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International Media Resource Articles

Rio Tinto digs deeper for next big discovery – by Brett Winterford (IT News.com – June 23, 2014)

http://www.itnews.com.au/

A group of a dozen physicists and geologists from mining giant Rio Tinto and the University of Western Australia is two years away from commercial production of a tool that could dramatically expand the scope of mineral exploration in Australia.

VK1, a collaboration between the mining giant and the university, is an airborne gravity gradiometer that harnesses quantum physics, superconduction, liquid helium cryogenics and aerial survey data to solve the ultimate challenge facing iron ore miners: how can we see underground?

Australia has become a reasonably mature exploration environment, according to Stephen McIntosh, head of exploration at Rio Tinto.

“It is relatively well-explored in the exposed parts of the continent – areas that don’t have cover over the mineral deposit, or some form of material that is younger sitting on top of the mineral deposit.

“The dilemma for Australia is that somewhere between 70 and 80 percent of the continent is covered by something. You actually have to see through a veneer of something to explore underneath the surface – to a mineral deposit a few metres to hundreds of metres below your feet.”

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Cold comfort for mining sector – by Robin Bromby (The Australian – June 23, 2014)

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

GOLD is up — but not enough. As for the resources sector generally, one veteran says there’s never been a more difficult time.

The yellow metal had a nice bump (thanks, Iraq) and closed at $US1315 an ounce. While gold bugs celebrated, there was some sobering news from Virginia-based resources analyst SNL Metals & Mining. Over the past 10 years, the cost of building a mine has blown out from $US560 an ounce of gold production capacity in 2004 to more than $US2300 in 2013. This was based on a study of 192 mines with minimum output of 50,000 ounces commissioned over that period.

Of course, construction costs are not the only factor in project economics (grades are another) and the increase in the gold price since 2004 dulls some of the pain, but nevertheless it is, one, a stark example of the cost inflation in mining about which we have heard so much and, two, reminds one that new projects are expensive things.

As SNL points out, when it became obvious in 2006 that gold’s rise was no seven-day wonder, producers green-lighted more capital-intensive projects; and, chillingly, SNL notes that capital cost intensity will hit an average $US2400 an ounce this year before pulling back. In other words, good drill results are the easy part. It’s making the development economics right that is harder.

Meanwhile, Peter Strachan at StockAnalysis says he has never seen it so tough, with “the vast ­majority” of ASX-listed resources companies now the “walking dead, just hanging on by their fingernails”.

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Enemy of my enemy brings gold and silver prices a big boost – by Lawrence Williams (Mineweb.com – June 20, 2014)

http://www.mineweb.com/

Gold has shot up 5%, and silver even more, during the past few days as geopolitical uncertainties rule.

FUNCHAL (MINEWEB) – While the ever increasing violence in the Ukraine after an initial couple of weeks seemed to have had a reducing impact on safe haven demand for gold – perhaps through news overkill in the early days of the supposedly Russian-inspired revolt against the Ukrainian government – the yellow metal has received something of a boost on the rapid – and seemingly totally unpredicted – incursion of the Islamist fundamental ISIS insurgents into Iraq.

However while gold moved upwards, the initial move was relatively minor until President Obama announced that he would be sending in some 300 U.S. ‘military advisers’ to help support the beleaguered Iraqi government and was also looking at other options. Gold then shot up around $40 before settling back a little, but still remaining well above the key $1300 level and is currently carrying a decidedly more positive image than it was only a couple of short weeks ago.

Indeed the Iraq situation, which could ultimately end by effectively splitting the nation into three religious-dominated entities – into Shia, Sunni and Kurd states – is seemingly out of control and, could even end in Shia Iran working in conjunction with ‘The Great Satan’ of the U.S. in helping bring the situation back into some semblance of structured order satisfactory to both parties – a co-operation unthinkable just a few weeks ago.

Indeed it is perhaps ironic that the old proverb ‘The enemy of my enemy is my friend’ is reputed to be derived from an old Arab saying suggesting the region has been through this kind of expedient partnership before.

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B.C. Developers Defend Near-Border Mines – by Ed Schoenfeld (Alaska Public Media – June 18, 2014)

http://www.alaskapublic.org/

We’ve heard a lot about mines planned for northwest British Columbia, just across Alaska’s border. Southeast tribal, fishing and environmental groups have blasted those plans. Critics say they’ll pollute rivers that cross the border, damaging or destroying salmon and other fish runs.

Much of the recent focus has been on what’s called the Kerr-Sulphurets-Mitchell or KSM Project, being developed by Seabridge Gold. The site, which also includes copper, is roughly 80 miles east of Wrangell.

Critics say it could damage the Unuk River, which flows into the ocean northeast of Ketchikan. Seabridge says that’s not the case. Brent Murphy is the corporation’s vice president of environmental affairs

“The concern with minimizing downstream environmental impacts has been the guiding principal behind the whole design of the mining project,” Murphy says. Critics say the KSM could be about the same size as the proposed Pebble Prospect, a controversial mine proposed for Southwest Alaska.

They worry about plans for huge, dammed tailing lakes that could leak or break, sending acidic water into nearby streams and rivers.

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More holistic model needed if sustainability is to be hard-wired into mining – by Chantelle Kotze (MiningWeekly.com – June 20, 2014)

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

Mining operations, which are often located in sparsely populated and remote areas, can be a source of livelihood and wellbeing for many people. But sustaining the positive impacts and limiting the downside risks remains an ongoing problem for near-mine communities, policymakers and mining companies.

For emerging nations, such as those in Africa, mines attract foreign direct investment, domestic investment, foreign earnings and government revenues. They also provide a means of stimulating local economic activity, while creating employ- ment and contributing to infrastructure and services. But such operations also attract hazards, both social and economic, while the pit-to-port infrastructure often associated with extractive industries is not generally designed to support the nonmining economic activities required to sustain livelihoods beyond mine closure.

Sustainability itself is a concept that is not easily and narrowly defined. However, it can be summed up as the collaborative involvement of multiple stakeholders towards maximising a mining company’s contribution to the wellbeing and benefit of its host society, as well as the environment and the economy.

The International Council on Mining and Metals (ICMM), which is dedicated to improving sustainable-development performance of the mining, minerals and metals industries, believes the focus cannot be strictly on how mining can be sustained, as all individual mining operations have a finite life span. Instead, attention should be given to how mining, minerals and metals can contribute to sustainable development.

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China Miners’ Loss Is BHP’s Gain as Iron Prices Slump 44% – by (Bloomberg News – June 20, 2014)

http://www.businessweek.com/

Rio Tinto Group and BHP Billiton Ltd. (BHP), two of the world’s biggest iron ore producers, are benefiting as falling iron ore prices pressure smaller rivals in China to shut down.

The price of iron ore has plunged 44 percent from its February 2013 peak on the back of record output. That’s hurting mining companies in China where 20 percent to 30 percent of mines have closed, according to the China Metallurgical Mining Enterprise Association.

The closures are helping Rio Tinto and BHP which, along with Vale SA (VALE5), already control about two thirds of global seaborne supply from their low-cost mines. About $40 billion a year of iron ore is mined in China, the country that’s also the world’s biggest buyer of the steelmaking component.

“Many smaller mines in China have stopped production due to the falling prices,” said Sarah Wang, a Shanghai-based analyst with Masterlink Securities Corp. “It’s the right time for BHP and Rio to seize the opportunity to boost their market share.”

BHP, the world’s biggest mining company, last month also flagged the closure of some Chinese ore mines.‘ “Most of them are smaller ones, while the bigger ones are also starting to be affected,” Liu Xiaoliang, the association’s general secretary, said in an interview. “Almost 70 percent of the ore processing companies have also closed.”

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UPDATE 1-Indonesia sets mining export tax cut in draft regulation-official – by Wilda Asmarini and Michael Taylor (Reuters India – June 20, 2014)

http://in.reuters.com/

JAKARTA, June 20 (Reuters) – Indonesia is drafting a new mining export tax that would more than halve the base rate to be paid by miners but doubts remain whether it would be accepted by major copper miners and end a five-month-old dispute that has halted concentrate exports.

Indonesia’s main copper concentrate producers Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp stopped exports in January when the government introduced new mining rules, including an escalating export tax.

The two U.S. companies have previously insisted they should not have to pay any additional taxes because it would violate their current mining contracts, casting doubt on whether even a lower tax rate would be accepted by the miners.

Coal and Minerals Director General Sukhyar said on Friday the new draft regulation meant the export tax would start below 10 percent and would be linked to a company’s progress in building a smelter.

“Yesterday I had discussions with the finance ministry and they said the draft is already finalized,” Sukhyar told reporters, adding that it been agreed by the mining, industry and finance ministries.

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Uralkali Cuts Potash Output Target by 8% to Support Price – by Yuliya Fedorinova (Bloomberg News – June 19, 2014)

http://www.bloomberg.com/

OAO Uralkali (URKA), the world’s largest potash company by production, cut its output target for this year by about 8 percent to support prices.

The company cut projected volumes to 11 million metric tons from 12 million tons, Chief Executive Officer Dmitry Osipov said at Uralkali’s Capital Markets Day today in Moscow. The fertilizer maker will continue to consider market conditions when weighing production levels, he said.

Uralkali broke up a trading venture with Belarus last July and said it will operate at full capacity to regain market share, a step that roiled the $20 billion global potash market. Potash prices slumped as much as 30 percent to as low as $310 a ton by December. They have since recovered to some $350 a ton.

“Market share is important for us, but we don’t want prices to fall,” Osipov said in an interview this month, signaling that the company may lower its production target.

Last year’s industry crisis, which followed Uralkali’s exit from the venture with Belarus, led to a “more healthy environment” in the market as producers have since adopted more “rational thinking,” Oleg Petrov, director for sales and marketing said at today’s event in Moscow.

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Indonesian miners delay alumina refinery plans on legal uncertainty – by Wilda Asmarini and Yayat Supriatna (Reuters India – June 19, 2014)

http://in.reuters.com/

(Reuters) – Bauxite producers are delaying plans to build alumina refineries in Indonesia due to legal uncertainty over a mineral ore export ban imposed five months ago, government and industry officials said.

Indonesia’s Constitutional Court has yet to decide on a legal challenge against a Jan. 12 export ban on bauxite, nickel and other mineral ores imposed by the government to force miners to build refineries and processing plants.

Before the ban, Indonesian bauxite exports accounted for about 12 percent of global aluminimum production, with China taking the bulk of shipments for processing into alumina, an intermediate stage in the production of aluminium.

As many as five alumina refinery projects are underway in Indonesia, industry officials said, but the legal uncertainty means firms have slowed their construction plans for the refineries, which can cost as much as $1 billion each.

“They are worried if the court allows exports again, bauxite producers will be able to resume shipments of raw materials. Investors want the ban to remain,” Dede Suhendra, Mineral Enterprise Director at the mining ministry, told reporters.

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Place of gold in a perilous world – by Lawrence Williams (Mineweb.com – June 19, 2014)

http://www.mineweb.com/

With numerous conflict flashpoints around the world and the possibility of market collapses there has never been a better time to hold some gold as insurance.

LONDON (MINEWEB) – The world is a dangerous place. One only has to look at the rise in extremism, rogue regimes, overthrown governments attempting to regain power, ethnic and religious factions fanatically opposed to one another, and other violent conflicts to see this. Indeed one could say that the populace of Western democracies are perhaps more in peril now than at the peak of the Cold War when the threat of mutually assured nuclear destruction kept most serious conflicts from ever starting.

Back then there would have been a state to target should conflict arise. Nowadays the threat tends to come from small disparate fanatical groups which have no easily identifiable physical power base and with leadership by individuals who may be located almost anywhere. But the weapons available to these groups and rogue states are often the most sophisticated money can buy, and the illegal arms trade can supply, and their awareness of the high tech means by which their leaders might be located makes them increasingly difficult to track down and sanction.

Even if the leadership is destroyed in say a drone strike, it tends to be like the Hydra’s head – cut them off and more grow in its place and often these are more extreme than the originals. Should some of these more extreme groups gain access to nuclear and biological weapons we could be closer to at least partial Armageddon than at any time in global history.

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REFILE-UPDATE 2-World Gold Council calls meeting to explore gold fix reform – by Eric Onstad and Clara Denina (Reuters U.S. – June 18, 2014)

http://www.reuters.com/

LONDON, June 18 (Reuters) – A discussion by gold buyers and sellers across the market on ways to reform or replace London’s global price benchmark, known as the “fix”, will be held next month by the World Gold Council.

The discussion comes as gold and silver fixes, along with other commodity benchmarks, face increased scrutiny by regulators in Europe and the United States following the London Interbank Offered Rate (Libor) manipulation case in 2012.

WGC, a gold mining industry group, said on Wednesday bullion banks, refiners, fund firms, central banks and mining companies had been invited to the forum, with a first meeting scheduled for July 7 in London. Britain’s Financial Conduct Authority will attend the discussion forum as an observer.

The discussions are separate to the London Bullion Market Association’s (LBMA) process aimed at finding a replacement for daily silver pricing, which will be disbanded in August.

Members of the association, including gold and silver fixing banks Deutsche Bank, Scotiabank, HSBC and other large bullion-trading banks will discuss proposals at a seminar on June 20. Sources say that an electronic solution to the silver fix could be applied to price-setting for gold and platinum group metals.

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AT HOME AND ABROAD: Mechanised mining is going to devastate rural areas – by Allister Sparks (Business Day Live – June 18, 2014)

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

EVEN as the platinum strike appears to be moving towards a settlement, the consequences of this drawn-out conflict are going to be with us for years to come. Not only will it take the miners themselves years to make up for their lost earnings, but the mining industry itself will never be the same again.

A revolutionary change in the way South Africa’s oldest and most fundamentally important industry operates lies ahead, with far-reaching consequences for all concerned, not least for our future shape of labour relations generally.

The days of “low-wage, high-employment” on which our mining industry was founded nearly 150 years ago are over. A radical switch to “high-wage, low-employment” lies ahead. In the new era, only a few years from now, miners will not only be paid the minimum of R12,500 a month they are demanding now, but much more. However, far fewer will be employed.

Machines will do most of the work and a relatively small number of highly skilled, highly paid mine workers will operate them.

Old mines that are nearing the end of their productive lives, or that don’t lend themselves to mechanisation, will be shut down or sold off to smaller operators that feel they can still operate them profitably. But the big platinum producers will focus on new mines, especially open-cast mines such as Anglo American’s rich Mogalakwena mine in Limpopo, which can easily be mechanised.

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Is the news about Congo’s conflict minerals good? – by Sarah Von Billerbeck (Washington Post – June 18, 2014)

http://www.washingtonpost.com/

On June 10, the Enough Project published a report claiming that 67 percent of tin, tantalum, and tungsten (3T) mines in eastern Congo are now free of armed actors and declaring the minerals mined there ‘conflict-free’ (compared with a 2010 U.N. Group of Experts report asserting that ‘almost every mineral deposit’ in the area was controlled by military groups).

The document came close on the heels of a June 2 deadline for U.S. firms to report to the Securities and Exchange Commission (SEC) the provenance of minerals used in their products and to certify that they do not contain ‘conflict minerals’ from the Democratic Republic of Congo or its neighbors. The BBC responded to the Enough Project’s report, calling it ‘rare good news’ from the DRC and lauding it as proof that consumer-led lobbying efforts in wealthy countries can have real effects on under-developed countries.

However, the situation is not as rosy as such reactions may suggest. First, describing the mines as ‘conflict-free’ suggests that the absence of armed groups and Congolese military from mines means that miners no longer work under duress and are not forced to pay illegal ‘taxes’ at the mine site that can in turn fuel militia activity. Yet the absence of armed individuals does not mean that miners are not working under forced or inhumane conditions, that they are not being extorted, or that non-state actors and individuals holding political office are not benefiting illegally from mining in the region.

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Ross Beaty’s decade-long copper dream comes to an end – by Dorothy Kosich (Mineweb.com – June 18, 2014)

http://www.mineweb.com/

With the proposed C$470 million sale of Lumina Copper to First Quantum Minerals, Ross Beaty finally closes shop on developing copper companies.

RENO (MINEWEB) – Over a decade ago, this reporter – who does not invest in stocks, and refrains from offering investment advice – was being tutored in the intricacies of financial journalism pertaining to the North American hardrock mining sector by one of the best, brightest and most successful North American gold and silver entrepreneurs.

My mentor at the time, renowned mining entrepreneur Ross Beaty, decided it was time he got into copper. His decision would provide a rare opportunity for a reporter to watch a mining company being born (in this case, actually three copper companies) and, eventually, to watch these companies pass into history.

During a conference call Tuesday, Beaty told analysts he was wistful at the prospect that he would be selling the last of those copper companies – Lumina Copper to First Quantum Minerals for C$470 million.

Back in January 2005, Beaty mesmerized his audience at the Northwest Mining Association convention with his theory that the mining sector may be approaching a “Hubbert’s Peak” for copper production. Globally, economic copper resources were being depleted with the equivalent production of three world-class copper mines being consumed annually; meanwhile, copper demand was increasing by more than 575,000 tons annually and accelerating, he observed.

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Struggle for a better life has been declared – by Palesa Morudu (Business Day – June 17, 2014)

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

SO IT’s back to where it all started. The platinum mine workers were planning on Monday to hold “back to work” marches across the platinum belt, including at Marikana, the scene of the massacre in August 2012.

For nearly six months, platinum miners have shut down the platinum industry, demanding a basic salary of R12,500 a month. Obed Kgaladi, a locomotive driver at Impala Platinum, was quoted in this newspaper as saying: “It is better not to work and suffer than to work and to suffer…. I want a decent place to stay, healthcare, a car and money to pay school fees for my four children.”

These are not simply demands for better wages. These are cries for human dignity. Because any parent who cannot provide shelter and educate their children is stripped of their dignity.

Kgaladi and his 70,000 co-workers have achieved what they were strong enough to get — and it is substantially more than was initially offered.

While the full details were not available at the time of writing, the monthly increase reportedly ranges from R950 to R1,250 over three to five years. This takes the lowest-paid entry-level miner’s pay to R10,000 in three years and close to R12,500 for rock-drill operators, with the living-out allowance apparently frozen at existing levels.

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