International Media Resource Articles – Page 770

Appetite for Destruction – by Damien Ma and William Adams (Foreign Policy Magazine – October 1, 2013)

October 3, 2013

http://www.foreignpolicy.com/

Why feeding China’s 1.3 billion people could leave the rest of the world hungry.

On Aug. 20, the Australian mining giant BHP Billiton announced that it will pump nearly $3 billion into developing a deposit of Canadian potash, a mineral used in the manufacture of fertilizer destined for farms fields across the world. And in late September, Chinese pork producer Shuanghui officially purchased Smithfield Foods in the largest Chinese acquisition ever made in the United States. The companies’ investments are both decisions that speak to a vote of confidence in global food consumption growth over the next decade — and nowhere will bellies be filling up faster than in China.

For three decades, resource-intensive manufacturing fueled China’s spectacular economic rise. By 2012, the country was consuming nearly half of the world’s coal and producing 46 percent of its steel, 43 percent of its aluminum, and about 60 percent of its cement. The Chinese economy has slowed in 2013 in part because of the government’s recognition that such a resource-intensive growth model has become unsustainable.

As a result, Beijing is trying to rebalance away from exports and investments and toward domestic consumption. Companies like BHP Billiton are betting that China’s rebalancing will spur rapid growth in demand for food and the inputs needed to produce it.

Wanted by the taxman: Indonesia’s $5 billion of lost coal – by Fergus Jensen (Reuters U.S. – October 1, 2013)

October 3, 2013

http://www.reuters.com/

JAKARTA – (Reuters) – Indonesia may be the world’s top exporter of thermal coal, but that masks an embarrassing fact for a government scrambling to raise revenue – more than $5 billion worth of the fuel is mined illegally and goes untaxed each year.

Export and consumption data shows Indonesia produces around 12-15 percent more coal annually than the ministry of energy and mineral resources reports. That’s enough to supply Taiwan, the world’s fifth-largest coal importer, for a year.

The $460 million of lost tax revenue that industry officials estimate this represents would provide Jakarta, which is considering roughly doubling royalties paid by coal producers, with some of the funds it needs to redress its budget deficit.

The gap between recorded and actual output has also attracted the attention of Indonesia’s top anti-graft agency the Corruption Eradication Commission (KPK).

A combination of export data from the Bureau of Statistics, using customs information, and consumption data from state electricity utility Perusahaan Listrik Negara PLNEG.UL, shows Indonesia’s total coal output at 451.9 million tons in 2012.

China’s Xi to give first speech by foreign leader to Indonesia parliament – by Kanupriya Kapoor and Yayat Supriatna (Reuters India – October 2, 2013)

October 2, 2013

http://in.reuters.com/

JAKARTA – Oct 2 (Reuters) – Chinese President Xi Jinping will on Thursday become the first foreign leader to address Indonesia’s parliament, signalling a push by the Asian economic powerhouses to expand relations that were for decades frozen in hostility.

Xi arrived in Jakarta on a state visit on Wednesday, his first official visit to Southeast Asia’s biggest economy and the world’s third most populous country. He will oversee the signing of a range of contracts, several of them focused on tapping the huge Indonesian resource sector to help feed the voracious Chinese economy.

A day before his arrival, China agreed a currency swap deal for the equivalent of $15 billion, to help Indonesia if its ailing currency comes under any more attacks. It has fallen more than 16 percent this year.

The urge to improve ties is in sharp contrast with the mid-1960s when Indonesia broke off relations with China, accusing it of backing an abortive coup it blamed on Indonesia’s communist party, then the third largest in the world.

So bitter was the split, that until 1990 when the two resumed diplomatic ties, Indonesia effectively banned anything from China, and its nationals from going to China.

Ex-Xstrata CEO Davis Raises $1 Billion From Noble, TPG – by Firat Kayakiran (Bloomberg News – September 30, 2013)

October 1, 2013

http://www.bloomberg.com/

Mick Davis, former chief executive officer of Xstrata Plc, raised $1 billion from Noble Group (NOBL) and private-equity fund TPG to start a resources company.

Noble, Asia’s largest raw-materials trader, and TPG agreed to each invest $500 million in the new company X2 Resources, according to a statement today from X2 Partners, founded by Davis and former Xstrata Chief Financial Officer Trevor Reid.

X2, also in talks with other potential investors, will use the funds to start a diversified mining and metals group. Davis, 55, and Reid, 52, were part of the team that set up Xstrata, a company that grew 100-fold to a market value of about $50 billion after 10 years of mergers, acquisitions and expansion.

“This is a great time to acquire assets in the mining sector,” said John Meyer, an analyst at London-based SP Angel Corporate Finance LLP. “The majors continue to offer sub-scale assets, including some better quality but smaller operations as they refocus on their larger cash generators.

Steel firm Outokumpu should help itself: Finland’s state fund – by Jussi Rosendahl (Reuters U.S. – September 30, 2013)

October 1, 2013

http://www.reuters.com/

HELSINKI – (Reuters) – Steel company Outokumpu (OUT1V.HE) should try to solve its own problems even though its heavy debts have raised the prospect it might need more money from shareholders at some stage, the head of Finland’s state investment fund Solidium said.

While Finland is often listed among the most innovative economies and remains triple-A rated, government funding is still badly needed in the country of 5.4 million people which has a limited pool of private capital. Kari Jarvinen, Solidium’s managing director, told the Reuters Nordic Investment Summit that the fund was making its long-term investment decisions independent of political pressure to help out troubled Finnish companies.

“It is better that the company tries to sort out its problems by itself. The company already had a 1 billion (euros) rights issue only one-and-a-half years ago,” Jarvinen said when asked about Outokumpu’s finances. “It is paramount that these companies find ways to be profitable in the future.”

Solidium holds stakes worth in total 7.7 billion euros in 11 Finnish listed companies including paper maker Stora Enso (STERV.HE) and investment and insurance group Sampo (SAMAS.HE).

Australian tycoon Rinehart wants to end family feud to focus on business – by James Regan (Reuters India – October 1, 2013)

October 1, 2013

http://in.reuters.com/

SYDNEY, Oct 1 (Reuters) – Australian mining magnate Gina Rinehart, one of the world’s richest women, wants to relinquish control over a $4 billion family trust, after several years of legal wrangling with her children over who gets what and when.

Lawyers for Rinehart, 59, told a court that the legal battle with two of her four children, which has been played out in public and captivated Australia, had placed huge pressure on their client but was now “effectively over”.

Bruce McClintock, one of Rinehart’s lawyers, said the two-year legal fight between the tycoon and her children, John Hancock and Bianca Hope Rinehart, had created “untenable risk” of damage to Hancock Prospecting Group, the mining company established by her late father and the source of her wealth.

“The increased demands on her time in dealing with the … plaintiff’s issues has taken valuable time away from her responsibilities,” he told the New South Wales Supreme Court.

Hancock Prospecting is in the midst of funding negotiations to develop a $10-billion dollar iron ore project in Australia. Rinehart nor her children attended the hearing.

Silicosis claims and the gold mines: To settle or not? – by Sarah Evans (Mail and Guardian – October 1, 2013)

October 1, 2013

http://mg.co.za/ [South Africa]

A recent settlement between miners and Anglo American could be a precedent as the gold industry prepares for a looming silicosis class action suit.

Despite being a landmark case, the confidential nature of a recent settlement between Anglo American and silicosis sufferers means there is little legal precedent for future cases, at least in terms of financial compensation.

But the agreement has other implications: as the number of silicosis damages claims against the gold mining industry piles up, and in the face of a looming class action suit, out-of-court settlements could become the norm as mining companies try to avoid bank-breaking court rulings.

In the weeks to follow, the high court in Johannesburg will decide whether to collate three class action claims against 30 of South Africa’s gold mines.

This comes on the back of a landmark settlement between Anglo American and 23 silicosis sufferers, seven of whom died waiting for the case to be finalised. Their claim was instituted in 2004 and was due to go to arbitration in 2014.

Why Miners Walked Away From the Planet’s Richest Undeveloped Gold Deposit – by Brad Wieners (Bloomberg Business Week – September 27, 2013)

October 1, 2013

http://www.businessweek.com/

Before pulling out of the Pebble Mine project last week, Anglo American (AAUKY), one of the world’s biggest mining companies, had invested six years and at least $541 million—in a partnership with Vancouver-based Northern Dynasty Minerals (NAK)—to develop the site in southwestern Alaska. Wait, pause on that number for a sec: $541 million.

That’s right, the London-based multinational and its U.S. subsidiary (AA Pebble) just forfeited a return on more than half a billion dollars of its shareholders’ money. By the end of its 60-day withdrawal from the project (mid-November), that figure will probably end up closer to $580 million. Anglo American has also indicated it will write down a $300 million loss (misreported as a “penalty” elsewhere) to remove the proposed mine as an asset from its books.

Although a far smaller player, Northern Dynasty will soon own 100 percent of the project, thought to be worth $300 billion or more, and vows to carry on. Having completed more than a million feet of exploratory, diamond-core drilling in 1,200 holes, the former partners also amassed a 27,000-page study of the terrain, but had not begun the formal permitting process. In fact, Northern Dynasty has plowed $180 million into Pebble since it first secured the rights to the region in 2001.

Huge mining consortiums frequently seed nine-figure projects, but $760 million-plus is still a large sum, so why did Anglo American bail now?

Newmont bids for Las Bambas to beef up copper assets – CEO Goldberg – by Dorothy Kosich (Mineweb.com – October 1, 2013)

October 1, 2013

http://www.mineweb.com/

Newmont, which began as a copper-gold miner in the early 1900s, is seeking to increase its copper mining operations as “pure gold plays” appear to be losing favor with investors.

RENO (MINEWEB) – In seeking to increase its copper holdings, Newmont Mining is apparently returning to its historic copper roots under the leadership of new CEO Gary Goldberg, a former copper mining executive for Kennecott Utah and Rio Tinto.

In an interview with the Financial Times published Monday, Goldberg said the company had expressed interest in the hotly sought after Las Bambas copper project in Peru. Mineweb was told of Newmont’s potential Las Bambas acquisition by a former top Newmont executive at last week’s Denver Gold Forum in Denver.

Newmont Founder, William Boyce Thompson, accumulated a large fortune by buying undervalued copper and gold claims through Newmont Mining. By the 1940s Newmont would become one of the world’s largest copper producers, eventually becoming a major shareholder in Magma Copper, which would be acquired by Australian uber miner BHP in the mid-1990s. By the 1960s, the company’s Carlin Trend discovered in northeastern Nevada would issue a new era for Newmont as a gold producer.

U.S. Coal Companies Scale Back Export Goals – by Clifford Krauss (New York Times – September 13, 2013)

September 30, 2013

http://www.nytimes.com/

HOUSTON — The ailing American coal industry, which has pinned its hopes on exports to counter a declining market at home, is scaling back its ambitions as demand from abroad starts to ebb as well.

Just south of here, New Elk Coal terminated its lease late last month at the Port of Corpus Christi, where it had hoped to export coal to Brazil, Europe and Asia. Two days later, when the federal government tried to auction off a two-square-mile tract of land in Wyoming’s Powder River basin, a region once poised to grow with exports to Asia, not a single coal company made a bid.

They were the latest signs that a global coal glut and price slump, along with persistent environmental opposition, are reducing the likelihood that additional exports could shield the industry from slipping domestic demand caused by cheap natural gas and mounting regulations.

United States coal exports this year are expected to decline by roughly 5 percent from last year’s record exports of 125 million tons, and many experts predict the decline will quicken next year. At the beginning of 2012, the coal industry had plans to expand port capacity by an additional 185 million tons. But those hopes have faded this year.

Germany’s Effort at Clean Energy Proves Complex – by Melissa Eddy and Stanley Reed (New York Times – September 18, 2013)

September 30, 2013

http://www.nytimes.com/

BERLIN — It is an audacious undertaking with wide and deep support in Germany: shut down the nation’s nuclear power plants, wean the country from coal and promote a wholesale shift to renewable energy sources.

But the plan, backed by Chancellor Angela Merkel and opposition parties alike, is running into problems in execution that are forcing Germans to come face to face with the costs and complexities of sticking to their principles.

German families are being hit by rapidly increasing electricity rates, to the point where growing numbers of them can no longer afford to pay the bill. Businesses are more and more worried that their energy costs will put them at a disadvantage to competitors in nations with lower energy costs, and some energy-intensive industries have begun to shun the country because they fear steeper costs ahead.

Newly constructed offshore wind farms churn unconnected to an energy grid still in need of expansion. And despite all the costs, carbon emissions actually rose last year as reserve coal-burning plants were fired up to close gaps in energy supplies.

A new phrase, “energy poverty,” has entered the lexicon. “Often, I don’t go into my living room in order to save electricity,” said Olaf Taeuber, 55, who manages a fleet of vehicles for a social services provider in Berlin. “You feel the pain in your pocketbook.”

Analysis: For the next round of gold deals, small is beautiful – by Allison Martell (Reuters U.S. – September 28, 2013)

September 30, 2013

http://www.reuters.com/

DENVER – (Reuters) – Gold miners may be tempted back into the takeover game by lower prices and the need to replace reserves, but they are likely to shy away from flashy mega-projects that require big capital expenditures.

Mining deals have slowed to a crawl, thanks to a volatile market and pressure from investors still angry about the steep premiums paid during boom times. The pause can’t last forever, but the excesses of the last cycle will cast a long shadow. “Everyone is really gun-shy of the high capex projects,” said Randy Smallwood, chief executive of Silver Wheaton Corp (SLW.TO), which provides miners with cash to finance mine construction in exchange for the right to buy future silver production at a set price.

Smallwood said projects that use relatively low-cost heap leaching could be more attractive than those with mills. In a heap leach, ore is crushed, stacked and irrigated with chemicals that separate out the valuable metals.

Across the industry, executives have vowed to chase profits rather than production, which often means focusing on higher-grade ore. But projects that require significant capital spending may take years to break even, a risky proposition when commodity prices or tax regimes are volatile.

Blood diamonds and do-gooders – by Dustin Benton (New Statesman – September 26, 2013)

September 27, 2013

http://www.newstatesman.com/

Tim Worstall on conflict minerals – good economics, bad politics.

Earlier this week, Global Witness, the organisation behind restrictions on blood diamonds, called for an EU law to restrict the use of conflict minerals. This would match a US law, called the Dodd-Frank Act, which requires companies to trace the origin of certain metals through their supply chain to ensure they don’t come from known conflict zones.

To be clear, conflict minerals are both horrible and, unfortunately, in most of our electronics. Few would defend them, but the call for a new law was immediately met by criticism. “There are times when the actions of do-gooders makes [sic] me want to kneel down and weep bitter tears of pain,” exclaimed Tim Worstall in Forbes, who wrote a riposte to the call for the new law.

This isn’t because Worstall supports conflict minerals – he doesn’t – but because he thinks that we can prevent conflict minerals from being used for 300-400 times less money. Fundamentally, this is a debate about how best to create supply chain transparency, an essential component of resource resilience.

In essence, Worstall’s solution is to regulate smelters rather than manufacturers. Because the mineral ores used to create metals have a unique “fingerprint”, they can be tested prior to smelting to ensure the fingerprint doesn’t match that of mines from known conflict areas.

Beneficiation lip service as hands-on-hips South Africa watches China usurp global ferrochrome edge – by Martin Creamer (MiningWeekly.com – September 27, 2013)

September 27, 2013

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

South Africa preaches beneficiation but it is certainly not practising it in the chrome mining space. Instead, with its hands on its hips, it is watching the Chinese ascend to the top spot in ferrochrome, which forms the beneficiation baseline of the chrome-mining value chain.

South Africa has a mature chrome value chain, the 2010 socioeconomic benefits of which were 200 000 jobs and a contribution of R42-billion to this country’s gross domestic product (GDP). However, South African ferrochrome’s rapidly declining market share is putting 60 000 to 80 000 of those jobs at risk, along with more than half of that GDP contribution.

Driving this home last week was the MetalBulletin Event’s chromite and ferrochrome conferences in Johannesburg. Instead of at least maintaining the credence it constantly gives to local value addition, it is watching ferrochrome exports decline and raw chrome exports soar.

For decades, South Africans have been urging miners to refrain from exporting raw ore and to add value to it before it leaves the country.