UPDATE 3-South Africa’s waning gold industry braces for more strikes – by Ed Stoddard (Reuters India – August 30, 2013)


JOHANNESBURG, Aug 30 (Reuters) – South African gold miners plan to strike for higher pay from Tuesday, inflicting more damage on an industry that has produced a third of the bullion ever pulled from the earth but is now in rapid decline.

The National Union of Mineworkers (NUM), which represents almost two thirds of the country’s 120,000 goldmine workers, served the mining firms notice of the strike starting from Tuesday’s night shift, the companies said.

Negotiations broke down last week, with the unions and companies still poles apart over pay. The Chamber of Mines, which negotiates on behalf of the companies, said it made a final offer to increase basic wages by 6 to 6.5 percent. The NUM is seeking 60 percent and rival union AMCU wants as much as 150 percent. The companies say those demands are unrealistic, given rising costs and falling bullion prices.

In a sign of the industry’s frustration over the deepening crisis, Chamber of Mines president Mark Cutifani choked back tears on Thursday as he made an emotional appeal for an end to the violence and rounded on “thugs and murderers” he accused of stoking the unrest.

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Congo, beyond the conflict: Six reasons why it matters – by Vava Tampa (CNN.com – August 28, 2013)


Editor’s note: Vava Tampa, a native of Congo, is the founder of Save the Congo, a London-based campaign to tackle “the impunity, insecurity, institutional failure and the international trade of minerals funding the wars in Democratic Republic of the Congo.”

(CNN) — Mention DR Congo, Sub-Saharan Africa’s largest country, and what comes to mind? Probably conflict minerals, proxy wars, the rape capital of the world, or the trigger for the 19th century “Scramble for Africa.”

But beyond the despair, there is another country; a country not like any other country in the world — a country with rich ancient traditions, a colorful cultural energy and creativity, amazing potential and much, much more.

Ask historians or archaeologists — one of the earliest known mathematical objects, the Ishango bone, was not made in Ancient Greece, Mesopotamia or Renaissance Europe but around Congo’s Lake Edward around 18,000 BC.

It is certainly difficult to picture this today: thirty-two years of dictatorship followed by wars, invasions and bad governance reduced Congo from being a potential economic powerhouse to one of the world’s poorest countries.

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Fears grow about Reko Diq Gold mines…Baloch senator says deal offered to China; government denies – by Shaheen Sehbai ([Pakistan] The News International – August 28, 2013)


WASHINGTON: While major world mining and investment companies are preparing to invest big time, big money in Balochistan, specially in the mining sector, suspicions and doubts that the biggest gold mine of Reko Diq may be quietly handed over to China as part of the growing economic ties are also coming to the fore.

Official and business circles have been wondering for some time what will happen to the multi-hundred billion dollar Reko Diq gold and copper mines after the world’s largest mining company, Barrick Gold of Canada, was thrown out of Pakistan by the Supreme Court of Pakistan during the PPP regime.

But after the recent visit of high level government delegation to China and a flurry of quick MoUs and super-paced exchange of visits, an important leader from Balochistan, former Senator Sana Baloch has alleged publicly that the government has promised these mines to China in a year or so.

While the Government leaders strongly denied any deal or any promise made during the Beijing visit, an official Pakistan Government statement assuring that the Reko Diq mines will be given to the highest bidder in an international tender is still awaited.

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Russia orders oil cut to Belarus after potash clash – by Dmitry Zhdannikov and Vladimir Soldatkin (Reuters U.S. – August 28, 2013)


MOSCOW – (Reuters) – Russia ordered its oil firms on Wednesday to cut supplies to neighboring Belarus by around a quarter, in a major escalation of a trade and diplomatic dispute following the arrest in Minsk of the boss of Russian potash firm.

Trade disputes between Russia and Belarus have affected oil deliveries in the past, causing knock-on disruptions to pipeline flows via Belarus to European countries such as Poland and Germany.

Memories of those cuts, which led to oil price spikes, resurfaced this week after a major diplomatic row erupted between Moscow and Minsk.

Belarus this week detained chief executive of Russia’s Uralkali (URKA.MM), the world’s top potash producer, accusing him of inflicted severe economic damage following the collapse of a Russia-Belarus sales cartel.

Russia demanded the release of Vladislav Baumgertner. Uralkali controls 20 percent of the world market and is partially owned by Suleiman Kerimov, a billionaire with close ties to Russian President Vladimir Putin’s administration.

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Israel looks to glitter in world diamond trade – by Ari Rabinovitch (Reuters India – August 29, 2013)


RAMAT GAN, Israel – (Reuters) – The Israel Diamond Exchange flexed its muscles this week, hosting a four-day show it hopes will strengthen its position as a major hub, and market leaders voiced optimism the struggling industry would have a strong end to the year.

Hundreds of companies crowded the world’s biggest diamond trading floor on the outskirts of Tel Aviv, where buyers, under heavy security and armed with eye loupes, ambled through rows of tables that displayed $2 billion of precious stones.

It was the largest event the exchange had held. Official figures were not made public, but Yair Sahar, president of the exchange, said sales were in the hundreds of millions of dollars, and he expected the show to provide a $2 billion boost by the end of the year.

“The eyes of the world are watching us. The mining companies, the jewelry manufacturers, they are wishing – ‘please be successful’,” Sahar said. Israel is already a key trading center and diamonds account for about 20 percent of all industrial exports. Manufacturing has dwindled, but trading has thrived, reaching an annual turnover of $25 billion.

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Anti-mining protests biggest hurdle for Peru’s mining growth – S&P – by Dorothy Kosich (Mineweb.com – August 29, 2013)


Peru’s mining sector may be booming, but the country need political stability to support long-term mining growth, Standard & Poor’s advises.

RENO (MINEWEB) – Of all the challenges facing Peru’s mining sector, Standard & Poor’s considers anti-mining protests the main constraint on its expansion “because if protests become more widespread, other mining projects could be delayed or scrapped entirely.”

Nevertheless, S&P Credit Analysts Diego Campo, Francisco Serra and Richard A. Francis feel “Peru’s mining sector is poised for significant growth, thanks to its large and high-quality metals reserves, reasonable tax regime, regulations that promote private investment, attractive power costs, and a long track record of mining activity. Plus, the country has fostered the development of ancillary-services suppliers and qualified manpower.”

“We expect investment in the energy and mining sectors will continue at a steady, rapid pace through the 2016 national elections, supporting future economic growth,” the analysts forecast in note published Wednesday. “Moreover, fiscal revenues from the mining sector, along with implementation of the new fiscal rule, should help Peru’s fiscal accounts and continue to reduce the government’s debt burden.”

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Prospecting under cover: Frontiers of exploration research – by Kip Keen (Mineweb.com – August 28, 2013)


In Part II of Mineweb’s series on exploration trends, Kip Keen turns to the Deep Exploration Technologies Cooperative Research Centre in Australia and talks paradigm shifts.

HALIFAX, NS (MINEWEB) – So the success rate falls. Now exploration money buys fewer discoveries. This was one of the key insights Richard Schodde, of Minex Consulting, discussed in Part I of this interview series on exploration trends. The rate of discovery used to correlate well with increases in spending, in part because the deposits were easier to find. More boots on the ground. More rocks chipped. More ore deposits discovered.

But now the boots are more expensive to pay for and many of the surface rocks, especially in developed countries, have already been kicked forcing exploration to go deeper and become more extensive. Meantime, labour costs, until recently that is, were sky-rocketing amid intense competition to secure services.

To some degree, as the market cools, a process unfolding for a couple years now, the cost of exploration gets cheaper as, for example, geologists lower their rate of pay and drilling contractors cut down margins to get contracts. But it can only go so far. That much is clear now as discoveries, especially in developed countries, come at depth and require increasing geological expertise to find and more drilling.

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UPDATE 1-Indonesia may loosen export ban on metal ores – by Rieka Rahadiana and Fergus Jensen (Reuters India – August 28, 2013)


Aug 28 (Reuters) – Indonesia will push for a relaxation of its controversial 2014 ban on metal ore exports amid a scramble to support the rupiah and restore confidence in Southeast Asia’s largest economy.

Indonesia is the world’s top exporter of nickel ore, coal and refined tin and its mining industry contributes around 12 percent of gross domestic product (GDP).

However, the ban on unprocessed mineral exports from January 2014 has hit the industry and uncertainties over the country’s mining rules have dented its credibility with foreign investors.

If approved, the reversal of mining policy will upset metal industries banking on a tightening of ore shipments that have increased significantly in the lead up to the ban. However, some in parliament doubted the government would manage to overturn the rule.

Under the proposed revision, mining companies with smelters under construction would be allowed to continue to export unprocessed minerals, but would be charged a progressive duty on the shipments depending on how close to completion their projects are, Industry Minister Muhammad Sulaeman Hidayat told reporters.

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The Big Australian should strike a deal with Rio Tinto – by Terry McCrann (Melbourne Herald Sun – August 27, 2013)


ALUMINIUM was the ghost at the BHP Billiton profit feast last week.

Although the aluminium, manganese and nickel division generated more than $9 billion of revenue, it contributed just $164 million of EBIT (earnings before interest and tax).

Compare and contrast that with the jewel in the BHPB crown – iron ore, which on a little more than double that revenue, at $20 billion, contributed more than 67 times as much EBIT, or $11.1 billion.

Incidentally, I never – and I’m equally certain, neither would most other commentators – have ever thought, in the good old days pre-China, that we’d end up describing lumpy, plentiful, iron ore as the ‘jewel” in anyone’s crown.

That it is, certainly in the corporate crowns of BHPB and Rio Tinto. It’s also made multi-billionaires of Gina Rinehart and Andrew Forrest. In contrast, aluminium ain’t going to make a billionaire of anyone. Thanks to China continuing to smelt uneconomically, aluminium has a knack of turning billionaires, corporate or otherwise, into mere millionaires.

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Potash Collapse Signals Buy Not Build for Vale: Corporate Brazil – by Juan Pablo Spinetto (Bloomberg News – August 26, 2013)


Turmoil in the global potash market is creating an opportunity for Vale SA to buy assets at a discount as the mining company leads Brazil’s bid to become self-sufficient in crop nutrients.

Vale, whose output at Brazil’s only potash mine dropped for the past three years, should abandon plans for greenfield projects and consider instead purchasing existing producers or their assets, according to Stifel Nicolaus & Co. Potash companies are trading at a “great discount,” making acquisitions a cheaper option for Vale than starting from scratch, said Terence Ortslan, managing director of research firm TSO & Associates.

Vale suspended two potash projects in Argentina and Canada worth $8.9 billion in the past year as cost increases made the ventures unfeasible. Fertilizer producer shares have slumped 14 percent on average since July 30 when OAO Uralkali ended output restrictions through a venture with Belaruskali, triggering speculation prices would tumble. Their average price-to-book ratio fell to 1.69 yesterday from 2.55 at the end of last year.

“It’s tough to justify the economics of a new project at today’s pricing,” Stifel Nicolaus analyst Paul Massoud said by telephone from Washington.

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Mining industry needs to look in the mirror, says Cutifani – by Allan Seccombe (South Africa Business Day – August 27, 2013)


THE entire South African mining industry needs to “look in a mirror” and take accountability for the sector, Anglo American CEO Mark Cutifani said at the Mining Lekgotla on Monday.

Mr Cutifani, who is also president of the Chamber of Mines, said the mining sector had faced a “tumultuous” year in 2012 and it remained the industry’s intention to “face with brutal honesty” what needed to be done to improve situations that had led to the unsettled sector.

“The Marikana tragedy was a stark reminder that we as an industry need to do more,” Mr Cutifani said at the second Mining Lekgotla, which draws together participants from labour, the government and the mining sector, as well as community and youth representatives.

The mining companies had looked in the mirror and taken full accountability for the state of the industry, Mr Cutifani said. “We ask our partners to also look in the mirror,” he said. “It remains our absolute intention to address the issues we have faced with brutal honesty and as a sector confronted with myriad challenges, we need to chart a path towards future growth and prosperity.

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Ex-Im loan request pits Caterpillar against iron ore miners – by John Myers (Prairie Business – August 26, 2013)


DULUTH, Minn. — It’s not that Minnesota’s congressional delegation doesn’t like Australia, mate. But the idea of a U.S. government bank loaning money to an Australian iron ore mine that will compete with Minnesota taconite?

That’s what they don’t like.

U.S. Sens. Al Franken and Amy Klobuchar and U.S. Rep. Rick Nolan, all Minnesota Democrats, are on record opposing a plan in front of the U.S. Export-Import Bank to invest in equipment for the giant Roy Hill iron mine in Australia’s northwestern Outback.

The Export-Import Bank is considering a request for $650 million in long-term financing to aid the export of $522 million of U.S.-made mining equipment to mine and process ore at Roy Hill. The rest of the money could be going to install the U.S. equipment on site at the mine.

Cleveland-based Cliffs Natural Resources, with four mines in Minnesota and Michigan, has led the charge to stop the loan, saying it threatens U.S. mining jobs and, with new Asian steel produced from Australian ore, eventually threatens U.S. steel industry jobs.

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BHP to Pursue Potash Venture on Strong Return Expectation – by Nichola Saminather (Bloomberg News – August 25, 2013)


BHP Billiton Ltd. (BHP), the world’s biggest miner, will proceed with its plans for a Canadian potash project that has been called “misguided” by its biggest shareholder, driven by the prospect of strong investor returns.

“We are continuing on this investment because we strongly believe, and we’ve talked a lot about it with the board, this is going to offer very high returns for shareholders in the decades to come,” Chief Executive Officer Andrew Mackenzie said in an interview yesterday on the Australian Broadcasting Corp.’s ‘Inside Business’ program, according to an e-mailed transcript. “We have the best undeveloped green field mine on offer to the world and what we are doing, we will be prepared to respond very quickly to the market when it’s needed.”

Russia’s OAO Uralkali, the largest potash producer, in July quit a marketing venture with Belarus’s state producer that controlled about 43 percent of global exports and kept limits on production, and signaled prices may fall by as much as a quarter. BHP said Aug. 20 that its projections for the project assume a shift away from the current market dynamic.

Melbourne-based BHP last week said it’s seeking partners for the Jansen project after approving spending of $2.6 billion. The company has been approached and has approached possible purchasers of a stake in the project, Mackenzie said then. Jansen may cost $16 billion to build, Citigroup Inc. said last month.

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In bustling Houston, it’s a case of ‘Build, baby, build!’ – by Anna Driver and Ilaina Jonas (4 Traders.com – August 25, 2013)


With Texas one of the few bright spots in the U.S. economy, the skyline of swaggering Houston is where the action is as builders and global oil companies, from Phillips 66 to Exxon Mobil Corp, look past previous busts and spend billions on gleaming new buildings.

The U.S. shale oil and gas revolution – which has already changed industries from railroads to pipelines and refineries – is helping drive the voracious appetite for office space needed for the expanding workforce in the world’s energy capital.

Demand is so hot that Houston is one of the few places where banks – including Wells Fargo & Co, which is seen as one of the more conservative big banks – will loan money for a new building without demanding developers first have a tenant.

“Houston is booming and bar none the strongest market in the United States of America,” said Joseph Sitt, chief executive of Thor Equities, which has two projects underway in Houston.

There are some 56 office buildings totaling at least 11 million square feet under construction in and around Houston, according to real estate services firm CBRE Group Inc. That is equivalent to 190 football fields.

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Australia’s mining boom rolls on for Chinese entrepreneur in the outback – by James Regan (Reuters U.S. – August 25, 2013)


SYDNEY – (Reuters) – Former Chinese commodities trader Jerry Ren, who is quietly building a mining empire in the Australian outback, scoffs at talk the resources boom is over. For him its just moved north.

As some mining firms clock up billions of dollars in losses, Ren has secured millions of acres of exploration rights in Australia’s most remote regions that could soon make him a billionaire, helped by his connections in the world’s biggest consumer of minerals China.

Ren, now an Australian resident, has already been dubbed the “$900-million-dollar-man” for his estimated net worth. “There’s still plenty of money and opportunity in Australia if you know where to look,” says Ren, the son of a steel mill engineer who grew up in the shadow of the Great Leap Forward, Mao Zedong’s disastrous attempt to modernize China’s economy.

Ren’s privately held Australian Oil & Gas company holds a 75 percent stake in exploration rights covering 70 million acres, 25 percent of Australia’s Northern Territory, or an area larger than Afghanistan.

Under-exploited by heavy hitters like BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) as Australia’s last boom took shape further south in established iron ore and coal fields, Ren has had a near-free run to stake his claims in the Territory.

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