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Latin America Mining

Excellon CEO talks Mexican tax reform and strategy – by Anthony Vaccaro (Northern Miner – March 21, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Excellon Resources’ (TSX: EXN) La Platosa Mine in Durango is one of the world’s highest grade silver mines. The mine also boasts lead and zinc byproducts that help make it one of the lowest cash cost silver mines in Mexico.

The company’s CEO, Brendan Cahill, took some time to sit down with The Northern Miner at the recent Prospectors & Developers Association of Canada (PDAC) convention in Toronto to discuss recent changes to Mexico’s tax code and Excellon’s strategy for thriving in a low cost commodity environment.

The Northern Miner: Your company, like other producers in Mexico such as Sierra Metals (TSX: SMT), took a more expedited route towards production, eschewing the formalities of completing a bankable feasibility study. Is there something about Mexico that allows companies to fast-track to production?

Brendan Cahill: With all the talk of tax reform, when you go through the checklist of things a company is looking for in a country it is going to invest in — the geology, the security, the community relations, education, stability of government — it is still better than almost anywhere else in the world for building a mine.

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China doomsayers misguided and will be proven wrong – Vale CEO – by Juan Pablo Spinetto & David Biller (Mineweb.com/Bloomberg – March 20, 2014)

http://www.mineweb.com/

Vale CEO, Murilo Ferreira, says investors betting against China and its demand for iron ore from the company will be proven wrong.

Investors betting against China and the nation’s demand for iron-ore from top producer Vale SA will be proven wrong, Chief Executive Officer Murilo Ferreira said.

“The biggest enemy to our share price is a certain belief that China will be over,” Ferreira said during a presentation in Sao Paulo today. “They are once more betting against China as they did in 2004, 2005, 2006 and beyond and I think that people are going to fail again with their projections.”

Shares of Vale, which ships about half its iron ore and pellets to China, dropped to a five-year low earlier this month on concern a possible economic slowdown in the biggest buyer of the mineral will hurt sales. Iron-ore entered a bear market on March 7, losing 23 percent from a five-month high in August through today, as Australian miners including Rio Tinto Group boost supply and China tightens monetary conditions.

The world’s third-largest mining company has underperformed its main peers in the stock market for the past year as weakening demand growth in China and a multibillion-dollar tax dispute with Brazil weighed on investors’ confidence.

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Drug cartel a misnomer as Mexico criminal group earns more from mining, logging, extortion – by E. Eduardo Castillo (Associated Press/U.S. News and World Report – March 17, 2014)

 http://www.usnews.com/

LAZARO CARDENAS, Mexico (AP) — Forget crystal meth. The pseudo-religious Knights Templar drug cartel in western Mexico has diversified to the point that drug trafficking doesn’t even rank among its top sources of income.

The cartel counts illegal mining, logging and extortion as its biggest moneymakers, said Alfredo Castillo, the Mexican government’s special envoy sent to restore the rule of law in Michoacan, the state controlled by the Knights Templar the last several years.

Iron ore “is their principle source of income,” Castillo told The Associated Press. “They’re charging $15 (a metric ton) for the process, from extraction to transport, processing, storage, permits and finally export.” The ore itself doesn’t go for that price; the cartel skims $15 for every ton arriving in port. While it’s long been known that Mexican cartels engage in other types of criminal activity, including trafficking of people and pirated goods, this is the government’s first official acknowledgement that a major organized crime group has moved beyond drugs. The Knights Templar and its predecessor, La Familia, started out as major producers and transporters of methamphetamine.

The implications are enormous that organized crime in general in Mexico stands to diversify and become even more entrenched.

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COMMENT: Chilean court cancels Pascua-Lama fine, retains suspension – by Marilyn Scales (Canadian Mining Journal – March 10, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

As we are used to hearing – there is good news and bad news. This time Toronto’s Barrick Gold is on the receiving end of both, thanks to the environmental court in Chile. At issue is the future of the expensive Pascua-Lama gold project that straddles the Chile/Argentina border.

Last week, Chile’s second environmental court annulled the fines imposed by a local environmental regulator (SMA). The amount is small – $16 million compared to the projected $8.5-billion cost of the project. The higher court cited “errors and illegalities” in the SMA’s resolution, and removed the fines. The SMA will now consider each of 23 charges separately, and readers can expect that the fines will be re-imposed.

That was the good news. Now the bad. At the same time the court upheld the suspension of work order imposed on the Chilean portion of Pascua-Lama. The only project Barrick has been allowed to work on is the water management system.

The Pascua-Lama project has been one of the most difficult any mining company tried to develop.

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Canadian miner’s quest for gold meets politics in the Amazon jungle – by Stephanie Nolen (Globe and Mail – March 8, 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.

RESECA, BRAZIL — Brazil, Mark Eaton likes to say, will be the place where he builds something – where he has an impact, where he leaves a legacy. Standing on the grassy riverbank in the Amazon basin where he hopes to build Brazil’s largest gold mine, he foresees a brilliant future.

The Brazilian present, however, is somewhat less appealing.

Mr. Eaton is red-faced and sweating in the damp midday heat. He struggles to make himself heard over the pounding music at his staff Christmas party, then frowns dubiously at the heavily salted grilled meat heaped on a plate in front of him. He cannot follow the Portuguese conversation bubbling around him. When a huge rain-forest wasp stings his hand, his jovial façade crumbles for a moment. He emits half an expletive before managing to restore the tight smile to his face.

A few days before the Christmas party, Mr. Eaton’s company, Belo Sun Mining Corp., obtained an environmental licence to work here, two hours by boat down the Xingu River from the city of Altamira. Obtaining that licence, after a bureaucratic process that dragged on over three years, gave Mr. Eaton and his colleagues something to celebrate.

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‘Ethical gold’ aims to curb mining’s toll in South America – by Lucas Iberico Lozada (Reuters U.S. – March 4, 2014)

http://www.reuters.com/

RELAVE, Peru – (Reuters) – Tucked between two desert ridges in southern Peru, Relave looks like any of the hundreds of ramshackle mining towns that blight the landscape in the world’s sixth-largest gold exporter.

Its name in Spanish means “tailings,” a nod to the heaps of mining waste that the town, a sprawling collection of wooden shacks and simple concrete huts, sits upon.

But Relave is also home to Aurelsa, one of the first small-scale mines in the world to produce gold certified and marketed as “ethical” as part of a scheme aimed at reducing the harmful impact of illegal mining in mineral-rich developing countries.

“When we arrived we didn’t have anything … Now we’re exporting internationally,” said Juan Coronado, the chief executive at Aurelsa who came to Relave in the late 1980s to sift through what was left of an abandoned gold mine after leaving his family farm in the Andean highlands.

He used to collect the abandoned mine’s tailings, mix them with mercury, and sell the amalgam to middlemen in a nearby town.

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UPDATE 3-Vale vows spending austerity as metals price outlook improves – by Jeb Blount and Guillermo Parra-Bernal (Reuters U.S. – February 28, 2014)

http://www.reuters.com/

RIO DE JANEIRO/SAO PAULO Feb 27 (Reuters) – Vale SA , the world’s largest iron ore producer, will continue reining in costs this year even as the outlook for prices and sales volumes is improving, its chief executive officer said on Thursday.

“We plan to continue with austerity,” Murilo Ferreira, the company’s CEO told investors at a conference call to discuss fourth-quarter earnings.

The company will also continue efforts to sell underperforming units and control investments as it sharpens its business focus on iron ore, responsible for about three-quarters of revenue and nearly all of its profit.

His remarks come as Vale reported a net loss of $6.45 billion in the quarter, its largest since Brazil’s government sold control to investors in 1997 and more than twice the shortfall of the year-earlier period. The loss was due to non-recurring events such as a one-time income tax settlement and the write-off of an abandoned potash project in Argentina.

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Vale Rallies as Chinese-Led Iron Ore Demand Boosts Earnings – by Juan Pablo Spinetto (Bloomberg News – February 27, 2014)

http://www.bloomberg.com/

Vale SA (VALE), the world’s largest iron-ore producer, rallied the most in three weeks after fourth-quarter earnings before taxes and other items beat estimates on rising prices for the steel-making material.

Vale rose as much as 2.7 percent to 29.81 reais in Sao Paulo today, the most intraday since Feb. 6, before closing at 29.31 reais. The gain pared its loss this year to 10 percent. The benchmark Ibovespa index of Brazilian shares rose 2.2 percent.

The world’s third-largest mining company is increasing cash generation after Asian-led demand pushed up average iron-ore prices 12 percent in the fourth quarter. While iron ore declined this quarter because of rising supplies and monetary constraints in China, it will remain at profitable levels for Vale for a sustained period of time, Executive Director for Ferrous and Strategy Jose Carlos Martins said.

“The price will continue to be very favorable and very profitable for Vale,” Martins told analysts on an earnings conference call today. “There is a very strong resistance in price in the range of local Chinese iron-ore costs.”

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Catholic Church opposition to mining a myth – Cedron – by Dorothy Kosich (Mineweb.com – February 26, 2014)

http://www.mineweb.com/

“The industry needs a new and better approach to the Church,” says Professor Mario Cedron, ‘The visit of a delegation of mining executives to the Vatican last September is a start.”

SALT LAKE CITY (MINEWEB) – In a presentation to the Society of Mining, Metallurgy and Exploration Wednesday, Professor Mario Cedron of the Catholic University of Peru said the supposition that the Catholic Church opposes mining is based in myth and has no substance.

Some members of the clergy may express personal positions that are opposed to mining, Cedron advised, but no popes in modern memory have expressed anti-mining sentiments.

In fact, Pope John Paul II, a former coal miner, condemned the Liberation Theology political movement, which interprets the teachings of Jesus Christ in relation to liberation from unjust economic, political or social conditions. Cedron observed, “Many people call it Christianized Marxism.”

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First cartels, now vigilantes target Mexico mines – by Agence France-Presse (Global Post – February 25, 2014)

http://www.globalpost.com/

Dozens of trucks carry iron ore out of a mine in western Mexico, spinning dust into the air as they barrel past a guard booth peppered with scores of bullet holes.

The pockmarks are the scars of darker days, when the mine in the town of Aguililla, Michoacan state, was under the yoke of the Knights Templar drug cartel, which extorted the business.

The gang was chased out of town, but the mine still has to pay outsiders. The mine now forks out “compensation” to a vigilante movement which celebrated on Monday the first anniversary of a revolt that has driven the gang out of Aguililla and around 20 other towns in Michoacan.

The civilian militias say the mines are helping to finance their cause against the cult-like cartel which was deeply entrenched in Michoacan’s economy and terrorized the community through extortion, kidnappings and murder. Farmers and ranchers are also making donations to the militias that have liberated their towns.

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BRICs Creator O’Neill Wowed by New Lula’s Success: Mexico Credit – by Nacha Cattan (Bloomberg News – December 18, 2013)

http://www.bloomberg.com/

Jim O’Neill has been tracking economic reform initiatives in countries across the world during his 33-year career on Wall Street. Only a few of them, he said, rank higher than what Mexico achieved this year.

“I can’t think of many other countries that have had a period of such deep reforms,” said O’Neill, who coined the term BRICs while serving as a top Goldman Sachs Group Inc. economist in 2001, correctly predicting a surge in growth for Brazil, Russia, India and China. “Markets are only just really starting to give Mexico any credibility now that the energy reform is going through.”

President Enrique Pena Nieto shepherded through at least 10 constitutional amendments in his first year in office, including measures to open Mexico’s oil industry to private investment for the first time in 75 years. He is slated to enact as soon as this week the new drilling rules, which are aimed at luring oil majors from Exxon Mobil Corp. (XOM) to Chevron Corp. (CVX), after a majority of states ratified the changes adopted by the national congress.

O’Neill estimates the reforms will boost Mexico’s long-term economic growth to 5 percent from the current 3 percent, helping trigger a bond rally that will top gains in other emerging markets next year. Barclays Plc predicts the reforms will spark investor demand for bonds in coming weeks, with yields on longer-term securities falling about 0.25 percentage point by year-end.

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UPDATE 2-Vale may sell Brazil potash project on tax dispute -CEO (Reuters U.S. – February 19, 2014)

http://www.reuters.com/

BRASILIA, Feb 19 (Reuters) – Vale SA may sell a $4 billion potash fertilizer project in Brazil’s northeastern state of Sergipe if it is unable to reach a tax accord with municipal authorities, Chief Executive Officer Murilo Ferreira said on Wednesday.

Shareholders “cannot be subject to fiscal uncertainties” about the project Ferreira said during a hearing before a Senate committee in Brasilia. Vale, the world’s No. 3 mining company by market value, is the world’s largest iron ore producer and a growing fertilizer producer.

Vale plans to shut down its planning work at the site on Feb. 28 if there is no resolution, Ferreira said. Sergipe Governor Jackson Barreto said at the same hearing that the state will find a solution to the tax problem. The impasse stems from a battle between rival Sergipe towns Capala and Japaratuba over the location of the mine’s planned processing facility on their territory so they can reap the expected tax benefits.

“We won’t do anything to hurt the state, but lacking a political solution we’ll hire a bank to sell the project to somebody interested in developing it,” Ferreira said.

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Brazilian government to help pay for potash mine – by Henry Lazenby (MiningWeekly.com – February 18, 2014)

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

TORONTO (miningweekly.com) – Brazil-focused fertiliser development firm Verde Potash on Tuesday said the Brazilian government would help fund construction of its flagship Cerrado Verde project, located within the country’s largest agriculture market.

The company announced that the project was selected to receive financing from a special financing programme of the government.

“Inova Agro’s decision is immensely important not only for Brazil, but for the world’s population, ever so reliant on Brazil’s food production. Thanks to a ground-breaking funding programme in the agriculture sector, Brazil takes a step towards reducing its economy’s debilitating dependency on imported potash,” president and CEO Cristiano Veloso said.

Inova Agro is a Brazilian government programme intended to fund innovative projects in the agriculture sector, including those focused on fertilisers. Selected projects would be considered for subsidised interest rates, equity investment and non-reimbursable project investment grants from the Brazilian Development Bank and/or the Financing Agency for Studies and Projects, both of which are arms of the Brazilian government with a mandate to support domestic projects.

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NEWS RELEASE: New York Times Best-Selling Author Launches Campaign Surrounding the Anniversary of Tragic Event That Killed 65 Men

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Feb. 19, 2014) – Local New York Times Best Selling Author Napoleon Gomez, today launches a campaign across Canada to bring attention to a tragic event that happened eight years ago, taking the lives of 65 innocent workers, whose bodies remain unrecovered.

Retold in his acclaimed book Collapse of Dignity, Gomez recounts the explosion deep in a Mexican mine and the ensuing half-hearted rescue attempts and government cover-up. Inspired by examples of public solidarity for social justice both in Canada and around the globe, Gomez was compelled to launch a bold campaign to mark the anniversary this year.

The campaign kicks off in Gomez’ home-base of Vancouver on key transit routes, supplemented and rolled out across Canada in newspapers, social media campaigns and a personal call to Napoleon’s peers and colleagues within Canada’s most reputable and largest labour unions. His message is clear: there are bodies still buried underground today and the lost miners deserve justice. Their families have never received support and their plight has never been resolved.

Frustrating for Gomez is the stark contrast to the Chilean mine tragedy in 2010, which was highly publicized and celebrated when the 33 miners were safely rescued. A Hollywood film about the 33 miners is currently in production. The Chilean accident took place just four years after the Mexican mining tragedy that saw little media support.

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Brazil land disputes spread as Indians take on wildcat miners – by Lunae Parracho and Caroline Stauffer (Reuters India – February 14, 2014)

http://in.reuters.com/

JACAREACANGA, Brazil – Feb 17 (Reuters) – As Brazil struggles to solve land disputes between Indians and farmers on the expanding frontier of its agricultural heartland, more tensions over forest and mineral resources are brewing in the remote Amazon.

The government of President Dilma Rousseff gave eviction notices to hundreds of non-Indian families in the Awá-Guajá reserve in Maranhão state in January and plans to relocate them by April, with the help of the army if necessary, Indian affairs agency Funai says.

The court order to clear the Awá territory follows the forced removal of some 7,000 soy farmers and cattle ranchers from the Marãiwatsédé Xavante reservation last year, a process profiled by Reuters that resulted in violent clashes. [link.reuters.com/dew27t ]

Anthropologists say evictions from Awá territory could be even more complicated. It is thought to be a base for criminal logging operations and is also home to some indigenous families who have never had contact with outsiders, a combination that worries human rights groups lobbying for the evictions.

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