China’s changing growth profile and the commodities that stand to benefit – by Geoff Candy (Mineweb.com – October 11, 2013)

http://www.mineweb.com/

According to Standard Bank, while it is not going to be a linear progression, the nature of Chinese growth is likely to moderate over the next five years.

GRONINGEN (MINEWEB) – Like any good relationship, it is hard to imagine one’s life without the other person while things are going well. Which is why, any mention of slowing growth in China was met by many in the commodities market with loud cries of “I can’t hear you” and hands clasped firmly over ears.

A case in point, it could be argued, is the massive expansion in iron ore production by the likes of Rio Tinto and BHP Billiton in the face of slowing demand from China, which is expected to result in at least four years of expanding gluts, according to data compiled by Bloomberg.

That’s also not to say, and this is an important distinction, that growth in China has stopped, rather it is moderating. Overall growth is expected to slow over the course of the next few years but it is still going to be at a healthy rate. Indeed, it should also be noted that the base on which this, albeit slower, growth is now placed, and thus the quantum of commodities required in any given year, is vastly higher than it once was.

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J.P. Morgan Kicks Off Sale of Commodities Business – by Christian Berthlsen (Wall Street Journal – October 9, 2013)

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

Bank’s Offering Documents Value Assets at $3.3 Billion

J.P. Morgan Chase JPM +2.33% & Co. has begun circulating offering documents for its physical commodities business, valuing the assets at $3.3 billion and telling prospective buyers they generate $750 million in annual income before compensation costs, according to people familiar with the matter.

The New York company, which announced in July that it would exit the physical commodity business as regulators are increasing their scrutiny of bank roles in the industry, began circulating the offering documents to prospective buyers in recent weeks and expects offers to come in the week of Oct. 21, according to people who have reviewed the materials.

The bank is soliciting offers for the group as a whole entity—which it refers to as “Newco”—or for individual divisions within the group, which are broken down into global crude, North American power, North American natural gas, European power and gas, base metals, coal and the Henry Bath metals warehousing network.

A J.P. Morgan spokesman declined to comment.

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Asean nations continue to develop mining industry – by Henry J. Schumacher (Business Mirror – October 9, 2013)

http://www.businessmirror.com.ph/index.php/en/ [Philippines]

ASSOCIATION of Southeast Asian Nations (Asean) member-states are mineral rich, and mining is playing an increasingly important role in the region’s economic growth (hopefully also in the Philippines). In Indonesia, Southeast Asia’s largest economy, mining accounts for 12 percent of gross domestic product.

Even as global demand has eased, Asia’s locomotive economies continue to drive Asean’s fast-developing mining sector, especially China, which consumes more than 40 percent of the world’s output of industrial ores.

The most rapid growth in both Indonesia and other Asean states has been seen in the extraction of industrial minerals—such as copper, nickel, tin and, more recently, gold. The region’s status as an area of world mineral importance, with immense, still to be exploited, deposits of an almost limitless range of ores, is a focus for the world’s biggest developers.

The Philippines is considered to be the fifth most mineralized country in the world, with its gold resources ranking as the third largest. The country also has the fourth-largest copper resources and fifth-largest nickel deposits. However, only a relatively small amount of territory has been mined.

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Commodity managers warm up to metals as world economy improves – by Claire Milhench (Reuters India – October 10, 2013)

http://in.reuters.com/

LONDON, Oct 10 (Reuters) – Base metals are back in favour with commodity managers after a long period in the dog house, reflecting a new enthusiasm for growth-oriented assets as the global economy picks up.

“The key economic regions of the world have either resumed a slight upward trend or have at least put the worst behind them,” said Ronald Wildmann, an adviser to the GFP Long Mining Fund , which returned almost 15 percent in the third quarter. “In China, the hard landing feared by many has not come to pass.”

Commodity prices as indicated by the Thomson Reuters-Jefferies CRB index rose 3 percent in the third quarter, compared with a 6 percent fall in the second quarter.

This turnaround meant the average actively-managed fund in the Lipper Global Commodity sector was up 1.94 percent, compared with a loss of 9.58 percent in the second quarter.

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Mining is critical for the planet – Cutifani – by William Lawrence (Mineweb.com – October 10, 2013)

http://www.mineweb.com/

Anglo American CEO, Mark Cutifani, is the new chairman of the ICMM Council and has already made it apparent where he would like the organisation to focus in the year ahead.

LONDON (MINEWEB) – “Mining is critical for everyone on the planet” said Mark Cutifani at an ICMM reception yesterday evening in London, as he set out his stall on what he thinks the International Council on Mining and Metals should be focussing on as his term begins as the august organisation’s chairman.

According to its website, the ICMM’s basic brief is as follows: to improve sustainable development performance in the mining and metals industry. Its core membership comprises 21 mining and metals companies (the world’s largest miners) as well as 35 national and regional mining associations and global commodity associations working, in combination, to address core sustainable development challenges.

The ICMM now serves as an agent for change and continual improvement on issues relating to mining and sustainable development. It requires member companies to make a public commitment to improve their sustainability performance and report against their progress on an annual basis.

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UPDATE 1-Protests close world No. 2 ferronickel mine in Colombia – by Luis Jaime Acosta and Peter Murphy (Reuters India – October 10, 2013)

http://in.reuters.com/

BOGOTA, Oct 9 (Reuters) – Cerro Matoso, the world’s No. 2 ferronickel producer owned by multinational BHP Billiton and located in Colombia, said it has temporarily shut its mine after two weeks of protests by indigenous groups, halting 4 percent of world output.

The impact of the stoppage on the nickel market is likely to be subdued amid a global surplus of nickel that has caused prices to tumble about a quarter in the last year but adds to near-constant disruption in Colombia’s mining sector this year.

The London-traded nickel contract ended 1.7 percent lower at $13,660 per tonne on Wednesday. Cerro Matoso took the decision to close its mine for workers’ safety, it said in a statement, adding that protesters were demanding “monetary indemnification”. It did not say why, merely that the dispute could only be resolved in the courts.

“This implies that from now there will be no ferronickel production or associated activities … until conditions enable the company to operate normally,” it said. A mining ministry source said the protesters were demanding compensation for alleged harm to their health from pollution caused by the open-pit project which the source said generates about $185,000 a day for the government in royalties.

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Special Report: The Darfur conflict’s deadly gold rush – by By Ulf Laessing (Reuters India – October 8, 2013)

http://in.reuters.com/

KHARTOUM – (Reuters) – With its scrubland, unpaved roads and mud brick huts, the Jebel Amer area in Darfur, western Sudan, can look like a poor and desolate place. Under the ground, though, lies something sought by people everywhere: gold.

In the past year or so the precious metal has begun to alter the nature of the decade-old conflict in Darfur, transforming it from an ethnic and political fight to one that, at least in part, is over precious metal.

Fighting between rival tribes over the Jebel Amer gold mine that stretches for some 10 km (six miles) beneath the sandy hills of North Darfur has killed more than 800 people and displaced some 150,000 others since January. Arab tribes, once heavily armed by the government to suppress insurgents, have turned their guns on each other to get their hands on the mines. Rebel groups that oppose the government also want the metal.

The gold mine death toll is more than double the number of all people killed by fighting between the army, rebels and rival tribes in Darfur in 2012, according to U.N. Secretary General Ban Ki-moon’s quarterly reports to the Security Council.

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Gold has potential to transform countries, communities – PwC – by Martin Creamer (MiningWeekly.com – October 8, 2013)

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

JOHANNESBURG (miningweekly.com) – Gold has the potential to transform countries and to boost communities, World Gold Council (WGC) director of gold for development Terry Heymann said on Tuesday.

Heymann, who was speaking to Mining Weekly Online from London, was commenting on a 50-page study just released, which shows the colossal potential of gold to boost the macroeconomics of countries as well as play a major role in the development of communities.

Produced by PwC, the WGC-commissioned study, calculated that gold had directly contributed more than $210-billion to the world’s economy in 2012, roughly equivalent to the gross domestic product (GDP) of the Republic of Ireland, Czech Republic or Beijing.

“The size of the figures are very significant and you think of that being equivalent to a city the size of Beijing and the tens of millions of people living in it,” Heymann said.

However, the $210-billion figure was in actual fact a highly conservative number in that it dealt solely with gold’s direct contribution, without taking into account the significant multiplier effect of its many economic linkages.

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Boart Longyear focused on weathering cyclic storm, building on lessons learnt – by Henry Lazenby (MiningWeekly.com – October 8, 2013)

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

TORONTO (miningweekly.com) – The world’s largest drilling company, Boart Longyear, has positioned itself to weather the difficult markets and emerge a leaner, more efficient company that had taken to heart lessons learnt in its recent overleveraged past.

CEO Richard O’Brien said the company was now positioned to perform better with its significantly reduced cost footprint.

“The plan is to keep the costs permanently off the balance sheet, even in the event of a rebound in market conditions,” O’Brien, who joined Boart Longyear this year from gold mining giant Newmont Mining, told Mining Weekly Online in an interview on Monday.

He blamed over-enthusiastic outlook assumptions for the debt blowout and spending that left the company exposed to the recent downturn. The Utah-based and Australia-listed company had last month finalised issuing $300-million in senior secured notes to retire most of its $450-million in debt.

Despite the newly issued notes bearing a 10% coupon, the debt restructuring would give Boart at least some relief from debt covenants that had cast an uncertain shadow over its immediate future.

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Vale Sees Iron-Ore Market Oversupplied From 2015 on New Capacity – by Juan Pablo Spinetto (Bloomberg News – October 7, 2013)

http://www.bloomberg.com/

Vale SA, the world’s largest iron-ore producer, said supply of the steelmaking raw material is expected to grow faster than demand, reducing support for future increases in price.

Iron-ore producers may have between 5 percent and 6 percent more capacity than demand by as early as 2018 as China steel consumption slows and companies boost output, Vale’s head of Ferrous & Strategy Jose Carlos Martins told reporters in Sao Paulo yesterday. While iron-ore prices are expected to remain above $100 a metric ton, the extra supply will make prices less volatile and unlikely to repeat spikes seen previously, he said.

“We will probably start to have some surplus capacity around 2015,” Martins said at the World Steel Association’s annual congress. “Peak prices are unlikely to happen again.”

Vale, based in Rio de Janeiro, is spending almost $20 billion in its Serra Sul mine and logistics venture in Carajas, the world’s largest iron-ore complex, which is the industry’s most expensive project.

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Gold price is ‘bound to go through the roof’ – by Brendan Ryan (Business Day – October 7, 2013)

http://www.bdlive.co.za/ [South Africa]

GOLD bulls have had it rough this year but many would have found solace in the Precious Metals Round Table web-based conference call and presentation held recently by Sprott Asset Management.

About 6,300 participants logged on to listen to speakers like investment “guru” Marc Faber — publisher of the Gloom, Boom and Doom Report — and Toronto-based Sprott chief investment strategist John Embry, a regular keynote speaker at gold conferences.

The bottom line? Hang on to your physical gold and gold shares because the point is fast approaching when the gold price is going to explode.

That prediction is, of course, completely at odds with what has actually happened in the gold market this year, where the price has plunged from about $1,700oz to $1,200oz, before recovering marginally to just above $1,300oz.

Predictions from institutions such as Natixis are far more restrained. The recently published Natixis Metals Review predicts gold dropping back to lows around $1,170oz over the coming six months to a year and averaging $1,200oz for next year.

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No plans to step down for Norilsk’s billionaire CEO – by Clara Ferreira-Marques and Douglas Busvine (Reuters U.S. – October 6, 2013)

http://www.reuters.com/

LONDON – (Reuters) – When he took the helm of Norilsk Nickel (GMKN.MM) last December as part of a deal that ended a long-running shareholder battle, Russian billionaire Vladimir Potanin hinted he saw himself in the job for roughly two years.

Almost a year on, Potanin is clearly relishing his role at the center of a major turnaround and indicates he has no plans to stand down as chief executive of the world’s largest producer of nickel and palladium. “I don’t like deadlines,” the 52-year-old Potanin told Reuters over tea in an upmarket London hotel late on Friday after a long day spent wooing investors.

His departure could be years away as he develops the Norilsk management into a world-class team, he said. “For a rich and reasonably successful guy, it is impossible not to enjoy your job, otherwise why would you spend so much time and effort doing it? I am a great fan of Norilsk and I like this kind of challenge.”

Potanin, whose more than $14 billion fortune began in banking, has long been a major shareholder in Norilsk, securing stock at a bargain-basement price in the loans-for-shares privatizations that followed the collapse of the Soviet Union and spawned a new oligarch elite.

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Miners retreat from Toronto exchange, one-time portal to riches – by Paul Garvey (The Australian – October 7, 2013)

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

THE love affair between Australian miners and the Toronto Stock Exchange appears to be well and truly over, with the bleak conditions in the market driving companies to drop their dual listings and return to their home bourse

Several Australian miners have either left or are preparing to leave Toronto amid complaints about the low levels of investor interest in the resources sector, high levels of compliance, the steep cost of maintaining a listing and the failure of companies to attract the share price re-rating they had expected.

The TSX for years ranked as the largest single exchange for mining ventures and acted as a major gateway for Australian-based companies looking to tap into the North American capital pool. The market also attracted Australian companies that believed they would enjoy better valuations in the eyes of Canadian and American investors.

However, executives told The Australian that investors in North America were increasingly uninterested in resource stocks.

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Iron Range mine could pollute water for up to 500 years – by Josephine Marcotty (Minneapolis Star Tribune – October 5, 2013)

http://www.startribune.com/

A proposed copper-nickel mine in northeast Minnesota would generate water pollution for up to 500 years and require billions of dollars in long-term cleanup costs, state regulators have concluded as they near a key stage in the project’s review.

The mine would require what critics say is essentially perpetual water treatment — a first in Minnesota’s long history of mining — to remove pollutants and heavy metals that would otherwise flow into nearby streams and rivers and eventually Lake Superior, according to a draft environmental impact statement.

The analysis, which regulators expect to release for public review in November, was prepared as part of the state’s review of a mining complex proposed by PolyMet Mining Corp., at a site near Hoyt Lakes.

The prospect of centuries of water treatment illustrates the scope of the environmental challenges facing what would be Minnesota’s first copper-nickel mine — and why it has generated intense environmental scrutiny and divided communities on the Iron Range. PolyMet is the first of many companies lining up to tap into one of the world’s largest copper-nickel deposits. The deposits offer the promise of a new era of mining for Minnesota, but one that comes with significant ecological risks for the wildest and most treasured corner of the state.

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Proponents, critics draw opposite lessons from recent copper mines – by John Myers (Duluth News Tribune – October 5, 2013)

http://www.duluthnewstribune.com/

Supporters of Minnesota copper mining often cite the Flambeau Mine near Ladysmith in north-central Wisconsin as an example of a mine that can run well, be played out and ultimately be “reclaimed” while not causing significant environmental problems.

While environmental groups cite ongoing issues with runoff at the Flambeau site, including high levels of copper in a small stream in excess of water quality standards, an August U.S. Court of Appeals decision ruled the company is not in violation of its permit. That decision is being interpreted by mining supporters in Minnesota as an example of a copper mine operating and closing without environmental doom predicted by critics.

The small Wisconsin deposit, discovered in 1969, was mined along the Flambeau River between 1993 and 1997, producing 181,000 tons of copper, 334,000 ounces of gold and 3.3 million ounces of silver.

“Yes, copper, nickel and other much needed metal production can and has been done safely and successfully, without polluting local waters,” the industry group Mining Minnesota notes in a recent publication. The Flambeau mine is “a great example of this success … and has since been closed and reclaimed in full compliance with Wisconsin laws.”

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