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South32 looks better bet than parent BHP Billiton by Clyde Russell (Reuters U.S. – March 17, 2015)

http://www.reuters.com/

LAUNCESTON, Australia – (Reuters) – BHP Billiton has done a great job in making its spin-off South32 look attractive, perhaps to the point where it may be a better bet than its parent.

The world’s largest miner released documents on Tuesday outlining details for the new company, which will take over BHP’s aluminum, manganese, nickel, silver and some coal assets.

These assets are often described in the media as “unloved,” but the outlook for many of them is better than the core of iron ore, petroleum, copper and metallurgical coal that will remain with BHP. South32, so named for the line of latitude that links its main operating centers of South Africa and Australia, will get a head start from its parent.

The new company will assume only $674 million in net debt, about half the level analysts had expected, providing a boost to the management should they decide to pursue mergers and acquisitions. Analysts expect the new company, which will list in Australia, the United Kingdom and South Africa, will be worth up to $13 billion.

The South32 assets contributed net profit after tax of $738 million to BHP for the half year to December 2014, again an upside surprise that bodes well for the new company’s reception.

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India’s Conflict Minerals – by Anthony Loyd (National Geographic – April 2015)

http://ngm.nationalgeographic.com/

The gunman at the jungle’s edge lived and died by different names. Some knew him as Prashant, others as Paramjeet. Occasionally he called himself Gopalji, trading the alias with another insurgent leader to further confuse the Indian authorities trying to hunt him down.

When I met him, he was fresh from killing, and called himself by yet another name. “Comrade Manas,” he said as he stepped from the shadows beneath a huge walnut tree, machine gun in hand, a slight figure, his frame and features burned out and cadaverous with the depredations of malaria and typhoid, war and jungle.

The day was already old and the sun low. The silhouettes of a dozen or so other gunmen lurked in the deepening green of the nearby paddy fields, watchful and waiting. Manas and his men were on the move and had little time to talk.

In India they are known by a single word, Naxalites: Maoist insurgents at the heart of the nation’s longest running and most deeply entrenched internal conflict. Their decades-long war, which costs India more lives today than the embers of the conflict in Kashmir, has been described by former premier Manmohan Singh as India’s “greatest internal security threat.”

In the spate of violence 24 hours before our rendezvous, Manas, just 27 years old, and his men had killed six policemen and wounded eight more in an ambush across the range of low hills at whose base we now met.

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UPDATE 2-Protests, lawsuit at Chile mine cloud Antofagasta outlook – by Silvia Antonioli (Reuters India – March 17, 2015)

http://in.reuters.com/

LONDON, March 17 (Reuters) – Environmental protests and a court ruling affecting Antofagasta’s Los Pelambras mine in Chile have clouded the outlook for its copper production this year and driven the company to slash its dividend.

Antofagasta, majority owned by Chile’s Luksic family, is grappling with weaker copper prices and falling metal grades, as well as the protests and lawsuit affecting Los Pelambres, which produces more than half the miner’s copper.

A court in Chile ruled last week that the firm must demolish a mine tailings dam at Los Pelambres, which protesters say is affecting water availability. Antofagasta is appealing the ruling but said it casts doubt over the outlook for the mine.

“Local protests have reduced expected copper production at Los Pelambres by some 8,000 tonnes of copper,” the company said in a statement on Tuesday announcing 2014 results.

“These protests, along with the adverse ruling from the Civil Court of Los Vilos, mean that there is some inherent uncertainty as to the potential impact on Los Pelambres 2015 production levels,” the London-listed company said.

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Barrick Gold eyes sale of key Chilean copper mine – by James Wilson (Financial Times – March 15, 2015)

http://www.ft.com/intl/companies/mining

Barrick Gold is eyeing the sale of one of its “crown jewels”, a Chilean copper mine, as the Canadian miner tries to meet an ambitious debt reduction target to help restore its lustre for investors.

Bankers and mining executives said the Chilean copper mine, one of Barrick’s key assets, would be of potential interest to a number of private equity vehicles, including Mick Davis’s X2 Resources. Mr Davis, one of the best-known mining executives, headed Xstrata before its 2012 sale to Glencore. X2 has raised $5.6bn and is hunting for mining deals.

A sale of the Zaldívar mine by Barrick, which mines more gold annually than any other company, could be expected to realise more than $1.5bn. It would be one of the most eye-catching mine sales since the sector’s sharp downturn, showing how companies that are under fire are having to respond to falling commodity prices and protect balance sheets by selling choice assets.

While X2 would be interested in Zaldívar, other interest could come from Chinese groups looking to acquire resources, one banker said. China’s Minmetals bought Las Bambas, a former Xstrata project that is one of the largest copper mines under construction, last year.

Teck, the Canadian mining group, is also on the hunt for copper assets, its chief executive said this month. X2 declined to comment.

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Weak rand double-edged sword for mining companies in South Africa – by Ed Stoddard and Silvia Anonioli (Reuters India – March 12, 2015)

http://in.reuters.com/

(Reuters) – The sliding rand is a double-edged sword for mining companies in South Africa, with cost inflation, wage claims and potential labour unrest outweighing the gains that exporters traditionally derive from domestic currency weakness.

The drop in the rand , near 13-year lows against the dollar, should benefit diversified mining giants such as Anglo American, BHP Billiton and Glencore as well as domestic companies such as gold producers Gold Fields and Anglo Gold Ashanti.

The rand has lost 7 percent so far in 2015 against the dollar, which has risen against emerging market currencies across the board on expectations of U.S. rate hikes. The flip side of this is that the rand gold price has increased over 4 percent this year even as the spot gold price in dollars has fallen 2.5 percent over the same period.

That’s good news for mining companies in the country who benefit from mostly cheaper costs but higher income from sales of their commodities.

However, those gains may evaporate in the face of inflationary pressures which are poised to lift costs longer term and will strengthen the resolve of the South African labour force – no strangers to strikes – to obtain bigger pay rises.

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PDAC: Is Canadian mining poised for a rebound? – by Peter Diekmeyer (Australian Mining – March 16, 2015)

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

Close to twenty-five thousand mining industry producers and suppliers converged earlier this month at the 2015 Prospectors & Developers Association of Canada conference. Sentiment at the gathering, which PDAC bills as the “world’s largest exploration and mining event,” was cautiously optimistic.

“When the average price of mining stocks listed in the Toronto Venture Exchange’s mining component is down 85 percent – 90 percent if you include companies that were taken out of the index because they went bankrupt, you have what amounts to a huge sale,” said Rick Rule, chairman of Sprott Global Resource Investments. “That means assets and properties are 90 percent cheaper. Years from now, investors will look back on 2015 as the “good old days,” when almost everything could be had at a really good price.”

Brent Cook, a mining investor and publisher of Exploration Insights agrees. “The industry has had a terrible time during the past five years, particularly on the exploration side, where discoveries of economically feasible deposits are fewer and farther between. There will be some further washing out of unsuccessful plays in coming months. But we are beginning to see green shoots indicating that a recovery may be on the way.”

Canada, which like Australia, is blessed with a wide variety of resources, can somewhat be regarded of a proxy for global extractions industries, which have literally been clobbered across the board. A recent report by Barcley’s described 2014 as the worst for commodities since 2008.

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Gina Rinehart blames high mining costs on government – by Julie-anne Sprague (Sydney Morning Herald – March 11, 2015)

http://www.smh.com.au/

Australia’s richest woman Gina Rinehart has attacked federal and state governments for inflicting high costs on local miners, which are battling plunging iron ore prices as global supply swells.

Mrs Rinehart, who is building on her father’s iron ore legacy by developing the $10 billion Roy Hill mine in Pilbara, also endorsed expansion strategies by BHP Billiton and Rio Tinto. The major miners have come under fire for flooding iron ore markets and depressing iron ore prices.

“You know if Australia doesn’t export, someone else will,” Mrs Rinehart told Fairfax Media on the sidelines of the Global Iron Ore & Steel Forecast conference, in Perth, on Wednesday.

Mrs Rinehart, who is estimated by BRW to have a $20 billion fortune, said it was high costs, rather than low iron ore prices that affected her Roy Hill project.

“What affects the project is high costs,” Mrs Rinehart said. “As I have said so many times it is really important government cost burdens are lowered. We have regulations; be it approval processes, be it permits, be it licences, be it the checks that have to go on after those compliances.” She said governments needed to take regulatory costs seriously.

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Mongolia: Between a Rock and a Hard Place – by Marcel Plichta (International Policy Digest – March 12, 2015)

http://www.internationalpolicydigest.org/

Since the establishment of a democracy in Mongolia following the collapse of the Soviet Union, foreign interests have attempted to reassert control over the landlocked piece of steppe between China and Russia.

Mongolia’s position, located between two ambitious powers, means that it is the target of Chinese and Russian influence, often to the detriment of the fledgling democracy and its people. Historically Mongolia’s geographical position and nomadic inhabitants (of which there are still many) has made it vulnerable to the influence of its neighbors. Mongolia was subjugated to both Beijing and Moscow at different times and still struggles with the political influence of both powers.

Economics further complicates Mongolia’s diplomatic issues; vast amounts of mineral wealth have been discovered in Mongolia since the early 90’s including large reserves of copper, gold, and coal. Previously Mongolia’s weak economy, based on pastoral products such as beef and cashmere production, meant that it provided very little potential wealth for powers seeking to control it.

These discoveries have led to serious interest from a resource-hungry China, which accounts for 89% of Mongolia’s exports, as well as Russia, which faces more competition for resources in an ever more hostile Europe.

Despite the renewed interest from its neighbors, most foreign companies involved in the Mongolian mining sector have been Canadian or Australian, of the 11 foreign companies invested in copper production, 9 of them were Australian or Canadian.

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Wolf Minerals’ tungsten mine to start production in Devon – by James Wilson (Financial Times – March 13, 2015)

http://www.ft.com/intl/companies/mining

It has required moving wildlife, building “bat hotels” and planting 40,000 replacement trees. But after more than a year of construction, Britain’s first metals mine for more than four decades is nearing completion.

On the edge of Dartmoor, in Devon, cranes loom over the steel skeleton of a shed as long as a football pitch and 25m high. Within months a complex circuit will begin to process the local rock and liberate the tiny fraction, less than 0.2 per cent, that matters.

The tungsten that Wolf Minerals will mine here is worth almost $30,000 per tonne: enough for a business with $100m in annual revenues.

Tungsten is one of the hardest of elements, seven times heavier than water and used in toolmaking and armaments. The Devon deposit was mined during the first and second world wars, but before Wolf spotted the opportunity to acquire the mining licence, the last serious exploration took place in the 1980s, before China’s explosive industrial growth.

The process plant, the nearby tailings dam for waste rock and the big open pit itself are the essential “kit” of a modern metal mine. They are familiar from Australia to Zambia but not in the UK, where such mining has been all but extinct in recent decades. The closure of almost all Britain’s collieries after a bitter 1980s strike further loosened the country’s bond with mining, and while London remains a centre for global mining finance, the projects are usually thousands of miles away.

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Future Arctic: More Mining, More Shipping and More Tourists – by Benjamin Hulac and Climate Wire (Scientific American – March 13, 2015)

http://www.scientificamerican.com/

As the Arctic thaws, northern nations dream of a new economy

ROVANIEMI, Finland—In one of this nation’s northernmost cities and at the close of a winter that citizens here have called unusually mild, foreign ambassadors spoke of their nations’ hope to do business in the Arctic, Finnish spokesmen outlined their plans to attract international money, and business owners burnished their cases for investment in the polar north.

“Nordic lights is a good example of business actually nowadays,” Juha Mäkimattila, the chairman of the Lapland Chamber of Conference, said at a dinner for foreign guests Wednesday, with a slideshow of aurora borealis photographs thrumming behind him. “We can actually make money on the northern lights from people from new parts of the world.”

At the two-day Arctic Business Forum, hosted by the Lapland chamber, delegations from more than 20 nations, most which do not border the Arctic Circle, said the tone reflected a robust appetite for economic expansion, natural resource extraction and an optimistic prognosis for strong tourist spending.

Meeting in a city that advertises itself on its website as “The Official Hometown of Santa Claus,” most speakers alluded to environmental management but didn’t get into the problems of melting permafrost or the additional threats of future oil spills or the loss of species.

On both days, the tone was bullish. Diplomats from global trade and economic powers signaled their governments’ growing interest in Arctic transit and heavy shipping in the Arctic Ocean.

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Lake Shore’s potential new ore – by Kip Keen (Mineweb.com – March 13, 2015)

http://www.mineweb.com/

We take a look at what’s driving reserve and resource growth at Lake Shore Gold.

Lake Shore Gold, an Ontario miner, issued a good gold reserve update on Thursday: by key analyst measures it beat expectations. The headline was 29% reserve growth, after depletion.

It was impressive, albeit growth on top of already short-lived reserves. Lake Shore has only about five years of minelife, though, it must be said, it has pushed that minelife out consistently with reserve additions over the years. The grade dropped, slightly, in its reserve update, but ounces grew: to 773,000 ounces gold @ 4.4 g/t Au from 598,000 @ 4.6 g/t Au.

For it, on a day that the spot price of gold was bouncing off $1,150/oz, Lake Shore did well in trading, gaining as much as 1.2% during the day.

But if the reserve growth surprised, a little, the real meat is yet to come. Much more interesting still, at this point, is what Lake Shore can bring in its relatively new 144 Gap discovery, 500 metres from its mining operations at Thunder Creek.

In drilling 144 Gap this and last year, Lake Shore caught some attention and for good reason: The hits have been high grade and broad. Late last year Lake Shore reported as much as 7.18 g/t Au over 24 metres among a number of other strong hits. More recently it has highlighted as much as 5.36 g/t Au over 47 metres. The intercepts have put the discovery at the forefront of Lake Shore’s drilling plans.

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Lessons from Rio’s Mongolian adventure – by Neil Hume and James Wilson (Financial Times – March 13, 2015)

http://www.ft.com/intl/companies/mining

How to minimise the risks of joint ventures with governments

If Rio Tinto could start again with Oyu Tolgoi, a $12.6bn copper and gold mine in Mongolia, what would it do differently? The question is addressed in an academic paper that examines ways to reduce the risks resource groups take when investing in frontier markets.

OT, which has already cost more than $6bn, is expected to be one of the biggest copper producers in the world and to last for decades. However, development has stalled as the Anglo-Australian mining group and the Mongolian government argue over how to pay for the second underground phase.

Rio is refusing to proceed until disagreements over cost overruns and taxes have been ironed out, while the cash-strapped Mongolian government wants to cut its 34 per cent equity stake in the project in return for higher royalties from the mine.

Much is at stake for both sides. For Rio, the expansion of OT will bulk up its copper business and reduce its dependence on iron ore. For Mongolia, it needs cash quickly from the mine to meet spending commitments.

So what can be done to prevent this situation happening again? The paper, written by Henry Steel, a special adviser at Rio, and Stefano Gatti, of Bocconi University Milan, focuses on the investment agreement between Rio and the Mongolian government as a key source of tension.

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All is not well on the metals commodities front – by Lawrence Williams (Mineweb.com – March 10, 2015)

http://www.mineweb.com/

In US dollar terms, metals commodities have seen drastic falls over the past 4-5 years which will just perpetuate the mining boom-bust cycle.

The world of metalliferous mining – for the most part at least – is suffering, and suffering badly. No more China-driven supercycle (at least for the short to medium term). More of a China-driven downcycle seems to be in place as Asia’s biggest economy ceases to grow at its recent pace, and there are suggestions too that the Chinese, who look at these things with a rather longer-term viewpoint than most Western governments and businessmen, may even be actively driving down some commodity prices through destocking and reducing imports.

No matter that this impacts on the country’s own mining operations – there has been something of an ongoing programme anyway to rein in some of that nation’s more inefficient and most-polluting mining operations. Air quality in most Chinese cities remains below the standards acceptable in much of the West, but this is all changing, slowly, as the nation restructures. This could be a painful process.

While precious metals prices seem to engender most media coverage, there is little real evidence that China is actively driving these prices downwards – indeed this may be one of the few areas where Chinese demand is supporting prices, albeit obviously not very effectively. But take iron ore, where prices are currently close to one-third of their peak to see the real impacts of declining Chinese demand. With the big low cost producers raising production to protect revenues, smaller, higher cost operations (some of which are large) are being driven out of business.

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Vale CEO Ferreira Said to Be in Talks to Head Petrobras Board – by Anna Edgerton and Sabrina Valle (Bloomberg News – March 10, 2015)

http://www.bloomberg.com/

(Bloomberg) — Vale SA Chief Executive Officer Murilo Ferreira is being sounded out to take over as chairman of the board of Brazil’s beleaguered oil producer Petroleo Brasileiro SA, people with knowledge of the discussions said.

Government representatives have spoken with Ferreira, 61, about replacing former Finance Minister Guido Mantega as chairman, according to three people who asked not to be named because the talks aren’t public. The next Petrobras board meeting in which a new leader could be confirmed will be on March 23.

Ferreira would be the first executive since at least 2003 to head the state-controlled oil producer’s board, replacing a political appointee who was known for his obedience to President Dilma Rousseff. After last month choosing Aldemir Bendine, a state banker backed by Rousseff’s party, to replace Maria das Gracas Foster as chief executive officer, the government recognizes the importance of choosing a market-friendly name to lead the board, one of the people said.

“He’s a great Brazilian executive, competent, with credibility, a good name for Petrobras,” consultant David Zylbersztajn, a former oil regulator who worked with Ferreira in the early 2000s, said in a phone interview from Rio. “Knowing Murilo, I can say he can stand his own.”

Vale and Petrobras press offices declined to comment on the possibility of Ferreira joining the oil company’s board.

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Sudbury’s Environmental Revival – by Boghos Ghougassian (Arab Forum for Environment & Development – December 1, 2012)

http://www.afedonline.org/en/

The Greater Sudbury area in Ontario Province, Canada, 400 km north of Toronto city, was one of the earliest regions of the world to feel the harmful impact of unsustainable industrial development. It was also one of the first to recognize the mistakes and determined to correct them.

For nearly a century, mining and logging activities had converted the Greater Sudbury area into an inhospitable land. It had been dubbed as moonscape, its blackened scar visible from outer space. Even the Apollo 16 astronauts have done their exercises in here in 1971, before landing on the moon surface.
Greater Sudbury encompasses one of the largest known nickel ore bodies on Earth, with an area of more than 60 km2. This has earned Sudbury international recognition as “the Nickel Capital of the World”.

Sudbury was found in 1883 as a railway station town. So dominant were the trees, the Jesuits called their parish “Ste. Anne of the pines”. The trees also caught the attention of wood logging companies who clear cut the area leading to loss of biologic diversity, erosion of soils and other environmental impacts. Records indicate that Sudbury’s forests have been swarmed with some 11,000 loggers during the late 1880s.

With the discovery of nickel, early mining and smelting processes in 1886 to 1929 delivered another devastating blow to the environment. The metal rich rock was ignited in open “roast beds” cloaking the area in dense clouds of sulfur dioxide’s acidic smoke, which devastated the remaining green vegetation and acidified the freshwater of many lakes of the region, killing fishes and many other aquatic species.

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