take advantage of a foreign investment tax holiday.

The company plans to invest up to $5 billion to build nickel processing facilities associated with its proposed mine at Weda Bay in North Maluku.

Because the company formed to pursue the Weda Bay mine plan pre-dates the government’s tax holiday initiative, the company may otherwise be ineligible for the incentive that it sought. A contract of work for the proposed mine was signed with the national government in 1998.

Thamrin Sihite, the director general for coal and mineral resources at the Energy and Mineral Resources Ministry, said that the regulation providing a tax holiday, issued by the Finance Ministry, may not cover investment plans such as the one by Eramet.

“The thing is, the tax holiday is only for companies [incorporated] after the regulation was issued [in 2010],” Thamrin Sihite said after a meeting with a French trade delegation lead by Trade Minister Nicole Bricq in Jakarta on Wednesday.

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Greek opponents of Eldorado mine take message to company’s Canadian HQ: ‘Leave us alone’ – by David P. Ball ( – June 4, 2013)

Greek villagers brought their region’s fierce battle against Vancouver-based Eldorado Gold to the firm’s headquarters Friday, marking the end of the activists’ cross-Canada tour opposing open-pit gold mining in their homeland.

Over the past year, a growing conflict in Greece’s Halkidiki region — birthplace of the philosopher Aristotle — has seen thousands of residents blockade roads, raid mine sites, and skirmish with police they say are corrupt and beholden to the company. Another demonstration brought 20,000 protesters to the streets of Thessaloniki.

“Our will will not be curbed,” said Maria Kadoglou, a resident of Ierissos village, Greece. “We will keep on fighting until Eldorado Gold goes away.”

“Eldorado has been trying for a very long time to conceal from the Canadian public and its own investors that fact that there is huge resistance to its operations in Greece. When demonstrations got so big that they could no longer deny it any more … they have been saying the people protesting are anarchists, radical leftists, that we are flying in protesters from other parts of Greece; this is totally false. This is a genuine local resistance movement.”

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Massive gas find renews shale debate in U.K. – by Paul Waldie (Globe and Mail – June 4, 2013)

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.

LONDON — Britain’s long-simmering debate about the future of shale gas has been shaken up by a new report indicating that one large deposit could contain enough natural gas to make the country self-sufficient for decades. The announcement came Monday from IGas Energy PLC, one of a handful of companies exploring Britain for shale gas.

London-based IGas said its drilling in northwestern England indicates a deposit containing at least 15 trillion cubic feet of in-place gas, and as much as 172 tcf. This was far higher than IGas’s original estimate of nine trillion cubic feet.

IGas, which is 20 per cent owned by Calgary-based Nexen Inc., has been drilling in the Bowland basin, a large rock formation that stretches across much of England. Another company, Cuadrilla Resources Inc., has been exploring the same basin in a different area and has already announced that it has located 200 tcf of in-place gas.

IGas chief executive officer Andrew Austin said the entire basin could contain 500 tcf. “Even if the industry can only extract a fraction of that, combined with North Sea reserves, it could make the U.K. self-sufficient in gas for decades to come,” Mr. Austin told the BBC on Monday.

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INTERVIEW-Norway oil fund may sell out of mines that mistreat workers – by Gwladys Fouche (Reuters India – May 29, 2013)

OSLO, May 29 (Reuters) – Norway’s $740-billion sovereign wealth fund, the world’s largest, is examining labour conditions in the mining industry and may sell out of firms that violate workers’ rights, the head of the fund’s ethics council said.

The fund could also divest from companies involved in cattle ranching, if working conditions on farms are exploitative, and from firms implicated in illegal or unregulated fishing.

“Working conditions, slave-like working conditions, … is a very important priority,” said Ola Mestad. “We have been trying to identify different sectors: (one of them) could be mining.”

The fund invests Norway’s revenues from oil and gas production for future generations. It is one of the world’s largest investors with holdings in some 7,500 companies.

It has excluded firms for what it deems to be unethical behaviour based on the advice of its ethics council, an independent body reporting to the finance ministry, which has ultimate responsibility for the fund. The ministry tends to follow the council’s recommendations. The fund also bans investments in some industries – nuclear arms, anti-personnel landmines, cluster bombs and tobacco.

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Excerpt from “An Insider’s Guide to the Mining Sector: An in-depth study of gold and mining shares”– by Michael Coulson

To order a copy of An Insider’s Guide to the Mining Sector, please click here:

United Kingdom: Little mining activity left

One of the most interesting business developments in recent years has been the relocation to and re-incorporation in the UK of a number of major mining companies. This has meant that four of the largest mining companies in the world – Rio Tinto, Anglo American, Xstrata and BHP Billiton – have UK incorporation; all are part of the FTSE100 share index. It is important to appreciate, however, that any UK mining operations that these companies have are very small. Indeed, mining in the UK is itself confined to speciality minerals such as china clay, sand and gravel and a rapidly contracting (though once powerful) coal mining industry.

The financial attractions of London

Therefore, with little mining activity in the UK the reasons for the presence of these companies in London is primarily financial. The banking system is seen as sophisticated and experienced in financing mining developments. Operating as a UK company means that the cost of capital can be much lower than in countries like South Africa. The historic links between the City of London and the mining industry mean that there is understanding of the risks and rewards of financing mining companies.

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Sweden’s LKAB Doubles Spending to Find ‘Elephant’ Iron Mine – by Niklas Magnusson (Bloomberg News – May 22, 2013)

LKAB is doubling spending on exploration in Sweden’s Arctic as the state-owned company targets finding a deposit to match its Kiirunavaara mine, the world’s largest contiguous body of iron ore.

LKAB will boost its exploration spending to 200 million kronor ($30 million) annually from 100 million kronor and is hiring more geologists to guide it to potential deposits, Chief Executive Officer Lars-Eric Aaro said in a May 20 interview.

“There’s a saying in mining, especially when you’re looking for big volume bodies, that if you’re looking for elephants you have to go to elephant land — and our part of the world is elephant land,” he said. “We now have the equipment to look at rocks deeper down but what’s under there is so far totally unknown. But, the geology is there and there could be a new Kiirunavaara mine — it will just be deeper underground.”

Sweden sits on 60 percent of Europe’s known iron ore and 2 percent of the global total. Prime Minister Fredrik Reinfeldt has said that the resource ore is equivalent to what oil has meant for Norway since it was discovered in the 1960s.
LKAB, which is moving parts of the towns of Kiruna and Malmberget to ensure it can continue production in those two locations, had sales of 27 billion kronor and a profit of 8.8 billion kronor last year.

LKAB paid a dividend of 5 billion kronor to the Swedish state for 2012, equivalent to 0.6 percent of the government’s forecast income in 2013, as well as taxes of 3.77 billion kronor. Those contributions to Sweden’s budget are likely to increase as LKAB opens new mines and expands.

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Swedish City Is Displaced by Race for Arctic Iron – by Niklas Magnusson and Johan Carlstrom (Bloomberg Business Week – May 21, 2013)

Swedes living in the Arctic town of Kiruna are packing up their belongings before their homes are bulldozed to make way for iron ore mining driven by Chinese demand.

LKAB (LKAB), Sweden’s state-owned mining company, opened a new level yesterday, more than 1 kilometer (3,281 feet) below the town, to be able to continue tapping the world’s largest contiguous body of iron ore. Many of the 18,000 who live above the deposit in the Scandinavian nation’s fourth-richest county will move a few kilometers east to accommodate the mine.

The extreme measure underscores the lengths to which governments and companies are willing to go to gain access to commodities prized by importers like China, the world’s fastest-growing major economy. And with LKAB producing 90 percent of all iron in the European Union, the willingness of Swedes to move is proving key to the whole region’s access to the metal.

“The move is of course crucial for the continuation of mining in Kiruna,” LKAB Chief Executive Officer Lars-Eric Aaro said in a May 20 phone interview. “Being Sweden’s seventh-largest exporter and third-biggest taxpayer, in addition to the dividend we pay the state each year, this is a national matter.”

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What Norway did with its oil and we didn’t – by Esther Hsieh (Globe and Mail – May 16, 2013)

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.

When oil was discovered in the Norwegian continental shelf in 1969, Norway was very aware of the finite nature of petroleum, and didn’t waste any time legislating policies to manage the new-found resource in a way that would give Norwegians long-term wealth, benefit their entire society and make them competitive beyond just a commodities exporter.

“Norway got the basics right quite early on,” says John Calvert, a political science professor at Simon Fraser University. “They understood what this was about and they put in place public policy that they have benefited so much from.”

This is in contrast to Canada’s free-market approach, he contends, where our government is discouraged from long-term public planning, in favour of allowing the market to determine the pace and scope of development.

“I would argue quite strongly that the Norwegians have done a much better job of managing their [petroleum] resource,” Prof. Calvert says. While No. 15 on the World Economic Forum’s global competitiveness rankings, Norway is ranked third out of all countries on its macroeconomic environment (up from fourth last year), “driven by windfall oil revenues combined with prudent fiscal management,” according to the Forum.

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