Archive | International Media Resource Articles

Mining in Space – The Next Frontier? – by Chaitanya Giri (The Diplomat – July 16, 2013)

http://thediplomat.com/

Off-Earth mining is no longer science fiction. Pacific Rim countries lead the way.

Given the rising global demand for rare-earth elements (REE) and the necessity to synthesize exotic materials for numerous high-tech applications, extra-terrestrial mining is likely to become the next race in space.

REE are used in state-of-the-art electronics, nuclear technologies, lasers, super-magnets and green-energy technology. China, the world’s largest producer of REE, restricted its abundant supplies globally in 2009, citing the need to protect the environment. In fact, it was the mismanagement of reserves and increasing domestic high-tech production that compelled Beijing to cut REE exports from its Bayan Obo mining district.

In response to Beijing’s move, REE consumers and electronic manufacturers like Japan, the U.S and South Korea accelerated terrestrial exploration of reserves to maintain their industrial supplies.

In 2011, Japan succeeded in discovering REE in ocean-bed deposits in its Pacific Exclusive Economic Zone. Apart from exploration, the Japanese trading firm Sumitomo Corporation created a joint venture – Summit Atom Rare Earth Company – with Kazakhstan’s state-run nuclear agency KazAtomProm, to extract REEs from the abundant uranium tailings in Kazakhstan. Continue Reading →

No excuse for Glencore Xstrata writedown – by Paul Murphy (Financial Times – August 23, 2013)

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

Argument claiming ‘accounting construct’ fails to convince

When large companies announce big asset impairment charges after a controversial takeover, as Glencore Xstrata did this week, two things happen.

First, the financial press bang the multibillion-dollar figure into a headline or two; then, almost immediately, ranks of investment banking analysts step up to explain, in condescending tones, that this is just an accounting exercise and really doesn’t matter since no cash was involved.

If the acquisition under debate involved the predator paying solely or largely in shares, as Glencore did in acquiring Xstrata, then those ignorant newspaper headlines are treated with complete disdain.

Step forward, then, Dominic O’Kane of JPMorgan Cazenove in London. As he told his clients on Wednesday: “$10.1bn of impairments/significant expenses, including a total of $8.8bn on XTA, were seized on by the press and sections of the market as evidence of the latest and perhaps most egregious example of capital misallocation in a sector with a poor recent track record. We would argue this misrepresents the true situation.” Continue Reading →

Indonesia Allows More Metal Ore Shipments Before 2014 Export Ban – by Eko Listiyorini and Widya Utami (Bloomberg News – August 23, 2013)

http://www.businessweek.com/

Indonesia said that it will allow more shipments of unprocessed mineral ores for the rest of this year by dropping quotas before an export ban comes into force as planned in 2014. A 20 percent tax on exports will be retained.

“This is a temporary policy, until the 2014” ban on unprocessed ores is in place, Finance Minister Chatib Basri said in Jakarta today. “We see that the restriction or quota has caused a drop in exports revenue.”

Southeast Asia’s biggest economy unveiled a policy package today after a record current-account deficit and worse-than-estimated economic growth and inflation data prompted investors to sell stocks and drove the rupiah to its weakest level since 2009. The country is the largest exporter of refined tin and thermal coal.

“Commodity prices remain weak, the mining sector’s profitability is declining rapidly, and government receipts through royalties and taxes would have suffered if the government had not taken any measures,” said Xavier Jean, a Singapore-based director of corporate ratings at Standard & Poor’s. “This is not coming as a surprise.” Continue Reading →

Mosaic Deal Hopes Fade as BHP Bets on Own Potash Mine: Real M&A – by Tara Lachapelle and Elisabeth Behrmann (Bloomberg News – August 22, 2013)

http://www.businessweek.com/

Mosaic Co. (MOS:US)’s takeover prospects are diminishing after BHP Billiton Ltd. (BHP) renewed a commitment to building its own potash mine.

BHP this week said it plans to see the Jansen potash project through to production as it invests $2.6 billion and seeks partners, damping speculation that the world’s biggest mining company may still consider a purchase of fertilizer maker Mosaic. Mosaic’s enterprise value has fallen to $14.8 billion, about the same as the estimated cost of constructing Jansen, its first potash mine.

Buying Mosaic would have been a logical alternative to building Jansen, which may not begin producing fertilizer until 2020, Sanford C. Bernstein & Co. said. Mosaic became a cheaper target this month as it dropped to its lowest price relative to book value on concern that the breakup of a Russian-led export venture will flood the market with supply and suppress potash prices. Even as hurdles to a sale of Mosaic were lifted this year, potential buyers are scarce, especially as BHP’s new project promises even more supply to come.

“The additional spending shows BHP wants to go ahead with Jansen,” Paul McTaggart, a Sydney-based analyst at Credit Suisse Group AG, said in a phone interview. “There’s now no turning back.” Continue Reading →

Resource nationalism can mean growth and prosperity – by Nick Holland (South Africa Business Day – August 16, 2013)

http://www.bdlive.co.za/

Nick Holland is the CEO or Gold Fields.

AT A time when the global mining industry is besieged by falling commodity prices, soaring input costs and investor apathy, resource nationalism strikes fear into the hearts of many mining executives and investors. At Gold Fields we have a different view.

We are strongly in favour of a more equitable distribution of the benefits of the mining economy, provided that we — governments and the mining industry — are aligned on which economic pie it is we are sharing. Is it the ever-shrinking mining earnings pie that has become the norm in most countries, or is it the growing mining economy pie so elusive to most countries?

A debate of this sensitivity requires well-defined parameters. We view resource nationalism as “government actions to extract the maximum developmental impact and value from a country’s natural resources for its people”. We believe this is the right, if not the duty, of every government.

Most developing countries with a natural resource endowment, including South Africa, have a legacy of poverty and inequality. To address this, and to see more sustainable growth, we need to maximise the socioeconomic benefits from the extraction of natural resources without shrinking the mining pie. Continue Reading →

INTERVIEW-Rio keeps focus on exploration while cutting costs – Clara Ferreira-Marques (Reuters India – August 23, 2013)

http://in.reuters.com/

LONDON, Aug 23 (Reuters) – Big miners such as Rio Tinto can slash exploration spending and still make valuable finds but they must resist the temptation to stop searching entirely or they will pay later, the company’s head of exploration said.

The secret of successful exploration on a budget, according to Rio’s Stephen McIntosh, is prioritisation and planning. “If something is not making it, we will get out quickly or divest that opportunity, so we can reinvest into something that will be of value to Rio Tinto,” McIntosh said.

Total withdrawal from exploration – attractive as it has no impact on current production – could hit earnings in decades to come especially at a time when smaller explorers and miners cannot raise cash to fill the gap left by big players.

“If you stop your most fundamental greenfield exploration, for the majors you won’t miss it for a very long time. But you will wake up one day, want to the go to the cupboard of future options and find it a little bit bare,” McIntosh said in a telephone interview from Singapore. Cutting exploration, has proved an easy win for miners under pressure, as prices and demand cool, to reduce costs that ballooned during the boom years.

Continue Reading →

Barrick Gold sells mines to Gold Fields as part of restructuring – by James Wilson and Andrew England (Financial Times – August 22, 2013)

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

London/Johannesburg – Barrick Gold has started its promised restructuring by selling a trio of Australian gold mines to industry rival Gold Fields.

The $300m sale will help the Canadian miner’s stretched balance sheet and will switch Gold Fields’ main production focus away from western Africa to Australia, where it will bundle assets with its existing mines to try to lower costs.

Barrick, the world’s largest gold miner by volume, flagged the possible sale of the Yilgarn South mines earlier this month, when it posted an $8.6bn quarterly loss. The loss was linked to writedowns to asset values because of the fall in the price of gold this year.

The three mines at Yilgarn South produce 452,000 ounces of gold annually, equivalent to about a quarter of Gold Fields’ annual output. Barrick said the sale would not change its plan to produce between 7m and 7.4m ounces this year.

Nick Holland, Gold Fields’ chief executive, said there was “considerable opportunity for cost synergies” between the Lawlers mine, one of the Yilgarn South group, and its adjacent Agnew mine. Continue Reading →

South Africa all but off BHP Billiton’s radar screen – by Martin Creamer (MiningWeekly.com – August 21, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – South Africa has all but fallen off the radar screen of BHP Billiton, the world’s biggest mining company, which on Tuesday reported an 8.7% fall in revenue to $65.9-billion for the year ended June.

The name of the country did not cross the lips of new CEO Andrew Mackenzie and one got the impression that this region’s aluminium, thermal coal and manganese interests are hanging on by a thin thread in a company dominated by iron-ore, oil, copper and coking coal.

When BHP and Gencor/Billiton of South Africa merged at the start of the new millennium, the South African assets helped to lift the chin of a then downcast BHP.

The performance of then standalone BHP, which in merged form has paid out more in dividends than the rest of the mining world put together, was so mediocre that the Economist of London scoffed that the letters BHP really stood for Broken Hearted People, and not Broken Hill Proprietary.

But the powers that be are clearly in no mood to return the favour; instead they are directing any tender, loving care they still have towards potash risk at Jansen in Canada, which is still a cost centre. Continue Reading →

RPT-INSIGHT-Barrick Gold’s Peter Munk seeks to regain his Midas touch – by Euan Rocha (Reuters U.S. – August 22, 2013)

http://www.reuters.com/

Aug 21 (Reuters) – Peter Munk has long driven the agenda for Barrick Gold Corp, the company he formed in 1983 and built into the world’s largest gold producer, but recent missteps have raised questions about the leadership of a man once seen as a visionary in the industry.

Munk, who owns a stake of less than a quarter of a percent in the company, still steers Barrick’s strategy from his position as chairman, and he is now attempting to shore up the miner’s position. But some investors, seizing on what they view as misguided decisions and problems at several mines, are questioning both the company’s direction, and Munk’s role.

In the last two years, gold miners across the globe have been stung by falling bullion prices and a surge in costs. Barrick has fared worse than its rivals, outlining about $13 billion in writedowns this year alone.

Its share price is down nearly 65 percent in two years, outpacing a 50 percent drop in the NYSE Arca Gold Bugs Index , and a 26 percent drop in the price of spot gold.

While environmental woes at its Pascua-Lama gold-mining project, high in the Andes, have been the biggest drag on Barrick’s share price, investors have taken the most issue with its disappointing push into copper and with a proposal to give Munk’s heir apparent, co-chairman John Thornton, an unusually large, $11.9 million signing bonus. Continue Reading →

FEATURE-North Nigeria’s poor beat path to nascent mining boom – by Tim Cocks (Reuters India – August 22, 2013)

http://in.reuters.com/

BAGEGA, Nigeria, Aug 22 (Reuters) – Like almost everything else in Nigeria’s economy, mining of metals and other solid minerals fell by the wayside when the West African nation discovered oil.

In the two decades to 1954, foreign companies produced around 360,000 ounces of gold in total, according to government statistics – tiny by today’s standards, but not insignificant for a country approaching independence with high hopes.

By 1964 – post-independence and less than a decade after oil was found in the creeks of the southern Niger Delta – gold production had largely ground to a halt.

Now much of the digging up of Nigeria’s minerals is done by artisanal miners in the largely Muslim north, bereft of the high-tech machinery that makes it safe and brings economies of scale.

“The sector was left in the hands … of untrained and ill-equipped artisans … making negligible contributions to GDP,” was how a government policy brief summed it up last year. Continue Reading →

After cost cuts, miners need to do more with less, BHP says – by Clara Ferreira-Marques (Reuters U.S. – August 21, 2013)

http://www.reuters.com/

LONDON – Aug 21 (Reuters) – Mining firms are wooing investors with aggressive cuts after years of profligate spending, but BHP Billiton says the greater challenge will be improving productivity, if major producers are to ride an eventual recovery.

BHP, Rio Tinto and others big and small have promised shareholders they will slash billions of dollars of spending, shedding jobs, reining in wages and cutting back on fringe costs, such as staff travel.

Rio says it tells employees in its iron ore unit to use low-cost airlines or teleconferencing – a far cry from a time when chartering flights to remote mines were the norm and tales abounded of truck drivers on six-figure annual dollar salaries.

But that was the easy bit, the chief financial officer of BHP Billiton, the world’s largest miner, told Reuters. “When you talk about costs there are two elements. One is how you tighten your belt and make the easy changes,” said Graham Kerr, a BHP veteran put in charge of finance last year.

“The second is productivity,” he said in an interview. “Getting more out of your existing people, your equipment and your infrastructure. Productivity will deliver more benefits over time, but takes a little more time to be done.” Continue Reading →

Uranium miners face new hurdles as Fukushima disaster worsens – by James Regan (Reuters U.S. – August 21, 2013)

http://www.reuters.com/

SYDNEY – (Reuters) – Revelations of more toxic leaks from Japan’s Fukushima Daiichi nuclear power plant will raise second-thoughts about Japan’s nuclear future, but won’t halt the long-term global expansion of the industry, the head of a uranium mining company said.

“It reinvigorates the heightened state of nervousness, it surely will make the Japanese government and nuclear regulatory authorities more cautious and conservative in the decisions about the restart,” said Vanessa Guthrie, managing director of Australia’s Toro Energy Ltd (TOE.AX), which expects to start mining uranium in Australia in 2016.

Japan is set to raise the severity rating of the leak to level 3, or “serious incident”, on an international scale for radiological releases, underlining a deepening sense of crisis at the site.

The price of uranium, used mainly as fuel for nuclear reactors, plunged after the March 2011 meltdown at the Fukushima plant 240 km (150 miles) from Tokyo and has struggled to recover ever since. August uranium futures stood at $35.15 per pound on Wednesday compared with $68 per pound before the earthquake and tsunami that triggered the disaster.

However, Guthrie said contract prices between uranium miners and buyers standing at around $58-$59 a pound more accurately reflect the supply and demand balance than the spot price. Continue Reading →

Miners at ’30-year lows’ could bounce as rates rise – by Jenny Cosgrave (CNCB.com – August 20, 2013)

http://www.cnbc.com/

Mining stocks slipped on Tuesday, as weak earnings from BHP Billiton and Glencore Xstrata sent the sector lower. Analysts said miners were now the cheapest they have been in 30 years, relative to the market, and were set to bounce back when interest rates begin rising.

The majority of global miners are in correction territory year-to-date, due to the slowdown in the Chinese economy and the slump in commodity prices. However, this “severe de-rating” has not hit earnings to the same extent as share prices, making mining stocks a compelling buy, according to Henry Dixon, fund manager at Matterley Asset Management.

“Miners had a torrid time in the first half. Mining has been the worst performing sector this year, leaving it as cheap relative to the market as we can find,” said Dixon, who was confident mining stocks would be the first to benefit from the climb in bond yields that will follow the Federal Reserve’s tapering off of its stimulus program.

Dixon said he had increased his exposure to mining stocks in recent weeks. “Obviously a lot has been made of the move we have seen in bond yields, and with history in mind, and rising bond yields, it is actually the mining sector that stands tall as one of the best under this environment, with the key being a little bit more growth in the system,” he said. Continue Reading →

COLUMN-Diversified miners’ short-term challenges at odds with long-term views – by Clyde Russell (Reuters U.S. – August 21, 2013)

http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Aug 21 (Reuters) – The world’s top diversified mining companies are starting to resemble choir boys singing the same hymn about cutting projects and costs.

The recent financial results of BHP Billiton, Rio Tinto, Glencore Xstrata and Anglo American were remarkably similar, as were the accompanying comments by their chief executives.

All reported lower earnings, but not dramatically so, which may be a bit of a surprise given weaker commodity prices in the first half of 2013 and widespread concern of worse conditions to come.

And all four also repeated the mantra of cost cutting and slashing capital expenditure, while at the same time trying to give equity investors more of what they want in the form of dividends and higher share prices.

The question is whether this unanimity is the right path or whether the diversified miners are going too far in a bid to boost share prices. Continue Reading →

Miners Buying Hugo Boss Perfume as Chile’s Copper Booms – by Matt Craze & Javiera Quiroga (Bloomberg News – August 20, 2013)

http://www.bloomberg.com/ 

Since starting work at the Esperanza copper mine in northern Chile two years ago, Erick Moreno has tripled his salary and is preparing to buy his first home. The pay, he says, is so good that he’d never take a job elsewhere.

“I am going to die in this industry, I don’t see myself anywhere else,” Moreno said by phone from Antofagasta, a city on the edge of the mineral-rich Atacama desert. “When you start working in a mine, everything changes and in a very little period of time.”

While Moreno, 27, completed his engineering course at Antofagasta University, he says many fellow students dropped out to start work at the mines without graduating. Most of them already own their homes and drive sports cars, while many older miners have five or more houses, some far from the mines that litter the northern desert, he said.

Spending by high-earning miners is spreading through the economy, fueling a consumer boom and driving unemployment to its lowest since 1973. The nation, squeezed between the Andes Mountains and the Pacific Ocean, has become the wealthiest in Latin America, according to the International Monetary Fund, with gross domestic product per capita rising to about $16,300 this year from $4,780 ten years ago. World Bank President Jim Yong Kim last month congratulated the country on earning “high-income” status. Continue Reading →