Spectre of illegal mining looms over India – by Ajoy K Das (MiningWeekly.com – June 22, 2015)

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

Kolkata (miningweekly.com) – Is illegal mining rearing its head in India again?

The concern has moved centre stage following the murder of a journalist in the central province of Madhya Pradesh for opposing the mining mafia and moving the courts against illegal mining.

Even though three people, all involved in illegal manganese mining and part of the mining mafia in the region, have been arrested on charges of murder, sections within the federal and provincial governments have expressed concern about whether the murder was an isolated incident or whether it signalled the re-emergence of the mining mafia despite changes in legislation and stringent punitive action.

Data collated from Indian Bureau of Mines showed that provincial governments had filed 727 cases during the past year following the inspection of 2 427 operational mines. The courts upheld charges in the cases of 25 mines.

Of the mines inspected, as many as 1 347 were operating in violation of the newly promulgated Mines Minerals Development and Regulation Act (MMDRA) 2015 and 357 mines had their mining licences cancelled over the past year.

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COLUMN-Technology may lower commodity prices, widen nation gaps – by Clyde Russell (Reuters U.K. – June 23, 2015)

http://uk.reuters.com/

LAUNCESTON, Australia, June 23 (Reuters) – The image of miners as mainly burly blokes in hard hats and high-vis vests is likely to change in the next decade to one of computer geeks controlling automated machines while sitting thousands of kilometres away from the pit.

That’s certainly the scenario outlined in a major report called “Australia’s future workforce?”, released last week by the Committee for Economic Development of Australia (CEDA), a think-tank encompassing businesses, community groups and academic institutions.

More than five million jobs, or about 40 percent of Australia’s current workforce, have a “moderate to high” likelihood of disappearing in the next 10 to 15 years, CEDA said in the report.

What is relevant for commodities in this scenario is that mining and agriculture are among the sectors likely to be affected the most because of technological advancements.

The report notes that technological changes, while disruptive, often lead to higher incomes and increased employment opportunities as more wealth is created and productivity boosted.

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China’s Zijin targets Australian gold miner in M&A spree – by James Regan (Reuters U.S. – June 22, 2015)

http://www.reuters.com/

SYDNEY – Zijin Mining Group launched a bid for Australian gold explorer Phoenix Gold on Monday, the Chinese company’s third planned acquisition of a foreign mining asset in less than a month.

Long-dormant M&A activity in Australia and other mining-intensive countries is showing signs of a rebirth, with Zijin the most acquisitive to date and with the deepest pockets.

“The company is open to opportunities around the world,” Zijin Executive Director and Vice President George Fang told Reuters. “It is a goal to find more gold or other assets.”

In May Zijin announced it was issuing shares to raise 10 billion yuan ($1.61 billion) for acquisitions. Before launching its A$47 million ($36.55 million) offer for Phoenix, it accumulated a 17.9 percent interest in the company.

Zijin, one of China’s largest gold mining companies, unveiled two acquisitions in May for more than $700 million, one in Papua New Guinea and one in Democratic Republic of Congo.

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A missed opportunity for marginal iron ore producers – by Stephen Bartholomeusz (The Australian – June 22, 2015)

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

Has the slide in the iron ore price over the past week signalled the closing of a small window for the recapitalisation of marginal producers?

For a few weeks the price had been firming to hold around the $US64 a tonne level, well above the $US47 a tonne seen earlier this year when the collapse in the price was seen as the death-knell for smaller and higher-cost producers. It was that plunge that triggered the failed Fortescue Metals campaign to try to force/coerce Rio Tinto and BHP Billiton into winding back their production.

But over the past week, the price, which had seen some previously mothballed production brought back into the market, has slipped back towards $US60 a tonne. That raises the possibility, indeed probability, that the firming of the price was an aberration.

The most likely explanation for the bounce in the price is that supply disruptions in April and May caused by weather affecting output from the Pilbara and the timing of shipments from Brazil coincided with a low-point in the inventory cycle of China’s steel producers. If that were the case, it would be a temporary phenomenon.

If the edging down in the price over the past week does reflect a gradual return to settings that better reflect the underlying balance of supply and demand, the period that preceded it could represent a missed opportunity for some of the smaller players trying to survive and position themselves for a potentially very prolonged period of much lower prices.

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Yellen Surprises Gold Bulls in Retreat by Reviving Rally – by Megan Durisin (Bloomberg News – June 21, 2015)

http://www.bloomberg.com/

Janet Yellen took the gold market by surprise. Bullion had its biggest rally in a month after Federal Reserve Chair Yellen and her fellow policy makers cut their long-term projections for U.S. interest rates. Money managers had anticipated officials would tighten monetary policy faster and reduced their net-long position in gold to a five-week low the day before the central bank’s statement.

The outlook for gradual rate increases sparked renewed investor interest, and more than $880 million was added last week to the value of assets in exchange-traded products backed by the metal. Higher rates curb bullion’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities. The Bloomberg Dollar Spot Index fell for two straight weeks.

“The Federal Reserve has signaled they will be moving in a glacial manner, which is causing the U.S. dollar to decrease,” Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey, which oversees about $170 billion, said by phone. “There’s an upward bias to gold, and we believe it’s being directly related to dollar weakness.”

Morganlander expects bullion prices to stabilize before being dragged lower by improving U.S. economic growth.

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Why would we choose not to make money? Rio’s iron ore boss speaks out – by Vicky Validakis (Australian Mining – June 22, 2015)

http://www.miningaustralia.com.au/home

Rio Tinto’s iron ore boss Andrew Harding says long-term demand for the commodity is strong, but warned high-cost producers would not last long in the current market.

Speaking to Rio’s M2M magazine, Harding said while demand growth for iron ore isn’t as strong as it was, the long-term outlook was sound.

Pointing to the continued urbanisation of people in China, India, Africa, and South America, Harding said the need for steel would remain strong.

“As developing countries urbanise, and people move from rural to urban ways of life, infrastructure needs change. They build tall apartment blocks and link up the urban areas with roads, railway lines, airports and bridges – all using massive amounts of steel,” Harding said.

Harding also highlighted the importance of demand from the developed world in replacing ageing infrastructure.

“Even though Japan, for instance, has had no to very low growth for a considerable period, it’s still been importing around 130 million tonnes of iron ore every year,” Harding explained.

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The People v. the Coal Baron – by David Segal (New York Times – June 20, 2015)

http://www.nytimes.com/

Don Blankenship always knew exactly what he wanted during the years he ran Massey Energy, once the sixth-largest coal company in the United States. He had specific and emphatic ideas about how to operate mines, how to treat employees and how to deal with regulators. When he issued instructions, he wanted them followed to the letter, and this wasn’t just true about his business.

It was also true about his breakfast.

His former maid, Deborah May, discovered this when she was dispatched one morning to McDonald’s to pick up an egg-and-cheese biscuit for her boss. What she returned with had bacon in it, and that was a problem. Mr. Blankenship flung the bacon, Ms. May recalled in a deposition, part of a lawsuit over unemployment benefits.

“He grabbed my wrist,” she said, and gave her a quick lecture: “Anytime I tell you to do anything, I want you to do exactly what I tell you to do and nothing more and nothing less.”

That was a well-known directive at Massey Energy. Middle managers would occasionally find cans of Dad’s Root Beer on their desks — a mnemonic for “Do as Don Says.”

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Journalist burnt to death by mining mafia in Madhya Pradesh (India Today – June 21, 2015)

http://indiatoday.intoday.in/

A 40-year-old local journalist was burnt to death allegedly by three persons, suspected to be closely linked to sand mafia, who set him ablaze apparently over his refusal to withdraw a court case, police said on Sunday.

The burnt body of Sandeep Kothari, who was abducted from Katangi tehsil in Balaghat district two days back, was found lying near railway tracks at Sindi town in Wardha district of east Maharashtra on Saturday night, police said.

Additional Superintendent of Police Neeraj Soni said that Kothari was out of bail for the last two months in a rape case. “His (Kothari’s) body was identified by his brother,” it said.

BSP demanded a CBI probe into the murder, saying the scribe’s family was being “tormented” by the sand mafia in the past as he had “exposed” their activities. Former MLA from Balaghat, Kishore Samrite said Kothari was falsely implicated in more than 12 criminal cases.

“He was externed as he wrote against and also lodged complaints against manganese and sand mafias and other high and mighty people involved in organised crimes. His family too was tormented by mafias,” said Samrite.

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Commentary: Govt needs to maximize benefits from Freeport – by Riyadi Suparno (Jakarta Post – June 22, 2015)

http://www.thejakartapost.com/

Timika, Papua – History is often forgotten when people discuss the fate of US-based Freeport McMoran’s copper, gold and silver mining operation in Papua. People tend to use the current situation to judge what happened in the late 1960s.

People critical of Freeport are quick to point out that the company has plundered Indonesia’s mining wealth in Papua since 1967 (or 1973, when its mines began production). They forget, however, to mention the situation at the time when Freeport entered Papua.

We need to consider at least three things about the situation when Freeport was given its mining contract of work (CoW) from the government of then newly-installed president Soeharto.

The first thing is that Indonesia was in a dire economic situation following the fall of strongman Sukarno, who brought Indonesia to its knees at the end of his two-decade-long rule.

In that context, Soeharto drafted a foreign-direct-investment law to attract badly needed investment. Freeport was the first foreign player to commit to large-scale investment in Indonesia, and the CoW it signed was the first of its kind.

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Gold mine cost cutting not allaying margin falls – GMP – by Lawrence Williams (Mineweb.com – June 22, 2015)

http://www.mineweb.com/

An analyst’s report from GMP points to declining profit margins among the world’s top and mid-tier gold miners.

FUNCHAL – Some interesting research from analysts at Canadian headquartered GMP Securities builds on a theme we covered here in these pages around six weeks ago. This suggested that, if anything, the cost cutting programmes entered into by most major and mid-tier gold mining companies may have largely gone as far as they can go. (See: Has gold mine cost cutting run its course?)

Indeed in its latest mid-year report the Canadian brokerage and investment bank points out that despite some seemingly effective cost cutting, profit margins have been continuing to fall regardless. It bases its analysis on All In Sustaining Costs (AISC) and that these, despite being far more encompassing, and less open to company by company variations than cash costs, are still reckoned by many bank analysts not to go far enough to account for all corporate costs in running modern day gold mines.

The mining companies have been entering into cost reductions that may perhaps be considered as window dressing to keep individual and institutional holders happy in that the easy cuts are being made regardless of the longer-term implications these may have on a company’s future.

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New South Africa mine union boss decries ‘apartheid’ wage system – by Ed Stoddard (Reuters U.S. – June 21, 2015)

http://www.reuters.com/

WESTONARIA, SOUTH AFRICA – The newly elected head of South Africa’s biggest mine union said on Sunday that his members were still being paid “apartheid” wages, signaling a hard line ahead of gold sector wage talks due to start on Monday.

David Sipunzi, formerly a regional leader from the gold-producing Free State province, was elected general secretary of the National Union of Mineworkers (NUM) earlier this month, replacing veteran Frans Baleni.

The leadership shake up has come just ahead of what are expected to be tough negotiations in South Africa’s ailing gold sector, which is grappling with depressed prices, falling production and rising costs.

Speaking to Reuters ahead of a rally in the mining town of Westonaria west of Johannesburg, Sipunzi defended NUM’s demand for wage hikes of around 80 percent for its lowest-paid members, who make between 5,000 rand ($410) and 6,000 rand monthly.

“We expect them to meet our demands. Eighty percent of just over 5,000 rand is not too much. The CEOs are raking in millions. But the indications are that they are going to plead poverty,” he said.

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Polish Opt-Out From EU Climate Pact? Lets Talk, Says Naimski – by Maiej Martewicz (Bloomberg News – June 21, 2015)

http://www.bloomberg.com/

Poland’s leading opposition party is seeking to negotiate exemptions from the European Union’s rules on reducing carbon emissions because the nation’s energy security and economic development depends on coal.

Law & Justice, which opinion polls show winning October’s general election, has vowed to toughen Poland’s stance on climate issues to protect the $526 billion economy, which relies on coal for about 90 percent of its electricity. While the government has been critical of EU emissions goals, it didn’t veto last year’s move toward stricter curbs on discharging heat-trapping carbon dioxide.

“The strategy that we’re planning for the economy rejects the dogma of de-carbonization,” Piotr Naimski, in charge of preparing energy policy at Law & Justice, said in an interview last week. “The role of coal in Poland’s economy fully deserves to receive special treatment.”

Poland will negotiate hard to win “respect” from EU partners for its stance on coal, which Naimski said mirrors the special exceptions, or “opt-outs,” from the bloc’s rules won by a number of other member nations. The country treats development of its coal deposits as a keystone of its energy security in a region dependent on Russian oil and gas imports.

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Happy days here again for NM mine industry – by Kevin Robinson-Avila (Abuquerque Journal – June 22, 2015)

http://www.abqjournal.com/

The Great Recession cut the bottom out of most mining operations in New Mexico but, in general, the industry is now back on a steady growth path and one sector – potash production in southeast New Mexico – is downright booming.

Overall, total income from mining operations statewide reached a record high in 2013 at $2.8 billion. That’s up from a low of $1.7 billion reported in 2009 during the throes of recession and it’s 27 percent higher than the state’s previous record of $2.2 billion before the economy crashed.

That’s good news for the New Mexico economy, particularly in rural areas, where mining now directly employs about 7,100 people. That represents a nearly 40 percent growth in jobs since 2009, when layoffs in copper production hit the Silver City area, contributing to a 28 percent statewide plummet in mining employment.

And some major new projects could be coming online in the next few years. That includes a huge new potash mine in Lea County, a copper operation near Hillsboro, and the state’s first magnesium mining and processing complex near Deming.

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COMMENTARY: Iron Range legislators: Cross us at your own risk – by Ron Way (Minneapolis Star Tribune – June 22, 2015)

http://www.startribune.com/

It was outrageous that a few legislators huddled in the dead of night at the end of this year’s legislative session and secretly agreed to slip language into a bill to abolish the Minnesota Pollution Control Agency’s Citizens’ Board.

But it’s a mistake to think, as too many do, that the board was done in by big agriculture’s concern that the board had reversed a PCA staff decision and required more environmental study of a planned animal feedlot. It’s another mistake to think that Minnesota business interests were finally successful in salving their decades-long pique that the PCA and its board burden business with “overregulation.”

The PCA board has dealt with many controversial ag and business issues ever since it was created in 1967. Ag got its pound of flesh early on when the Legislature required that one member of the nine-member board be a farmer. Business was able to dilute citizens’ power when then-Gov. Arne Carlson made his MPCA commissioner the board’s chair.

What really happened this year was that Iron Range legislators saw an opportunity to send yet another pointed message to everyone in government that there’s a political price for saying or doing anything that even hints of opposition to long-planned copper-nickel mining in northern Minnesota, with the environmentally dangerous sulfates that come with ore extraction.

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Vale Said to Hire Canada’s Stikeman Elliott for Base Metals IPO – by Juan Pablo Spinetto and Scott Deveau (Bloomberg News – June 17, 2015)

http://www.bloomberg.com/

Vale SA, the world’s top nickel producer, hired Canadian law firm Stikeman Elliott LLP to help it prepare for a possible initial public offering of its base metals business, three people with knowledge of the appointment said.

The Rio de Janeiro-based company probably will choose bank advisers in the coming months as it considers the IPO, said the people, who asked not to be named because the matter is private. The sale is subject to a nickel-price recovery, they said.

In December, Vale told investors in New York that it was considering selling a minority stake in its base metals operations, the largest generator of revenue after iron ore, to boost cash. Vale forecasts increased profit and output from the operations, which is based on a 2006 takeover of Inco Ltd., after years of setbacks including strikes in Canada, design defects at Brazil plants and a New Caledonia acid spill.

Vale declined to comment on IPO advisers.

Michelle Di Rocco, a Stikeman Elliott spokeswoman, didn’t respond to e-mails and voice messages seeking comment. The Toronto-based firm also advised Vale in the Inco takeover.

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