International Media Resource Articles – Page 739

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.

X2 boss Davis calls next supply deficit – by David McKay (Miningmx.com – July 1, 2014)

July 4, 2014July 2, 2014

http://www.miningmx.com/

[miningmx.com] – THERE’S A MOMENT when X2 Resources founder, Mick Davis, can’t contain a smile. Asked whether there was any mischief in the naming of his new company, he replied: “Maybe just a bit of fun.”

The psychology of naming, however, runs deep. It’s no coincidence, for instance, that a year after completing the ‘merger’ of Glencore Xstrata, the combined company should resolve at its recent annual general meeting to rename the company Glencore plc. The merger of equals was long dead, but the name change sealed it.

Said Hanré Rossouw, who is head of commodities for frontier and emerging markets at Investec Asset Management of the decision to call Davis’s new venture ‘X2’: “I think the name says it. It’s the Xstrata model rebooted”.
Yet is the market similarly positioned for another Xstrata?

“I think Mick has got a good track record,” said Rossouw. “He brought change to the industry by introducing a more financial focus. Before that you still had mining engineers running companies.

“The only disadvantage is that because Mick has had success, so it may become more difficult to get the same kind of deals. In the past, he seemed to come out of nowhere”. Rossouw was a CFO of Xstrata Alloys before joining Investec in Cape Town.

Boardroom battle leaves Cliffs on edge – by Barry Fitzgerald (The Australian – June 30, 2014)

July 2, 2014

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

OWNERSHIP of the $1 billion-plus Koolyanobbing iron ore operation in Western Australia could be up for grabs as a result of a bitter boardroom proxy battle at Cliffs Natural Resources.

The ownership issue for the 11 million-tonne-a-year Koolya¬nobbing operation — 50km north of Southern Cross — comes to a head on July 29 at the annual meeting of owner Cliffs, which is based in Cleveland, Ohio.

New York activist hedge fund and 5.2 per cent Cliffs shareholder Casablanca Capital is behind a boardroom shake-up push at the meeting which, if successful, would see Cliffs move to quit its Australian operation. Casablanca wants Cliffs, which is also a coal producer, to focus on its larger and domestic market-based US iron ore business. It wants the seaborne market-exposed Australian assets, and Cliff’s Canadian assets, to go.

The hedge fund argues that Cliffs is too small to compete head to head with the iron ore majors of Rio Tinto, BHP Billiton and Brazil’s Vale in the seaborne markets for iron ore. It has said there are many potential mechanisms for an exit, including a spin-off and a partial or total sale.

The Australian operation should be sold now, it said, as it held the greatest strategic value “today’’ because of its relatively short mine life of about seven years, based on current reserves.

NEW CALEDONIA: Is a Vast Marine Sanctuary Any Use if You Can’t Police It? – by Ian Lloyd Neubauer (Time Magazine – June 29, 2014)

July 2, 2014

http://time.com/

Tiny New Caledonia relies on a handful of French ships to patrol a marine reserve twice the size of Texas

For the first half of June — until the U.S. declared an even bigger one — the tiny, French semiautonomous territory of New Caledonia boasted the largest nature reserve on earth.

Covering a vast 1.3 million-sq-km region of the South Pacific, the Natural Park of the Coral Sea was established on May 28 to protect the world’s second largest coral reef and its attendant lagoon. Already safeguarded in parts by a UNESCO World Heritage listing, this wonderland is a nursery for 25 kinds of marine mammals (including sea cows and humpback whales), 48 species of shark and five different marine turtles. It also spawns vast numbers of pelagic fish, 3,000 tons of which make it into the Pacific every year – an important food source for tens of millions, and a source of employment for thousands of people living in the region.

But before most people had even heard of the creation of the Natural Park of the Coral Sea, U.S. President Barack Obama went one better by using his executive powers to create an even larger marine park in the south-central Pacific on June 17. Known as the Pacific Remote Islands Marine National Monument, it protects 2 million sq km of ocean and a smattering of islands and atolls between Hawaii and American Samoa from commercial fishing.

Obama’s announcement made world news, while New Caledonia’s barely received a mention. Perhaps that’s because the U.S., while sketchy on the details, has the hardware and manpower to enforce the no-take rule at the core of any national park.

CA Aboriginal title judgment has serious mining implications – by Dorothy Kosich (Mineweb.com – June 27, 2014)

June 27, 2014

http://www.mineweb.com/

Canadian Supreme Court decision granting unprecedented authority to First Nations may mean trouble for mining on traditional lands.

RENO (MINEWEB) – Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, a ground-breaking decision by the Canadian Supreme Court on a 20-year old dispute over Aboriginal communities land claims in British Columbia, has staggering implications for Canadian mining, especially for miners and explorationists who have failed to establish meaningful and positive working relationships with various First Nations groups.

The Tahltan Central Council of Dease Lake B.C. has already announced that it will prepare an Aboriginal title and rights claim against the Province of British Columbia and Fortune Minerals against the Arctos Anthracite Coal project for Mt. Klappan.

As of Mineweb’s deadline early Friday, Fortune Minerals had not published a comment regarding the Tahltan Nation’s decision to file an Aboriginal title and rights claim against the mining company.

The Supreme Court rendered its judgment on an appeal by Chief Roger William on behalf of the Tsilhqot’in Nation concerning 1990-1998 legal dispute which sought a declaration of Aboriginal title over 438,000 hectares in B.C.’s Cariboo-Chilcotin region after the BC government granted Carrier Lumber a license to cut trees in Tsilhqot’in territory. The trial on the matter convened in November 2012 and was heard over 339 trial days.

Glencore tax bill on $15b income: zip, zilch, zero – by Michael West (Sydney Morning Herald – June 27, 2014)

June 27, 2014

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

Australia’s largest coalminer, Glencore, paid almost zero tax over the past three years, despite income of $15 billion, as it radically reduced its tax exposure by taking large, unnecessarily expensive loans from its associates overseas.

At up to 9 per cent, the interest rates on these $3.4 billion in loans were double what the company would have had to pay had it simply borrowed the money from the bank.

As it was claiming tax breaks in Australia on these inflated interest payments, the secretive Swiss-based multinational actually increased its lending to other related parties interest free. This may include its executives. Nobody from Glencore, which used to be called Xstrata, was available for comment despite repeated requests.

The aggressive tax avoidance tactics of Glencore Coal International Australia Pty Ltd have been identified in an independent analysis of the company’s accounts for Fairfax Media by an expert in multinational financing.

Along with the blatant irregularities in its borrowing and lending, the study also found a hefty increase in Glencore’s coal sales to related companies (up from 27 per cent to 46 per cent of total sales, with no explanation), indicative of transfer pricing – also known as profit-shifting – and an activity that appears to breach Section IVA of the Income Tax Assessment Act – the part that deals with schemes designed to comply technically with the law but whose ”dominant purpose” is really to avoid tax.

RPT-After 125 years, Alcoa looks beyond aluminum – by Allison Martell (Reuters India – June 27, 2014)

June 27, 2014

http://in.reuters.com/

(Reuters) – Alcoa Inc, the company that helped create the aluminum industry more than a century ago, is reinventing itself as a manufacturer of specialized components for aerospace and automotive customers, including some that contain no aluminum at all.

The company’s deal for jet engine part maker Firth Rixson, which uses little aluminum, is its biggest move yet to escape the terrible primary aluminum market by crafting the parts its customers need, even if they are made of nickel or titanium.

It announced the proposed $2.85 billion deal to buy Firth Rixson earlier on Thursday. Alcoa talks constantly about expanding its downstream businesses, which sell truck wheels, aircraft parts and other goods. Now it is rebranding itself in ways that would have seemed unthinkable just a few years ago.

“We are really material-agnostic,” Chief Executive Officer Klaus Kleinfeld said in an interview on Thursday. “We love, internally, that we have fights over what is the right material, in front of our customers, together with our customers.”

From an upstart, this would be one thing. But Alcoa has been synonymous with aluminum since 1888, and it has a role in every part of the sector: mining bauxite, refining it into alumina and smelting alumina to create aluminum.

Rio Tinto, Acron JV pushes ahead with Canadian potash project – by Silvia Antonioli and Karen Rebelo (Reuters U.K. – June 27, 2014)

June 27, 2014

http://uk.reuters.com/

LONDON/BANGALORE – (Reuters) – Global mining company Rio Tinto and Russian fertiliser producer Acron OAO are moving ahead with the development of the Albany potash prospect in Saskatchewan, Canada, Acron said on Friday.

In its first disclosure of the size of the discovery, Acron said the project area contained 1.4 billion tonnes of inferred resources within the mining caverns at an average grade of 31 percent potassium chloride (KCl). The company put the recoverable amount at 329 million tonnes of KCl.

“The next steps for the project include continuation of the environmental assessment and the pre-feasibility study,” Acron said in a statement.

Rio’s rival BHP Billiton has invested in a larger potash project in Canada, the $14 billion Jansen development, but has pushed back production until at least 2020, looking for the right time to enter the currently oversupplied market..

BHP’s Jansen has 5.3 billion tonnes of measured, or proven, resources with 25.7 percent potassium oxide and 1.3 billion tonnes of inferred, or assumed, resources.

UPDATE 1-Brazil court revokes license for Canadian gold mine in Amazon – by Anthony Boadle and Nicole Mordant (Reuters India – June 27, 2014)

June 26, 2014

http://in.reuters.com/

(Reuters) – A federal court has revoked the environmental license for a large gold mine planned by Belo Sun Mining Corp on the Xingu River in the Amazon, ruling that the company had failed to assess the impact on local indigenous communities.

The ruling published on Tuesday can be appealed. Belo Sun’s stock fell 7 percent on the Toronto Stock Exchange to 19 Canadian cents.

“This is an important victory for justice. It can still go to an appeals court, but we think it will be difficult to overturn,” said Helena Palmquist, a spokeswoman for the federal prosecutors office in the northern state of Para.

The Volta Grande, or Big Bend, open-pit project is slated to start operating in 2016 and become Brazil’s largest gold mine. It is next to another controversial project, Belo Monte, which is designed to become the worlds third largest hydroelectric dam and has also been the target of lawsuits by prosecutors.

Belo Sun could not immediately be reached for comment, but the Toronto-based company said in a news release that a federal judge in Para had ruled that the company needed to complete an indigenous study for its preliminary license to be valid.

China Finds $15 Billion of Loans Backed by Fake Gold Trades (Bloomberg News – June 26, 2014)

June 26, 2014

http://www.businessweek.com/

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” said Liu Xu, a senior analyst at Capital Futures Co. in Beijing. “Any scaling back by banks of gold-backed financing deals might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders.”

As much as 1,000 metric tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.