Shrinking mining professional ranks may impact investors – HSBC – by Dorothy Kosich (Mineweb.com – July 29, 2014)

 http://www.mineweb.com/

The dwindling ranks of geosciences professionals has impaired mining companies’ ability to quickly respond to surges in precious metals prices.

RENO (MINEWEB) – “A well-established feature of the precious metals market is the apparent inability for producers to raise production levels when demand and prices rise,” said HSBC analysts James Steel and Howard Wen.

“The paucity of trained professionals’ expertise helps explain—along with other factors—the weak supply response by producers to the surge in precious metals prices in 200-2012,” observed HSBC. “This is important to investors because it arguably contributed to the height and longevity of the precious metals rally; it also implies that future rallies are unlikely to be cut short by a rapid increase in mine output.”

An important component in our relatively positive long-term outlook for precious metals generally is the fact that demand exceeds supply in all four metals,” said the analysts, who suggest that lack of professional skilled and technical labor may be a key factor in the ability of mining companies to meet demand.

“If precious metals rallies are not be reversed by rapid increases in mine output, in part due to shortages of professional expertise, then prices may have to rise sufficiently to mobilize aboveground stocks, or deter demand,” they advised.

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Obama Seeks Closer Africa Ties as China Is First Choice – by Mike Cohen and David J. Lynch (Bloomberg News – July 29, 2014)

http://www.bloomberg.com/

When Uganda sought bids last month for an $8 billion contract to expand the East African nation’s rail network, it only invited Chinese companies to apply.

That condition, agreed to by the Ugandan and Chinese governments, illustrates the hurdles President Barack Obama must overcome as the U.S. tries to challenge China’s status as Africa’s No. 1 investor and trading partner. China’s trade with the continent exceeded $200 billion last year, more than double that of the U.S, which it overtook five years ago.

Obama will step up his efforts to forge closer ties with Africa when he hosts more than 40 of the continent’s leaders at a summit in Washington next week. While the World Bank projects African growth of 4.7 percent this year, the U.S. is looking beyond securing deals and access to a consumer market of 1 billion people to promoting democratic principles and countering Islamist-inspired security threats from Nigeria to Kenya.

“China has got a massive head start,” Daniel Silke, director of Cape Town-based Political Futures Consultancy, said in a July 23 phone interview. “From both a diplomatic and economic point of view, China has made all the running over the last few years so there is quite a catch-up for the U.S.”

China has held five conferences with ministers and leaders across Africa since 2000 as it fosters ties with a continent that provides both resources and a market for manufactured goods.

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COLUMN-Big 3 iron ore miners in volume, price sweet spot – by Clyde Russell (Reuters India – July 28, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, July 28 (Reuters) – One thing has become clear from the latest production reports from the big three iron ore miners: They appear intent on ensuring their dominance by boosting low-cost output.

BHP Billiton mined a record 225 million tonnes of the steelmaking ingredient in the year to end-June, beating its own forecast by 4 percent. BHP said in its latest production report that it expects to increase output further, to 245 million tonnes in the 2014-15 financial year.

Fellow Anglo-Australian miner Rio Tinto boosted output 23 percent in the second quarter from the same period last year to 75.7 million tonnes. It also is forecasting higher annual output, with the quarterly report released on July 16 pointing to 2014 production of 295 million tonnes, up 11 percent from 266 million in 2013.

The world’s biggest iron ore miner, Brazil’s Vale , also had record output in the second quarter, posting a 12.6 percent gain to 79.45 million tonnes. The company is planning to boost its annual output to 450 million tonnes by 2018 from 306 million last year.

The three global iron ore giants have effectively gambled that they can continue to boost production and grab bigger slices of global demand, given that they can withstand lower prices due to their low-cost mines and economies of scale.

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INTERVIEW-Mozambique still counting on coal, despite price doldrums – by Pascal Fletcher (Reuters India – July 28, 2014)

http://in.reuters.com/

MAPUTO, July 28 (Reuters) – Mozambique is still counting on increasing coal exports to expand its infrastructure and drive economic growth, despite depressed global prices which might delay the timing of some major railway and port projects, the transport minister said.

Gabriel Muthisse told Reuters the government was also keen to attract investors to help build the infrastructure needed to exploit huge offshore natural gas reserves in the north.

The World Bank has forecast that coal and gas may generate up to $9 billion in revenues by 2032 for the southern African state, which is still poor and recovering from a 1975-1992 civil war.

Rio Tinto , Brazil’s Vale and India’s Jindal have invested heavily in developing Mozambique’s coal deposits – the fourth-largest untapped recoverable coal reserves in the world.

But billions of dollars of investment in rail and port expansions are still needed to carry the coal from the inland Tete mines to the seaborne market.

With global prices for coal in the doldrums because of oversupply and sluggish demand, experts and producers say Mozambican coal mining operations face an uphill battle to be competitive in the next few years, especially when so much infrastructure capacity still needs to be built.

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World’s Best Mining Debt Defies Gold Woe in a Volcano – by David Stringer and Benjamin Purvis (Bllomberg News – July 27, 2014)

http://www.bloomberg.com/

Newcrest Mining Ltd. (NCM) bonds are delivering the best returns this year among metal producers even as the gold miner prepares for new writedowns at a floundering asset inside an extinct volcano.

Debt securities issued by Australia’s biggest gold producer returned 24 percent this year through July 25, compared with 15 percent for the world’s largest extractor Barrick Gold Corp. (ABX), according to a Bank of America Merrill Lynch index of dollar notes sold by investment-grade miners. Falling costs have buoyed the company, which last week flagged a charge of as much as A$2.5 billion ($2.4 billion) mainly on its Lihir mine in Papua New Guinea.

While the writedown may raise Newcrest’s gearing by as much as 6 percent, the miner forecasts cash flow will stay positive after production costs fell 8 percent in the three months to June 30 and gold rose 3.4 percent. Output expenses have been helped by a decline in the Australian dollar, which averaged 10 U.S. cents less in the first half than it did in the same period a year earlier. For every one-cent drop in the Aussie, earnings before interest and tax are boosted by A$28 million, the Melbourne-based company said in February.

“Cost-cutting initiatives and the recent move in the Australian dollar have provided some relief,” Tariq Chotani, a credit strategist at Commonwealth Bank of Australia in Sydney, said in a July 24 interview. “The company’s plan to reduce capital expenditure has also been a credit positive overall.”

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‘Nationalisation alone will fix capital’s crime’ – by Chris Barron (Business Day Live – July 27, 2014)

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

THE National Union of Mine-workers (NUM) was shocked by Anglo American Platinum’s decision to sell its most labour-intensive South African mines, but Dick Forslund, the economist who advised the Association of Mineworkers and Construction Union (Amcu) during its devastating platinum strike, seems unmoved.

“We say good riddance. This is one of the Anglo American subsidiaries that have caused a lot of damage to the South African economy,” says Forslund, an economist and researcher at the Alternative Information and Development Centre.

The NUM said after the announcement by Amplats CEO Chris Griffith this week that it feared 20 000 jobs would be lost. Analysts believe the Amplats decision is the inevitable consequence of the five-month strike.

Forslund, 60, a hardcore socialist from Sweden, rejects the possibility that his advice may have prolonged the strike and put these jobs on the line.

Anyway, he says, Griffith “was planning this long before the strike”.

This is what Griffith implied when he said the decision to walk away from its deepest and most labour-intensive mines had nothing to do with the strike, even if the results announced this week left no doubt about its hugely damaging impact on Amplats.

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The Brics have a $100bn bank. Can the West start taking them seriously now? – by Jim O’Neill (The Telegraph – July 25, 2014)

 http://www.telegraph.co.uk/

Before this decade is over, there is a reasonable chance that India and Brazil will be larger than the UK

Earlier this month, the political leaders of the so-called Brics countries, who were meeting in the city of Fortaleza in northern Brazil, announced plans to set up a joint development bank. The new institution will be headquartered in Shanghai, run by an Indian president, and backed by $100bn (£59bn) of capital.

It is two years since this idea was first mooted. If nothing else the plans demonstrate that these extremely diverse countries can agree on something quite specific if they put their minds to it. It is a development that I have more than a passing interest in, having coined the BRIC acronym – for Brazil, Russia, India and China – back in 2001. So how significant is the launch of this new institution?

Some have suggested that it will start vying for influence with the World Bank and could mark the beginning of the demise of the global order that has existed since the end of the Second World War. Well, maybe. Much will depend on the remit of the Brics bank and how the World Bank and the International Monetary Fund respond. It is worth noting that the IMF issued a statement welcoming the new organisation. I suspect that neither it nor the World Bank will see the Brics bank as direct competition. After all, there are already the Asian and African development banks, and many countries have their own versions – the BRICS countries included.

The first article I wrote that included the Bric acronym (South Africa has since been added to make it Brics but the country was never part of my economic vision) was called “The World Needs Better Economic Brics”.

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Surface mining’s price – by Rebecca Schmoyer (Albany Times Union – July 26, 2014)

http://www.timesunion.com/

Mountaintop coal removal leaves environmental and health impacts

A few weeks ago, I stood on top of Armstrong Mountain. The day was clear and the valley below filled with spruce, fir and hardwood forest. Unbroken ridges extended into the distance. As my final summit of the 46 Adirondack High Peaks, it was a moment of accomplishment. But while I took in the view, I was troubled by a somber national milestone.

As of this year, over 500 of the Appalachian Mountains have been destroyed by mountaintop removal coal mining. It’s time for New York state to divest from this industry.

According to the Office of State Comptroller’s 2013 asset report, the state has millions invested in companies that practice what the industry decorously calls “surface mining.” But the impact of mountaintop removal mining on the people and landscape of central Appalachia is far from superficial. The U.S. Environmental Protection Agency estimates the industry has left 1.2 million acres, or over 2,000 square miles, of barren, scarred land — an area bigger than the state of Delaware. And the devastation continues.

A few days later, Vernon Haltom and I are standing on a flattened ridge in southwestern West Virginia. Here, in the dust above Coal River Valley, summertime means blasting.

“They’re at it six days a week,” says Haltom, executive director of Naoma, W.Va.-based Coal River Mountain Watch.

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Anglo warns of ore price torpor – by Matt Chambers (The Australian – July 26, 2014)

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

MINING giant Anglo American says iron ore prices are set to remain depressed for the rest of the year as growing supply exceeds demand that is being tempered by a fragile Chinese housing market.

But the outlook is better for coking coal, with the British miner’s Wollongong-born chief executive Mark Cutifani expecting contract prices to rise from six-year lows of $US120 a tonne and change the fortunes of the company’s metallurgical coal unit, where first-half profits fell 86 per cent.

Anglo released first-half earnings last night, reporting a $US2.9 billion ($3.08bn) profit, in line with expectations. Net debt of $US11.5bn was lower than forecasts of $US12bn because of lower capital expenditure.

Anglo is the first of the big miners to deliver its June-half profit report and the first to offer its assessment of the global markets, with Rio Tinto and BHP Billi­ton both having stopped giving their views on economics and fundamentals in quarterly production reports.

“Uncertainty is likely to persist for the balance of 2014, though there are some encouraging signs that activity is strengthening in our key markets,” Mr Cutifani said. “Over the long term, we expect new supply to be constrained and to see tightening market fundamentals and a recovery in price performance.”

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Life reflected in BHP’s figures – by Terry McCrann (The Australian – July 26, 2014)

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

BHP Billiton’s production figures effectively fired the starter’s gun for the annual profit season. They also neatly captured in microcosm the big questions about the future course of the overall economy.

Indeed, they were a much better guide to the future and its uncertainties than the June quarter CPI figures, released on the same day, which sent sections of the economentariat into a frenzy of hyperventilating certainty.

That’s a certainty that will no doubt last until some other statistic sends them hyperventilating in the opposite direction.

There’s no great surprise in the significance of BHPB’s numbers — oh for the day when it returns to the simplified BHP, sloughing off the second “B” along with all the rubbish it bought with Billiton.

BHPB remains our biggest company by far. While it won’t generate a profit this year all-but equal to the profits of all the four big banks combined, as it did a few years ago, it will still post a 2013-14 profit which will put any individual bank profit in the shade.

BHPB is not just the resources boom in miniature, it all but is the resources boom. OK, perhaps in combination with Rio Tinto, given the latter’s edge in iron ore, the resource that really “is” the boom, both in terms of dollars generated and its dominant centrality in our role in the China story.

Then perhaps we should add Twiggy Forrest’s Fortescue as not just the third iron ore major but also more directly representative of the “boom” aspect of the “resources boom”.

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EPA moves to block Pebble as House moves to block EPA – by Elwood Brehmer (Alaska Journal of Commerce – July 24, 2014)

http://www.alaskajournal.com/

The Environmental Protection Agency is continuing its push to block the potential Pebble copper and gold mine.

EPA Region 10 Administrator Dennis McLerran said in a formal statement July 18 that the agency is moving to protect the robust salmon stocks of Bristol Bay from the possible impacts of a large mine in the region.

The 214-page proposed determination document calls for a ban of large-scale mining in the area of the Koktuli River and Upper Talarik Creek watersheds north and west of Iliamna, where the Pebble deposit is located. The watersheds are part of the larger Kvichak River and Nushagak River watersheds — the Pebble deposit sits nearly on the border of the two — which support some of the largest returns of sockeye salmon in the world each year.

“The science is clear that mining the Pebble deposit would cause irreversible damage to one of the world’s last intact salmon ecosystems. Bristol Bay’s exceptional fisheries deserve exceptional protection,” McLerran said. “We are doing this now because we’ve heard from concerned tribes, the fishing industry, Alaskans and many others who have lived and worked for more than a decade under the uncertainty posed by this potentially destructive mine.”

If developed, it is believed the Pebble mine would be one of the world’s largest surface copper and gold mines. Alaska U.S. Rep. Don Young called the determination a “jurisdictional power grab.”

During a July 16 House Transportation and Infrastructure Committee hearing on legislation to limit the EPA’s Clean Water Act authority, Young delivered a heated monologue in which he condemned the agency’s actions and called the Obama administration a “monarchy.”

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Red Dog lead, zinc mine marks 25 years, $1B in royalties – by Tim Bradner (Alaska Journal of Commerce – July 24, 2014)

http://www.alaskajournal.com/

The Red Dog Mine in Northwest Alaska turned 25 years old July 17 after producing since 1989 and paying about $1 billion in royalties to NANA Regional Corp., the landowner.

NANA paid $608 million of that to other Alaska Native corporations under revenue-sharing provisions of the Alaska Native Claims Settlement Act and $199 million in dividends to its own shareholders.

The remaining $103 million was retained by NANA to help pay operations and for investments in other business, which has now helped NANA grow a diversified portfolio of assets that earned the corporation $1.7 billion in revenues last year.

To celebrate the July 17 anniversary, NANA invited guests to the mine including including former Gov. Bill Sheffield and Willie Hensley, NANA leaders and former legislators who played key roles in the original mine development.

Teck president and CEO Don Lindsay also attended. The mine is operated by Teck Alaska Inc. Teck Alaska’s parent, Canada-based Teck Resources, purchased Cominco, the Canadian company that developed Red Dog with NANA in the mid-1980s.

Red Dog is a surface mine that is one of the world’s largest zinc mines, producing 551,300 tonnes of zinc concentrates in 2013 (a tonne is approximately 2,200 pounds). The mine earned $874 million in total revenues that year, according to Teck.

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African Barrick Gold: Better as she goes! – by Lawrence Williams (Mineweb.com – July 25, 2014)

http://www.mineweb.com/

African Barrick has achieved a seventh successive quarterly fall in AISC and has improved its guidance on both gold output and costs after another positive quarter’s financial and operating results.

LONDON (MINEWEB) – The measures being taken to bring African Barrick Gold (ABG) – Barrick Gold’s London quoted African gold mining arm – back towards decent profitability seem to be working and while there are still some hiccups – notably a fall in grades at its flagship Bulyanhulu gold mine – its Q2 production results showed substantial further improvement beating most analysts’ consensus with gold output of 178,000 ounces at all in sustaining costs (AISC) of US$1105 an ounce.

This compares with production of 168,000 ounces in Q1 and 164,000 ounces in Q2 2013 – while AISC have shown the best improvements down from $1404 an ounce a year earlier. Consequently it is upping its production guidance for the year and maintaining its guidance on cash and all in sustaining costs.

CEO Brad Gordon was obviously pleased with the latest figures, commenting “We are pleased to report strong results for H1 2014, with increased production and continued cost discipline enabling the business to return to cash generation.. We have now delivered our seventh successive reduction in quarterly all-in sustaining costs (AISC) as we continue to drive operational improvements through the business”.

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India’s Uranium Boss Says Deformed Children May Be ‘Imported’ – by Rakteem Katakey and Tom Lasseter (Bloomberg News – July 23, 2014)

http://www.businessweek.com/

Confronted with reports villages near Uranium Corp. of India Ltd.’s mines have unusually high numbers of physically deformed people, Chairman Diwakar Acharya said: “I wouldn’t be surprised if a lot of those guys are imported from elsewhere, ok?”

A Bloomberg News report on July 9 highlighted the struggles of the locals with disease and early deaths — and the suspicion they shared with some environmental activists that the health conditions are linked to mining waste.

Acharya dismissed as biased any findings of a correlation between the mines and deformities in nearby villages.

Activists and doctors come with an agenda to Jadugora, a town of about 19,500 people in eastern Jharkhand state that’s home to the company’s main operations, he said in a July 14 interview.

“See, what happens is, you say you are a specialist and you’ll come and treat,” Acharya said at Uranium Corp.’s headquarters. “But all you do is, you are convinced UCIL is evil and you have come here only with the sole motive of finding reasons which would validate your preconceived notions.”

Uranium Corp. sends its security officers to monitor attempts by outsiders to examine villagers, Acharya said, explaining it was a necessary step for collecting information about alleged health problems.

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Coal India undermined by basic equipment flaws – by Krishna N Das (Reuters India – July 25, 2014)

 http://in.reuters.com/

NEW DELHI – (Reuters) – As Prime Minister Narendra Modi’s government looks to shape up Coal India Ltd (COAL.NS) for a potential major restructuring, the world’s biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.

The new government, which has a 90 percent stake in the company whose total market value is about $40 billion, is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.

But the firm, which accounts for more than 80 percent of India’s production and employs 350,000, has not met its output target for years, ensuring the country remains the world’s third-largest coal importer despite sitting on huge reserves.

A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government’s reform strategy. [ID:nL3N0O6458]

Two units produced less in the last fiscal year than a year ago, partly due to lack of basic equipment and ageing machinery, Power and Coal Minister Piyush Goyal told parliament this week.

The minister did not provide data but according to a top official at one Coal India unit this issue could be cutting Coal India’s annual output by more than 10 percent. The official declined to be identified due to its policy on talking to media.

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