International Media Resource Articles – Page 738

Canadian company hopes to find copper in Methow Valley – by Craig Welch (Seattle Times – July 5, 2014)

July 7, 2014

http://seattletimes.com/html/home/index.html

Less than 2 miles from the heart of one of the most popular outdoor recreation spots in Washington, a Canadian company plans to drill holes to hunt for copper. The Forest Service says it doesn’t have the authority to stop the project.

MAZAMA, Okanogan County — Behind the general store and the outdoor gear shop — above the inn and horse corral — granite walls and pine-covered hills rise thousands of feet to form a towering nob called Goat Peak.

This fixture overlooking the North Cascades’ upper Methow Valley — one of the most popular outdoor playgrounds in the state — is where residents and visitors, including many from Seattle, walk dogs, run trails, cross-country ski, snowmobile, hike, bike and even paraglide.

Now a Canadian mining company wants to explore the earth beneath this recreation hot spot to see if metals marbled into the rock are plentiful enough for a copper mine. And despite mountains of opposition, the U.S. agency overseeing exploration maintains it’s powerless to stop the project.

Not 2 miles from the heart of Mazama, Vancouver-based Blue River Resources is proposing to drill as many as 15 bore holes 1,000 feet deep to see how much copper and molybdenum ore is there. The drilling could go on 24 hours a day for months, and would require the company to haul thousands of gallons of water up the mountain. The drilling could start later this summer.

Can mining companies survive US$90/t iron ore prices? – by Dorothy Kosich (Mineweb.com – July 4, 2014)

July 4, 2014

http://www.mineweb.com/

If iron ore prices continue at near-record lows, mining companies with substantial debt or expensive operations may “bear the brunt of the impact”, S&P warns.

RENO (MINEWEB) – If iron ore prices “stagnate” at US$90 per ton through 2015, some miners’ key credit metrics might worsen significantly, based on scenario analysis on 10 major iron ore producers, Standard & Poor’s Ratings Services observed this week.

“In particular, miners with large iron ore exposure, but are unable to cut costs and are saddled with debt, will face a severe deterioration in earnings and credit metrics,” warned S&P Credit Analysts May Zhong, Diego H. Ocampo, Andrey Nikolaev, Amanda Buckland, Elad Jelasko, and Xavier Jean.

“Whether this deterioration triggers a downgrade depends critically on a mining company’s financial flexibility. If a miner can defer its capital expenditure and conserve cash, its credit quality should be able to withstand sliding iron ore prices,” said the analysts. “In addition, diversified mining companies are well placed, as they can rely on commodities with more resilient prices, such as oil.”

“Another important factor is the movement of mining companies’ local currencies, which could affect their costs and revenues,” S&P observed.

“We observed that major players – Australia’s BHP Billiton Ltd. and Rio Tinto, PLC, and Brazil’s Vale S.A, – can accommodate declining earnings should iron ore prices stay at US$90 per ton through to the end of 2015,” said the credit ratings agency.

Davis sees IPO for X2 at future point – by David McKay (Miningmx.com – July 2, 2014)

July 4, 2014

http://www.miningmx.com/

[miningmx.com] – WHEN NEWS FILTERED through last year that Mick Davis was planning to establish his own firm, the natural assumption was that he was joining the ranks of other former mining executives in private equity.

Davis’s former banker, for instance, Ian Hannam has established an investment firm of his own aimed at capitalising on opportunities in Zimbabwe. There are a bunch of others.

Then in April, Ivan Glasenberg and Mark Cutifani, the CEO of Anglo American, told Reuters at the FT Commodities conference that private equity and mining was like mixing oil and water.

Private equity gears up assets with steady cash flows which are used to repay interest. Then the asset is sold for a higher value after a six to seven year investment period.

“The problem with the commodities space, if you have a high gearing (debt), is that you are not running Boots pharmaceutical where you have a pretty constant earnings base,” said Glasenberg. “In mining you just don’t know your earning base.” Davis, however, said X2 Resources differs from private equity.

“X2 Resources’ proposition is that of building another diversified mining company.

What Mick [Davis] wants – by David McKay (Miningmx.com – June 30, 2014)

July 4, 2014

http://www.miningmx.com/

[miningmx.com] – ONE OF THE best quotes about Mick Davis, the founder CEO of Xstrata, comes from former JP Morgan banker Ian Hannam who assisted with a number of transactions for Davis.

He said: “There are four people who claim they brought Billiton to London: [Brian] Gilbertson, myself, Adrian Coates [a well-known banker in London, then at HSBC] and Davis. The answer is – it was Davis. He saw the opportunity and managed to persuade Gilbertson that it would create a platform to build a new company to rival Rio [Tinto]”.

Since the listing of Billiton in 1997, Davis has been the primum mobile of some of the highest profile mining deals in London, including Billiton’s merger with BHP, a string of transactions during the decade or so during which Xstrata was built into the fourth largest diversified miner, Xstrata’s ultimately frustrated ‘merger of equals’ with Anglo American, and finally, the marriage of Xstrata to Glencore in 2013, the largest transaction in the City that year.

The Glencore-Xstrata combination was also described in terms of ‘a merger of equals’ when first unveiled in 2012. The fact that the final arrangement ended with the departure of Davis, and nearly all of his senior management team, suggests that in global mining finance, mergers are illusory, created to save the actors from over-paying for those acted upon.

That’s why it’s so tempting to style Davis’s swift return to the UK’s corporate scene as head of X2 Resources as an act of ‘unfinished business’, although, Davis was off stage so briefly, it’s hard to describe X2 Resources as a return so much as a continuum.

Rio Tinto looks to catch up in potash – by Emiko Terazono (Financial Time – July 3, 2014)

July 4, 2014

http://www.ft.com/home/us

Miner’s Canadian joint venture is latest in oversupplied market

Dark clouds are gathering over the potash industry again. Last week, Rio Tinto and its partner, Russian fertiliser group Acron, said they would push ahead with the development of the Albany project in Saskatoon, Canada.

In its first disclosure of the size of the asset, north Atlantic Potash, the 50-50 joint venture between Rio and Acron, said the project area contained 1.4bn tonnes of assumed potash resources, a key fertiliser ingredient, of which 329m are estimated to be recoverable.

The announcement does not bode well for an already oversupplied sector where several other major developments, the biggest being BHP Billiton’s Jansen mine with its 5.3bn tonnes of measured resources and 1.3bn tonnes of inferred potash, are also on the drawing board.

Rio, which invested in the joint venture in 2011, has not disclosed how much it has spent on the project, but it sees it as a “tier one” exploration asset.

According to last week’s announcement, the next steps for Rio and Acron are a continuation of the environmental assessment and the pre-feasibility study.

Major Partner Won’t Expand Stake In Mine Near Ely – by CBC Minnesota (July 3, 2014)

July 4, 2014

http://minnesota.cbslocal.com/

MINNEAPOLIS (AP) — A major partner gave up the right Thursday to take a bigger stake in the proposed Twin Metals copper-nickel mine near Ely in northeastern Minnesota, which has been a target of criticism from environmentalists who fear it will harm the nearby Boundary Waters Canoe Area Wilderness.

Chilean-based mining company Antofagasta PLC said it has terminated its option to buy another 25 percent of Twin Metals Minnesota LLC. The announcement said Toronto-based Duluth Metals Ltd. is now assuming control of the joint venture.

Duluth Metals owns 60 percent of Twin Metals Minnesota. Antofagasta, which could have upped its stake to 65 percent, said it’s now “evaluating its options” for what to do with its 40 percent interest in the joint venture and its 10 percent direct ownership stake in Duluth Metals.

“By doing this today Antofagasta has signaled they intend to walk away from the project,” said Aaron Klemz, spokesman for the Friends of the Boundary Waters Wilderness. An Antofagasta spokesman denied that.

“No they’re not walking away,” spokesman Robin Wrench said by phone. He said Antofagasta still likes the project for the long-term, it’s just not exercising its right to buy a larger stake. The move means Antofagasta is only responsible for 40 percent of the project’s future funding, not 65 percent, he said.

“You can’t breathe in air with 7000 micrograms of sulfur dioxide.” [Norilsk Nickel – Kola Peninsula] – by Amelia Jaycen (Barents Observer – July 03, 2014)

July 4, 2014

http://barentsobserver.com/en

BarentsObserver.com is an open internet news service, which offers daily updated news from and about the Barents Region and the Arctic. The site is run by the Norwegian Barents Secretariat in Kirkenes, Norway.

Putin presses Norilsk Nickel to move to a functioning, upgraded plant, dismantle the obsolete polluter in Nikel.

Russia’s Ministry of Natural Resources and Ecology on Tuesday told representatives of “MMC” Norilsk Nickel of the planned decommissioning some of Nikel plant rundown facilities by 2016 and reorganization of metallurgical production at the Monchegorsk plant, which must be upgraded and modernized, the ministry said in a press release yesterday. Monchegorsk is owned by the same company and located some two-hour drive south of Murmansk on the Kola Peninsula.

The program involves modernization and renovation of all stages of processing and consolidation of smelting and refining capacity to a more modern venue including technological upgrading and expansion of refinery at Monchegorsk during 2016-2017. Capital investments in the program total more than 50 billion rubles, the release says.

The decision was made in the course of inter-ministerial consultations, and the updated reconfiguration of Monchegorsk is to be accompanied by a special Russian-Norwegian working group. The parties scheduled a technical workshop for September 2014 in Moscow to plan the next steps.

UPDATE 2-India’s Sesa sees 6-fold jump in iron ore output, Goa mining set to resume – by Krishna N Das (Reuters India – July 3, 2014)

July 4, 2014

http://in.reuters.com/

NEW DELHI, July 3 (Reuters) – India’s Sesa Sterlite Ltd expects its iron ore output to surge six fold this fiscal year as it resumes production in Goa in September after a 19-month mining ban in the state, an executive of the country’s top private iron ore miner said.

A pick up in production as mines in India’s biggest iron ore-exporting state restart could hurt global prices of the steelmaking raw material .IO62-CNI=SI that have already lost almost 30 percent this year in an amply supplied world market.

Sesa Sterlite’s total iron ore output from India, where it operates in Goa and neighbouring Karnataka, is expected to reach 9.29 million tonnes in the year to March 2015 from about 1.5 million a year ago, Aniruddha Joshi, a vice president at the firm, told Reuters in an interview on Thursday.

Most of the output will be exported as Indian steelmakers are not keen on buying the low-grade ore from Goa at global benchmark prices, Joshi said. The country is currently the world’s tenth largest exporter of iron ore.

“It’ll suffice to say that only China can use Goan ore,” Joshi said. “Because it’s hematite coarse fines which can be mixed with very fine concentrates that are only produced in China in high quantities.”

Randgold CEO Bristow Hunts One Last Big African Discovery – by Kevin Crowley (Bloomberg News – July 3, 2014)

July 4, 2014

http://www.bloomberg.com/

Mark Bristow, the chief executive officer of Randgold Resources Ltd. (RRS), said he’s hunting one last major discovery to cap his career before retiring.

The 55-year-old South African has overseen Randgold’s development from a junior mining-exploration company into a gold producer with assets across sub-Saharan Africa including Mali, the Democratic Republic of Congo and Senegal. The next big find could be in Ivory Coast, he told reporters.

“I’d like to find one more asset, for me it would be a perfect finish to my career,” he said in Johannesburg yesterday. “We pour the gold and I’m out of here. I don’t want to hang around. I don’t want to be the chairman or anything like that. I’ve got other things to do.”

Bristow, a geologist by training, led the discoveries of three gold mines in Mali holding 20 million ounces in deposits, over the course of his 30-year career at Randgold. The stock’s return has averaged the equivalent of 27 percent annually in the past decade, compared with the 0.4 percent gain by Barrick Gold Corp. (ABX), the largest producer, and the 2.7 percent decline by Newmont Mining Corp. (NEM), the second biggest, according to data compiled by Bloomberg.

With the Kibali mine in Congo that went online at the end of 2013, Randgold can produce gold profitably across its operations even if the price of bullion falls to $1,000 an ounce, 32 percent lower than the current spot price, for the next five years, Bristow said. The challenge is the five years beyond that.

COLUMN-Copper is unexpected victim of Indonesian export ban – by Andy Home (Reuters India – July 3, 2014)

July 3, 2014

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters.

(Reuters) – When Indonesia banned the export of unprocessed minerals in January of this year, the consensus view was that the most significant impact would be on the nickel and aluminium raw material markets in that order.

Copper barely warranted a mention.

Analysts at Macquarie Bank, for example, issued a research note on January 14, two days after the ban came into effect, examining the implications in a question-and-answer format. The only reference to copper came in the 19th bullet point under the telling heading: “Have copper producers been let entirely off the hook?”

Six months on, though, and one of the country’s two giant copper mines is on care and maintenance and the other has cut production by half. There have been no concentrate exports since January.

Not only is this the single biggest hit to copper mine supply this year but it is acting to accelerate a fracturing of the copper concentrates pricing model.

Both Freeport McMoRan, which owns and operates the Grasberg mine, and Newmont Mining, major stakeholder in and operator of the Batu Hijau mine, appear to have been blind-sided by the January rule changes.

Mining sector tipped to rise again – by David McKay (Miningmx.com – July 3, 2014)

July 3, 2014

http://www.miningmx.com/

[miningmx.com] – THE long-standing adage about mining is that it consists of a hole in the ground with a fool at the bottom and a liar at the top. As derogatory as that may sound to an industry where its top 40 largest companies turn over $731bn, and provide the minerals crucial to modern life, the loss of investor confidence in the sector since 2012 suggests many among the investment ranks were prepared to believe it.

Mining companies spent $348bn between 2005 and 2012, but generated only $126bn in net cash returns. It was a poor performance that was reflected in how resource equities fared. The HSBC Global Mining index shed 46% of its value from 2011 to 2013 as the reality of how little had been returned in yield by the big-spending mining companies hit home.

That’s why at a market capitalisation of $157bn, Facebook is worth nearly double Rio Tinto ($86bn) even though the Anglo-Australian miner generated $50bn from continuing operations during its 2013 financial year.

In comparison, the social media phenomenon generated $2.5bn in the first quarter of this year and some $641m in profit whereas Rio Tinto produced an annual loss of $3bn, including impairments and currency exchange losses.

The market forces that affect Facebook and Rio Tinto are, of course, vastly different, but the fact remains that in a universe of investment, the promises of riches that would flow from China’s industrialisation in the early 2000s had, in the hands of the diversified mining companies, resulted in very little.

Blood Money and Conflict Minerals – by The Editors (Bloomberg News – July 2, 2014)

July 3, 2014

http://www.bloombergview.com/

The world’s insatiable demand for everything from smartphones to jewelry to cars is feeding the bloody war in eastern Congo, where tin, tantalum, tungsten and gold are mined for use in manufacturing. Last year, exports of these minerals from central Africa generated at least $2.1 billion — much of which went to rebels and government soldiers.

Four years ago, Congress responded with a sensible provision of the Dodd-Frank Act that requires U.S.-regulated manufacturers whose products may contain conflict minerals to investigate the matter and report, publicly, to the Securities and Exchange Commission. This transparency is meant to motivate the companies to get conflict minerals out of their supply chains and avoid the wrath of socially conscious consumers and shareholders.

So far, though, companies are widely flouting the law. The first conflict-mineral reports were due June 2, and only 6 percent met an acceptable standard for compliance, according to a review by Claigan, an environmental compliance consultancy.

Now, this is only the first year, and some companies may have been confused by an eleventh-hour Court of Appeals ruling that modified the law’s reporting requirements. Some noncompliance would have been understandable. But not this much. Manufacturers apparently need to be nudged awake to the harm their reliance on conflict minerals causes. The SEC will have to make an example of the worst offenders.

Cliffs Offers Casablanca Three Seats on Smaller Board – by Tess Stynes (Wall Street Journal – July 2, 2014)

July 2, 2014

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

Coal and Iron Ore Producer Cliffs Natural Resources Trying to Avoid Proxy Fight

Cliffs Natural Resources Inc. CLF +4.84% is proposing again a settlement that would give hedge fund Casablanca Capital LP three seats on a smaller nine-member board, the coal and iron ore producer’s latest attempt to avoid a proxy fight.

Later Wednesday, Casablanca, which has a 5.2% stake in Cliffs, contended that the mining company’s latest proposal in its view wasn’t a “a genuine attempt to reach a settlement.”

“We have no intention of negotiating through press releases but remain willing, as we have detailed in our public filings, to enter into a reasonable settlement that provides for real change,” Casablanca also said.

The activist hedge fund of Donald Drapkin has been urging Cleveland-based Cliffs to split its U.S. and international operations. Earlier this year, Casablanca rejected a previous settlement offer from the mining company and instead nominated six directors to the company’s 11-person board.

In a statement Wednesday, Cliffs said two of its current directors won’t stand for re-election at the company’s annual meeting. The company also said three additional board members wouldn’t seek re-election if Casablanca accepts its proposed offer.

RPT-COLUMN-China’s iron ore mines won’t shut fast enough to offset global supply boost – by Clyde Russell (Reuters India – July 1, 2014)

July 2, 2014

http://in.reuters.com/

LAUNCESTON, Australia, July 1 (Reuters) – Iron ore prices rose the most in 10 months last week, but hopes that this marks the start of a new bullish phase are likely to be dashed.

Spot Asian iron ore .IO62-CNI=SI ended last week at $94.90 a tonne, a gain of 3 percent from the prior week, with prices bolstered by an improvement in the outlook for manufacturing in China following the June HSBC flash Purchasing Managers’ Index showing expansion for the first time in six months.

Iron ore prices are still down 30 percent from the $134.20 a tonne at the end of 2013, but they have recovered since briefly dropping to a 21-month low of $89 on June 16.

The bullish case for a recovery is largely based on expectations that Chinese domestic production will drop as high-cost mines are forced to close on unsustainable losses. The loss of domestic output will open the door to increased imports, thus absorbing the extra supply being brought online by the major mining houses.

This view is bolstered by the improving outlook for steel demand on the back of faster investment in railway and other infrastructure spending as the authorities undertake what’s been characterised by several analysts as a “mini-stimulus” to ensure economic growth remains above 7 percent per annum.

Broad transformation needed in global mining – EY – by Dorothy Kosich (Mineweb.com – July 2, 2014)

July 2, 2014

http://www.mineweb.com/

Given the right levels of investment, significant gains are possible through innovating mining and processing methods, says EY.

RENO (MINEWEB) – Global mining productivity has been declining on a volume and cost basis since 2000 as miners have chased production growth during the commodity boom, said EY Global Mining & Metals Advisory Leader Paul Mitchell.

Mining productivity in Australia has declined about 50% since 2001. Despite massive investment in new equipment and automation, Australian mining capital productivity has declined by 45% compared to 22% in all industries, says a new EY report, Productivity in mining: A case for broad transformation.

Labor productivity in the U.S. coal sector has declined nearly 30% from 2009-2012, while in the South Africa gold sector, labor productivity is estimated to have declined 35% since 2007.

Many companies have been dealing with the plunge in productivity through a series of cost-cutting exercises or point solutions, observed the EY report. “However, the size of the problem is too large for point solutions to solve on their own and often they have the effect of simply moving the problem further down the supply chain.”

“Real and sustainable productivity gains will only come from broad business transformation,” EY stressed.