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

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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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Mass grave with hundreds of skeletons found in Bolivian mining town – by Cecilia Jamasmie (Mining.com – July 27, 2014)

http://www.mining.com/

Construction workers in the southern city of Potosi, Bolivia, have uncovered the remains of hundreds of miners believed to be from the Spanish colonial era.

They mostly mined at Cerro Rico Mountain, home to what became the world’s biggest silver mine and provided the Spanish with so much of the precious metal to ship to Europe that people used to say a bridge of pure silver could be built from the top of hill to the royal palace’s entrance in Spain.

But that boom came at an extremely high price tag — an estimated eight million miners died in Potosi alone between 1500 and 1800. What it is still unclear is how those miners met their deaths.

Some say the area was an indigenous burial ground for slaves and indentured servants who may have worked in the mines.

Another explanation could be that the remains are linked to the collapse of a reservoir in Potosi during the 17th century, which killed around 2,000 people.

“We are talking about a common grave found at about 1.8 metres, and the human remains are scattered over an area of four by four metres,” Sergio Fidel, a researcher at a museum belonging to Potosi’s Tomas Frias University, told AFP.

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Central America’s biggest nickel mine reopens amid violent clashes – by David Hill (The Guardian – July 24, 2014)

 http://www.theguardian.com/uk

Guatemala’s Fenix mine, closed for 30 years, faces disputes over land ownership and lawsuits for gang-rape and murder

Fenix, Guatemala – The biggest nickel mine in Central America has restarted operations amid violent clashes between indigenous people and security forces, disputes over land ownership, and ongoing lawsuits for gang-rape and murder.
The Fenix mine in Guatemala had been closed for 30 years, and was inaugurated by a recent visit to the site by president Otto Pérez, who called it the biggest investment in the history of the country.

But just one week later a community bordering Fenix known as Lot 8 Chacpayla, who are part of the predominant Maya Q’eqchi’ group in the region, say there were invaded by private security forces working for the firm which runs the mine, Compañía Guatemalteca de Níquel, now a subsidiary of the Cyprus-based Solway Investment Group.

Residents of Lot 8, where large nickel ore deposits are believed to lie, and the neighbouring community, Lot 9 Agua Caliente, told the Guardian that about 10 men turned up unannounced, “armed to the teeth”, intent on preventing a meeting from taking place.

“When we asked why they were there, they said they had been asked to protect the lands of the company,” says Lot 9’s Rodrigo Tot. “They said they wouldn’t leave and assumed a position to shoot. They were out in the corridor, but pointed their weapons at us.”

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Wary investors slow to warm to Barrick Gold’s latest shakeup – by Euan Rocha (Reuters U.S. – July 21, 2014)

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(Reuters) – Worried they are being given the cold shoulder by an imperious leadership, shareholders of Barrick Gold Corp, the world’s biggest gold miner, are taking a “show me” approach to the company’s latest management shakeup.

Barrick said last week that Chief Executive Jamie Sokalsky will leave the company in September. He will be replaced by two co-presidents, a move that concentrates power in the hands of Executive Chairman John Thornton, a man handpicked for the job by Peter Munk, who founded the company and ran it his way for decades.

“The concern in this situation is that the person setting the strategy does not listen to the shareholders, who are the real owners of the company,” said Chris Mancini, an analyst at Gabelli Gold Fund, which owns more than 2.4 million shares in Barrick according to Thomson Reuters data.

“There was a concern within the market that Mr. Munk was not listening to shareholders…And so if Mr. Thornton also doesn’t listen to shareholders that could be a problem again.”

Munk stepped down as chairman in April in the face of investor criticism, and with the exit of Sokalsky, Thornton is now both more free and under greater pressure to map out a clear strategy to cut Barrick’s lofty debt levels, boost profits and eventually raise dividends.

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Lundin Mining emerges as front-runner for Chile copper mine – by Rachelle Younglai (Globe and Mail – July 11, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Canada’s Lundin Mining Corp. is emerging as the front-runner to buy a major Freeport-McMoRan Copper & Gold Inc. copper mine in Chile, sources familiar with the matter said.

Toronto-headquartered Lundin would pay more than $2-billion for the Candelaria mine, according to people familiar with the current proposal. It would partner with Franco-Nevada Corp., which would pay up to $1-billion for a stream of the mine’s future gold production, the sources said.

The base-metals miner has been hunting for a copper acquisition for more than two years. Its chief executive officer Paul Conibear told The Globe and Mail in April, 2013, that assets with at least a 10-year mine life and capable of producing some 50,000 tonnes of copper per year would be ideal.

At the time, Mr. Conibear said the company had a strong balance sheet, no debt and has been on the lookout for the right deals for the last year and a half. If Lundin’s proposal succeeds, the Chilean mine would boost Lundin’s copper production significantly.

The interest in copper assets comes after a tumultuous few months for the red metal, used in construction and power generation. It dropped below $3 (U.S.) a pound on fears that China’s slowing economy would weaken demand, though has since rebounded and is trading around $3.25.

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Copper Hunt Continues for First Quantum in Bet on Demand – by Firat Kayakiran (Bloomberg News – July 10, 2014)

http://www.businessweek.com/

First Quantum Minerals Ltd. (FM), which agreed to buy an Argentinian copper project last month, is on the lookout for more deals as it sees a supply shortage of the metal by the end of the decade.

“Copper remains our favorite long-term commodity,” Clive Newall, president of the Vancouver-based company, said in an interview in London. “The supply constraints are really going to start to hit home later in this decade and the supply-demand balance is going to roll over at some point in the not-too-distant future.”

First Quantum completed its biggest deal last year, acquiring Inmet Mining Corp. to add Cobre Panama. The company plans to invest $6.43 billion in the project to produce 320,000 metric tons of copper a year in 2018 and become the world’s fifth-largest provider of the metal. Last month it agreed to buy Lumina Copper Corp. for $430 million to add the Taca Taca deposit in Argentina.

The value of copper-mining deals this year has risen almost fivefold from the same period a year earlier, amounting to $7.1 billion, according to data compiled by Bloomberg. They were led by the $5.85 billion sale of the Las Bambas copper deposit by Glencore Plc to a group let by China Minmetals Corp. in April.

Newall sees the appetite for copper acquisitions rising amid a shortage driven by a lack of projects, the high cost of developing them, and declining grades.

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ANNALS OF SURVIVAL: SIXTY-NINE DAYS – The ordeal of the Chilean miners – by HÉCTOR TOBAR (The New Yorker Magazine – July 7, 2014)

http://www.newyorker.com/

The San José Mine is situated inside a round, rocky, and lifeless mountain in the Atacama Desert, in Chile. Once every dozen years or so, a storm system sweeps across the desert, dropping a torrent of rain. When that happens, the dust turns to mud as thick as freshly poured concrete. Charles Darwin briefly passed through this corner of the Atacama in 1835. In his journal, he described the desert as “a barrier far worse than the most turbulent ocean.”

In the deeper desert, miners are the only conspicuous living presence; they ride in trucks and buses to the mountains, which contain gold, copper, and iron. The minerals draw workers to the Atacama from all over Chile. On the evening of August 3, 2010, Juan Carlos Aguilar began a bus journey of more than a thousand miles to reach the San José Mine, leaving from the temperate rain forests near Valdivia.

Raúl Bustos left for work the next morning, from the port city of Talcahuano, eight hundred miles south of the mine. He travelled along a flat landscape filled with greenhouses, tractors, and the cultivated fields of Chile’s agricultural heartland, passing through the town of Talca, where José Henríquez, a tall, devout Christian, boarded yet another bus. Mario Sepúlveda, a forty-year-old father of two, took a bus from the outskirts of Santiago, five hundred miles away.

When the men reached the port city of Coquimbo, nearly two hundred and fifty miles from the San José Mine, they joined the path that Darwin had followed. In Darwin’s time, the country was only twenty-five years old, and his small expedition rode overland with four horses and two mules, making notes about Chile’s geology and its flora and fauna.

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Mining for the truth in Guatemala – by Melinda Maldonado (MACLEAN’S Magazine – July 8, 2014)

http://www.macleans.ca/

What lawsuits claiming rape and murder in a Guatemalan jungle mean for Canadian companies abroad

Rosa Elbira Coc Ich was warming tortillas when the men came. Their trucks rumbled down the dirt road toward her home, a shack she’d rebuilt in eastern Guatemala after a forced eviction 12 days earlier. It was Jan. 17, 2007, and as hundreds of police, military and private security workers returned, she heard their voices pierce the thick tropical brush as they called out for the leaders of the community.

Nine of the men pushed their way into her home.

“Where’s your husband?” a policeman asked, pressing a gun to her temple, according to documents filed as part of a lawsuit in an Ontario court. When she couldn’t answer, the officer said he was going to kill her. Then the men pushed her to the floor, ripped off her clothes and covered her mouth. Ich claims all nine of them raped her.

Nearby 10 other women from the Mayan Q’eqchi’ community say they experienced the same ordeal—gang rapes at the hands of police, military and private security from the Fenix nickel mine, 300 km northeast of Guatemala City—during evictions from the homes they’d built on the mine’s property.

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Brazil suspends Belo Sun’s gold mine licence – by Stephanie Nolen (Globe and Mail – July 1, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

RIO DE JANEIRO — A Brazilian court has suspended the environmental and provisional licences of Toronto-based gold miner Belo Sun Mining Corp., putting a significant new obstacle in the way of the company’s plans to develop Brazil’s largest gold mine on a tributary of the Amazon river.

Last November a federal court suspended the company’s environmental permit, saying Belo Sun had not taken necessary steps to analyze the mine’s potential impact on indigenous peoples who live within a few kilometers of the mine site.

In December, Belo Sun won temporary permission to keep operating while awaiting a final ruling on that case. But when the ruling came last week, the judge said that the mine stood to cause “negative and irreversible damage to the quality of life and cultural heritage” of the Juruna and Arara peoples and that Belo Sun must complete a study of this issue before it can proceed.

Mark Eaton, Belo Sun’s CEO, said the indigenous impact study is already under way and that the new ruling does not extend the company’s timeline for production. “It’s had an impact on market psyche as these things always do,” Mr. Eaton said in a telephone interview from Toronto. “But it hasn’t come completely out of the blue.”

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

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(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.

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Yamana struggles to find buyers for Brazil mines – by Boyd Erman and Rachelle Younglai (Globe and Mail – June 23, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Yamana Gold Inc. has been trying to sell mines in Brazil for months, but is struggling to drum up interest in all the properties, people familiar with the matter say.

The Toronto-based company put its three mines in Brazil up for sale at the beginning of the year and hired Royal Bank of Canada to run the process, the sources said. A spokesman for Yamana declined to comment.

The Chapada, Jacobina and Fazenda Brasileiro mines are nearing the end of their lives and are facing problems. They have a combined net asset value of about $3-billion (U.S.), according to a recent report from Canaccord Genuity.

“I am not surprised that people have passed on it because they are very mature mines,” said John Ing, the president of investment firm Maison Placements Canada. “Jacobina has never worked right. Chapada has been a disappointment and Fazenda is very small.”

Yamana was previously focused on building its portfolio in South America until it teamed up with another Canadian miner to buy half of Osisko Mining Corp.’s large gold mine in Quebec.

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Vancouver-based Tahoe Resources faces lawsuit over violence at Guatemala mine – by Derrick Penner (Vancouver Sun – June 18, 2014)

http://www.vancouversun.com/index.html

Seven men allege they were shot at close range during a peaceful protest

A group of men wounded last year during a protest outside a Guatemala mine is suing the Vancouver-based mining company, Tahoe Resources Inc., in British Columbia Supreme Court arguing it should be held liable for the alleged violent action against them.

It is the first time a Canadian company has been sued in B.C. for events that occurred at operations outside of Canada, but it follows from three suits against Toronto-based Hudbay Minerals, which were accepted to proceed to trial by an Ontario Superior Court Judge last year, also related to alleged violent incidents in Guatemala.

Together, the suits are part of increasing efforts of non-government organizations seeking greater accountability from Canadian mining companies operating abroad.

“The plaintiffs feel like they’ve not got justice for what happened to them (in Guatemala),” said Matt Eisenbrandt, legal director for the Canadian Centre for International Justice.

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Pretenders vie for Chile’s copper crown but can’t replicate boom – by Rosalba O’Brien and Silvia Antonioli (Reuters U.K. – June 16, 2014)

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SANTIAGO/LONDON – (Reuters) – As top copper producer Chile starts to lose market share, players are betting on fledging suppliers to help feed hunger for the red metal, but no single country is likely to replicate the South American nation’s boom of the last century.

Chile produces about a third of the global supply of copper, a key raw material for construction and power that is vital for industrialisation. With consumption rising 4 percent yearly, the country’s output growth is not enough to meet additional demand.

Its market share is being eroded by spiralling costs at ageing deposits, with neighbouring Peru and Africa’s Democratic Republic of Congo (DRC) and Zambia gaining ground.

While those countries are poised to become large suppliers in a more fragmented market, the emergence of a single, giant challenger to Chile is unlikely in the foreseeable future due to geological, political and infrastructure constraints.

“Is there ever going to be another source of supply as good as Chile? No,” Bernstein Research analyst Paul Gait said.

“Collectively Peru, the DRC and Zambia have half the geological endowment of Chile. They are great copper locations but they won’t be able to do what Chile did to the copper market in the 20th century.”

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Peru Blows Up Gold Mine Machines in Bid to Legalize Activity – by John Quigley (Bloomberg News – June 12, 2014)

http://www.bloomberg.com/

Crisologo Quispe says he halted operations at his gold mine in the Peruvian jungle in April after police used dynamite to blow up $350,000 loaders at a nearby site.

Quispe fired 17 workers and moved machinery elsewhere on concern his concession in 428 hectares (1,057 acres) of jungle bordering the Madre de Dios region of southeast Peru will become embroiled in a government campaign against illegal mining.

“I’m not operating for safety reasons until things become clearer,” Quispe said last month in an interview in Cuzco, where he’s applying for a mining permit. “I’m not illegal but I’m worried that what’s happening to the illegal ones could happen to me. The raids don’t differentiate.”

Quispe owns one of 58,000 small mine operations that the government says have signed up for a process to operate legally and abide by environmental, labor and tax legislation. The crackdown on another 30,000 has fed a slump in gold exports from Latin America’s largest producer. The government needs to streamline the permit process and stop attacking mines operating in areas where previously it encouraged mining, or it will face social conflict, according to Miguel Santillana, an economist at Lima-based Universidad San Martin de Porres.

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Anglo Will Flourish Under Cutifani Or Be Bought, Bernstein Says – by Firat Kayakiran (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

Anglo American Plc (AAL) will either be successful at reorganizing its platinum business and starting production at the Minas-Rio iron ore mine in Brazil or be acquired, research company Sanford C. Bernstein Ltd. said.

The metals producer is reviewing global assets to shore up earnings after Chief Executive Officer Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio. Cutifani set a goal of improving Anglo’s return on capital employed to at least 15 percent by 2016 from 8 percent in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a note today. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70,000 miners, including employees at Anglo American Platinum Ltd. Government-led talks yesterday failed to end the impasse.

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