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Speaker’s Corner: Piercing of corporate veil in Hudbay case may send Canadian companies elsewhere – by Megan Lem (Law Times News – August 5, 2013)

http://www.lawtimesnews.com/index.php

Compañía Guatemalteca de Níquel (Guatemala Nickel) owns and operates the Fenix nickel mine in Guatemala. Between 2007 and 2009, there were some unfortunate security incidents at the mine when protesters clashed with police and private security details working for a security contractor that had been retained by Guatemala Nickel. These clashes allegedly led to the death of one man, the serious injury to another man, and the rape of several women.

The alleged victims of this violence in Guatemala, rather than suing Guatemala Nickel domestically in that country, brought three separate actions in Canada against Hudbay Minerals Inc., the parent company of Guatemala Nickel, for an aggregate of approximately $67 million in damages. Hudbay, in response, brought a motion in Ontario’s Superior Court to dismiss the Guatemalan claims, asserting that the proper place for a trial, if any, was in Guatemala, and that the proper party that should be responsible for whatever happened in Guatemala, if any, was Guatemala Nickel.

On July 22, Superior Court Justice Carole Brown denied Hudbay’s motion to dismiss the case in Canada, allowing the Guatemalans to continue their lawsuit against Hudbay in Canada. This precedent-setting decision is, according to Murray Klippenstein, counsel for the plaintiffs, “the first time that a Canadian court has ruled that a claim can be made against a Canadian parent corporation for negligently failing to prevent human rights abuses at its foreign mining project.”

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Finding Chuqui’s lost ore – Lowell on tackling world-class mystery – by Kip Keen (Mineweb.com – August 1, 2013)

http://www.mineweb.com/

The massive Chuquicamata copper deposit has long been theorized to be missing ore, possibly faulted off to the south. Now exploration legend David Lowell is looking.

HALIFAX, NS (MINEWEB) – David Lowell, the famed octogenarian explorer credited with finding the Escondida copper deposit, among others, is now taking a crack at one of the world’s greatest exploration mysteries: finding lost – or believed to be lost – Chuquicamata copper ore. Forgive the superlative. For the known Chuquicamata copper-molybdenum deposit and mine in Chile, now owned by Codelco, is ranked by many as the greatest – or certainly one of the greatest – copper ore bodies in the world.

Chuquicamata, Chuqui for short, is big and, for its size, very high grade. A mid-2000s estimate tallied 2 billion tonnes @ 1.54 percent copper as having been mined. These days, a grade a third that is considered pretty normal – good even – for a large porphyry deposit like this. So Chuqui is abnormal. And many billion tonnes of ore remain at the known Chuqui deposit. As the massive Chuqui open pit wanes, Codelco aims to continue mining in a giant block cave mine it estimates will cost about $4.2 billion to build. The pit is reaching its limits, about 900 metres deep, and four kilometres long and three kilometres wide.

The Chuqui mystery is this: a fault, called the West Fault, cuts through the Chuqui ore body and appears to have moved a chunk – how much is not clear – of Chuqui ore elsewhere, where or exactly how far is uncertain.

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Barrick looks to cut high-cost mines – by Tim Kiladze (Globe and Mail – August 2, 2013)

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.

After its second major writedown in just six months, Barrick Gold Corp. is trying to wooing back shaken investors by focusing on assets closer to home.

The world’s largest gold miner announced a hefty $8.7-billion (U.S.) after-tax impairment charge, leaving the company with a second-quarter loss of $8.6-billion.

Barrick also slashed its dividend by 75 per cent as part of its second quarter earnings. In response to the losses, the Toronto-based company plans to shed, suspend or shut high-cost mines and continue to cut costs.

Chief executive officer Jamie Sokalsky said he is considering changes to his lineup of high-cost mines, most of which are in Africa and Australia. On a conference call Thursday, he said is already “well-advanced in a process to sell certain Australian assets.”

The miner will also continue to slash expenses where possible, having already cut or deferred $4-billion in capital spending over the past year, half of which came in the first six months of 2013.

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How rage over a Mexican mining tragedy has propelled a union leader’s book to the bestseller list – by Oakland Ross (Toronto Star – July 27, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

In Collapse of Dignity, Napoleon Gomez Urrutia reveals much about Mexico’s corrupt mining sector – but what about himself?

Will the real Napoleon Gomez Urrutia please stand up? About 66 years old and living in exile in Vancouver, the Mexican labour leader has trod many different paths during a long, eventful career, and now he has written a book about that journey.

Titled Collapse of Dignity: The Story of a Mining Tragedy and the Fight Against Greed and Corruption in Mexico, the densely written volume recently scaled its way into the Top 10 on The New York Times list of non-fiction bestsellers, an impressive achievement by any measure and all the more so in this case because a good deal of the book is at least somewhat fictitious.

It’s also pretty hard slogging for much of its 368-page length. Still, the good parts are engrossing, and they centre on a mining disaster – or, really, two mining disasters. One of these mishaps took place in northern Mexico, on Feb. 19, 2006, and it was an unmitigated catastrophe.

Sixty-five men lost their lives after a huge explosion hit the Pasta de Conchos coal mine in the early hours that day.

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BHP and Rio fork out $3.7 billion for water in Chile – by Brian Robins (The Age – July 26, 2013)

http://www.theage.com.au/

BHP Billiton and Rio Tinto are being forced to spend $US3.4 billion ($3.67 billion) on a water plant at their copper project in Chile, at a time when mining companies globally are curtailling capital spending.

The two miners will lose access to most of their water supply at the Escondida project, the world’s largest copper mine, in 2017.

BHP’s share of the new round of investment is estimated at $US1.97 billion and Rio’s at $US1.03 billion. Construction on the planned desalination plant is to start immediately, with completion planned for 2017.

The partners are in the middle of a $US4.5 billion round of spending which is to be completed next year, primarily on a new ore concentrator at the project, together with ancillary upgrades.

When completed, these upgrades will enable the production of more than 1.3 million tonnes of copper a year from 2015.
When the partners in Escondida disclosed the $US4.5 billion upgrade early last year, they signalled this was the first in a series of programs that could substantially expand capacity at the mine.

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UPDATE 2-Teck profit falls on lower prices, delays new mines – by Julie Gordon and Allison Martell (Reuters India – July 25, 2013)

http://in.reuters.com/

(Reuters) – Teck Resources Ltd on Thursday reported a sharp drop in second-quarter earnings on lower copper and coal prices, and cut its capital spending plan through 2014, delaying new mining projects.

The company, Canada’s largest diversified miner, is slowing the restarting of its Quintette coal mine in British Columbia until the steelmaking coal market recovers, and it delayed development of its Quebrada Blanca Phase 2 copper expansion in Chile.

“I think it is the right move,” said Garrett Nelson, mining analyst at BB&T Capital Markets, on the Quebrada Blanca delay. “That was going to be a significant drain on free cash flow over the next few years.”

Shares rose 4 percent to C$24.64 on the Toronto Stock Exchange.

A feasibility study last year pegged the project’s capital cost at $5.6 billion, with Teck’s share at $4.8 billion. It had planned to complete a study on its social and environmental impact by the end of the second quarter, but now does not expect to finish before the fourth quarter of 2014.

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Mark Cutifani to set out his vision for Anglo American – by James Wilson and Andrew England (Financial Post – July 22, 2013)

http://www.ft.com/home/us

Metals prices are under pressure. Costs remain sky-high. And disgruntled shareholders want more money back. Yet still there is a consolation for most mining chief executives: their problems are not as bad as Mark Cutifani’s.

At Anglo American, the diversified miner he has led since April, Mr Cutifani does not merely have to pep up the company’s financial performance. In South Africa, where Anglo’s roots date back nearly 100 years, he has to show political savvy to negotiate a sometimes violent environment of labour unrest and government anger. In Brazil, Anglo’s flagship iron ore project is wildly over schedule and budget.

This week Mr Cutifani, one of a cohort of recently anointed chief executives at the world’s largest mining groups, has promised his first public explanation of how he intends to improve Anglo, which underperformed its peers during the mining boom. Since 2008 Anglo’s total shareholder return has halved compared with a fall of 24 per cent for Rio Tinto and a 44 per cent increase for BHP Billiton.

“The company has not been delivering on shareholder expectations,” he acknowledges. “We need a much more commercial, value-focused mindset.” Rivals including BHP and Rio have promoted insiders to their top jobs, arguably giving them a head start in addressing a markedly more pessimistic environment for the sector.

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Guatemalans can sue HudBay in Canada, judge rules (CBC News Business – July 23, 2013)

http://www.cbc.ca/news/business/

Miner faces lawsuits over alleged rapes and violence at Guatemalan mine unit

An Ontario court has cleared the way for a group of Guatemalans to sue mining company HudBay Minerals Inc. in Canadian courts over alleged shootings and gang rapes at a mining project. The ruling, handed down Monday, means that the claims of 13 Mayan Guatemalans can proceed to trial in Canadian courts, according to a lawyer for the plaintiffs.

The Guatemalans are attempting to sue over gang rapes by security personnel and military personnel at the Fenix project nickel mine near El Estor, Guatemala in 2007 and 2009. The indigenous group have also alleged a shooting at the same mine paralyzed one victim, while a local community leader who voiced opposition to the mine was beaten and killed.

Lawyers for the plaintiffs called it a “wake-up call” for Canadian miners, saying the Toronto-based company could potentially be held legally responsible at home for actions by its subsidiary in Guatemala.

“As a result of this ruling, Canadian mining corporations can no longer hide behind their legal corporate structure to abdicate responsibility for human rights abuses that take place at foreign mines under their control at various locations throughout the world,” said Murray Klippenstein, lawyer for the 13 indigenous Mayans, in a press statement.

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Guatemalan mine claims against HudBay can be tried in Canada, judge says – by Bertrand Marotte (Globe and Mail – July 23, 2013)

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.

Canadian mining company HudBay Minerals Inc. can potentially be held liable for alleged violence at a Guatemalan mine owned by a subsidiary, a Ontario Superior Court judge has ruled in what plaintiffs say is a precedent-setting case.

Madame Justice Carole Brown’s ruling, handed down Monday, means that the claims of 13 Guatemalans can proceed to trial in Canadian courts, according to Murray Klippenstein, lawyer for the plaintiffs.

Mr. Klippenstein had argued that HudBay itself can be held liable for alleged negligence in the case, alleging that HudBay executives made decisions for its subsidiary regarding security at the mine, relations with local indigenous people and the “forced evictions” of Mayan protestors claiming the mine is theirs.

Lawsuits were launched against HudBay after clashes that pitted protestors against security details at the Fenix nickel mine in 2007 and 2009. The allegations have not been proven and HuBay has since sold the mine.

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Alabama Coal Billionaire Battles Murder Suits as Prices Ebb – by Anthony Effinger & Matthew Bristow (Bloomberg News – July 16, 2013)

http://www.bloomberg.com/

Gustavo Soler knew he was in trouble. It was 2001, and Soler was union president at a coal mine in Colombia owned by Drummond Co., which is controlled by the wealthiest family in Alabama.

Soler’s predecessor, Valmore Locarno, and Locarno’s deputy, Victor Orcasita, had been killed seven months earlier, and now Soler was getting threats, says his widow, Nubia, in an interview in Bogota. He told his family to pack up. They would leave the area as soon as he got home from the union office in Valledupar, a city in the country’s coal belt. He never made it.

Armed men stopped his bus, asked for him by name and abducted him. He was found under a pile of banana leaves with two bullet holes in his head, Bloomberg Markets magazine will report in its August issue.

After the killing, Nubia says, Garry Neil Drummond, chief executive officer of Drummond Co., sent a taxi to bring her to the Drummond offices near the coastal town of Santa Marta, where, in a meeting, he promised to put her children, Sergio and Karina, then 14 and 9, through school.

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Exclusive: Chile indigenous group likely to appeal Barrick ruling -lawyer – by Alexandra Ulmer (Reuters India – July 19, 2013)

http://in.reuters.com/

SANTIAGO – (Reuters) – A Chilean indigenous group will likely ask the Supreme Court to review a lower court decision on Barrick Gold Corp’s Pascua-Lama gold mine, because the ruling does not go far enough to protect the environment, a lawyer representing the group told Reuters on Thursday.

The appeal will probably also seek a re-evaluation of the suspended $8.5 billion project and ask that Barrick present a new environmental impact assessment study, a potentially lengthy and costly process, the lawyer, Lorenzo Soto, added.

The Copiapo Court of Appeals on Monday ordered a freeze on construction of the project, which straddles the Chile-Argentine border high in the Andes, until the company builds infrastructure to prevent water pollution.

“It’s very likely we appeal the decision,” Soto said. “What we’re interested in is that the project be re-evaluated. What is optimal, in our opinion, is for the project to present a new environmental impact assessment.”

Soto said the decision on whether to appeal would be made on Friday. The Diaguita indigenous group has until Monday to file with the court, he added.

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Gold price headed north of $2 000/oz, even $5 000/oz – gold bull McEwen – by Henry Lazenby (MiningWeekly.com – July 17, 2013)

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

TORONTO (miningweekly.com) – NYSE- and TSX-listed McEwen Mining chief owner Rob McEwen has plenty of faith that the gold price will, within the next two years, head north of $2 000/oz and even cross the $5 000/oz mark in the not too distant future.

In an interview with Mining Weekly Online, McEwen said that while there was a lot of sentiment out there that the gold price would go lower, he believed the price of the yellow metal would go much higher.

McEwen pointed to historical precedents where governments debased their currencies through monetary expansion in excess of their sustainable debt loads, which caused the currency to devalue relative to assets such as gold.

In the past, these happened in isolated cases, but were more commonplace these days, as many countries and regions, including the US and the European Union, were concurrently pumping cash into their economies to keep them buoyant.

In some cases, as in the US, debt was reaching unprecedented levels at around $17-trillion. He said it worked well when interest rates were low, but should rates climb to about 5%, the debt service costs alone would be about a trillion dollars, which would crowd out other essential public services.

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UPDATE 4-Chilean court suspends Barrick’s Pascua-Lama mine project – by Erik Lopez (Reuters U.S. – July 15, 2013)

http://www.reuters.com/

SANTIAGO, July 15 (Reuters) – A Chilean appeals court on Monday suspended Barrick Gold Corp’s controversial Pascua-Lama gold mine until the company builds infrastructure to prevent water pollution, and ordered the mine’s environmental permit be reviewed.

In April, the Copiapo Court of Appeals temporarily and preventively froze construction of the $8.5 billion project, which straddles the Chile-Argentine border high in the Andes, while it examined claims by indigenous communities that it has damaged pristine glaciers and harmed water supplies.

On Monday, a three-judge panel of the appeals court, in a unanimous decision, ordered a freeze on construction of the
project until all measures required in the government’s environmental license for adequate water management, “as well as
urgent and transitory measures required by the environmental regulator,” are adopted.

Chile’s environmental regulator had already suspended Pascua-Lama, citing major environmental violations, and asked
Barrick, the world’s top gold miner, to build water management canals and drainage systems. “Barrick is committed to operating at the highest environmental standards at all of its operations around the world, including at Pascua-Lama, and is working diligently to meet all regulatory requirements at the project,” the Toronto-based company said in a statement on Monday.

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The History of KGHM International Ltd.

 

This historical overview is from the 2013 KGHM International Corporate Social Responsibility Report, click here: http://www.kghm.com/files/doc_downloads/WEB_KGHM%20CSR%202013%20English.pdf

KGHM International Ltd. is a wholly owned subsidiary of KGHM Polska Miedź S.A., the 7th largest copper producer and the largest silver producer in the world based in Lubin, Poland. The KGHM International story is one of rapid growth, from a junior mining company to a global industry player.

The Early Years

KGHM International, formerly known as Quadra FNX Mining Ltd. (“Quadra FNX”), was formed as the result of a merger between two equals: Quadra Mining Ltd. (“Quadra”) and FNX Mining Company Inc. (“FNX”). Both were incorporated in 2002, and later listed on the Toronto Stock Exchange, with the goal of becoming mid-tier base-metal producers.

The Quadra strategy: to grow through acquisitions

Quadra acquired its first asset, the Robinson Mine located near Ely, Nevada, in April 2004 and restarted production in December 2004. Quadra continued to grow through a series of acquisitions; in 2004, the company acquired the Sierra Gorda property in Chile through option agreements, and in 2005, added the Carlota Project near Globe, Arizona to its portfolio of assets.

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Brazil indigenous protest blocks major iron ore railway (BBC – July 10, 2013)

http://www.bbc.co.uk/news/

Brazilian indigenous people in the Amazon region have blocked one of the country’s most important railways in a protest for better public services. The railway is owned by mining giant Vale and connects the world’s largest iron ore mine, Carajas, to a port on the northern coast near Sao Luis.

The track transports more than 100m tonnes of the mineral each year. It is the second time this week that the trains have been halted by protesters of neighbouring villages.

Protesters from several tribes burned wood on the railway in the Amazonian region of Alto Alegre do Pindare, demanding better transport, education, health and security.

Last week, they blocked the railway for two days. Earlier this week, residents of another village near Sao Luis, in the state of Maranhao, also stopped the trains in a protest. They want Vale to act on their behalf in negotiations with the authorities.

Because of the protests, the passenger train that transports about 1,500 passengers a day between the city of Parauapebas, in Para, and Sao Luis has not resumed its regular service since last week.

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