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Latin America Mining

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)

 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.

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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)

http://uk.reuters.com/

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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Vale Proves Too Rich for Barclays on Iron’s 30% Plummet – by Juan Pablo Spinetto and Julia Leite (Bloomberg News – June 9, 2014)

http://www.bloomberg.com/

The biggest drop in iron-ore prices in five years is a signal to Barclays Plc and Seaport Group that Vale SA (VALE5)’s outperformance in the bond market is about to end.

The $2.25 billion of bonds due 2022 returned 9 percent in the past six months, exceeding the 7.4 percent average gain for notes from emerging-market mining companies with investment-grade ratings. The Vale bonds yield 4.06 percent, the least relative to similar securities from London-based Rio Tinto Group since September, data compiled by Bloomberg show.

Vale, which gets about 95 percent of earnings from its ferrous business, posted a bigger-than-forecast drop in first-quarter profit after selling its ore for 25 percent less than the benchmark global price, which fell to the lowest since September 2012 on May 30. Investors should sell after the bond rally as reduced demand cuts prices for iron ore, according to Michael Roche, an emerging-market strategist at Seaport Group, which this month started recommending clients buy debt from Southern Copper Corp. instead of Vale securities.

“I’m still worried about China, I’m still thinking global growth is very muted, I’m still worried about Europe,” Roche said in a telephone interview from New York. “I am going to take that superior performance over the last six months and take a profit.”

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Codelco Looks to 1st Female Director After CEO Fired – by Matt Craze and Javiera Quiroga (Bloomberg News – June 9, 2014)

http://www.bloomberg.com/

The success of a $20 billion plan to revive Codelco, the world’s largest copper producer, may rely increasingly on its first appointed woman director following the firing last week of Chief Executive Officer Thomas Keller.

Laura Albornoz was named in May by Chilean President Michelle Bachelet to defuse a growing feud between executives and workers at the company created in 1971 through the nationalization of foreign-owned mines. She participated in a six-hour board meeting until 2 a.m. on June 6 that decided to fire Keller, a former Anglo American Plc executive.

Consensus-building between workers, executives and the state at Codelco, which has generated $110 billion in profit since its creation, is a top priority as the company looks to maintain its No. 1 ranking in the global copper market, while cutting costs, Albornoz said in an interview in Santiago June 3.

“Codelco has had management issues that isn’t just down to the international price of copper,” Albornoz said. “We can take the company a lot further than where we have got it to now.”

Albornoz will visit next week the century-old Chuquicamata mine in the Atacama Desert where relations between Keller and the workers were at their worst.

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UPDATE 2-Board of Chile’s state-run Codelco removes CEO Keller (Reuters India – June 6, 2014)

http://in.reuters.com/

SANTIAGO, June 6 (Reuters) – Chilean state-run copper miner Codelco said it was removing Chief Executive Officer Thomas Keller to seek new leadership at a pivotal time for the company, but opponents said the decision was politically motivated.

Keller, a former retail executive, has earned plaudits for his efforts to overhaul old mines and cut costs at the world’s No. 1 copper producer, but his tough style triggered tensions with Codelco’s powerful unions and the new center-left government.

The board stressed the removal of Keller, seen as close to the right, was not politically motivated, while the conservative opposition decried what it said was meddling that could harm the miner in the midst of an ambitious investment plan.

“We asked Thomas Keller to tender his resignation as CEO as a result of the company’s move towards a new phase with new challenges that require new leadership,” new board head Oscar Landerretche told journalists after a more than five-hour meeting that ended early Friday morning.

The board voted 5-3, with one abstention, to remove Keller. “There were no arbitrary political motivations, though there were motivations surrounding the company’s politics, the politics of what Codelco should be in the future,” Landerretche said. ” … There was no single factor that formed board members’ opinion.”

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VIOLENCE: MINING CONFLICTS IN GUATEMALA ARE ERUPTING IN VIOLENCE – by Giles Clarke (Vice Magazine – March 27 2014)

http://www.vice.com/en_ca

In 2000, engineers from Radius Gold, a Vancouver-based mining company, discovered a belt of gold deep inside the Tambor mountains in southern Guatemala. The Guatemalan government promptly issued the company an exploratory license, and for more than a decade, Radius studied the region as a possible base of operations. The proposed mine lies just a few miles from the village of San José del Golfo and from San Pedro Ayampuc, a small city.

Few locals, most of whom are of indigenous Mayan descent, were consulted before Radius moved in. Few of them knew anything was happening at all. They certainly didn’t know they were living atop what would become a literal gold mine.

It wasn’t until early 2012 that townspeople began to grasp the scope of what was happening just down the road. They watched as truck after truck, loaded with heavy equipment, rumbled down the winding jungle roads that were normally used as routes for colectivo buses and small pickups carrying crates of chickens. In February 2012, Radius obtained final permission from the government to build its mine, which it hoped would pump out as many as 52,000 tons of gold a year.

Fearful of what might happen if a big foreign developer started digging into their soil, the community decided to intervene. They formed a human roadblock, manned in rotating shifts by people sitting on plastic chairs. They held banners, and cooked on-site meals for protesters in a makeshift kitchen under a lush canopy of vegetation.

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Barrick reaches deal with indigenous groups over Pascua Lama mine – by Rachelle Younglai (Globe and Mail – May 29, 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.

Barrick Gold Corp. has struck a deal with the indigenous groups that opposed the company’s mothballed Pascua Lama project. But the miner must still overcome huge obstacles before it can resume developing the massive gold and silver deposit in the Andes.

The mountaintop project on the border between Chile and Argentina has been put on hold indefinitely while Toronto-based Barrick waits for market conditions to improve.

The company’s mismanagement of Pascua Lama pushed costs up to $8.5-billion as the gold market soured, forcing Barrick to halt construction late last year in order to conserve cash.

Although Barrick is nowhere close to restarting the South American project, the company said Wednesday that it had reached an initial agreement in April with 15 Diaguita communities in Chile.

Barrick said it will share technical and environmental information about Pascua Lama with the indigenous groups as well as provide funding for any independent analysis.

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