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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UPDATE 1-Guatemala seek 2-year moratorium on new metal mining – by Mike McDonald (Reuters U.S. – July 10, 2013)

http://www.reuters.com/

(Reuters) – Guatemala President Otto Perez asked the country’s congress on Wednesday to impose a two-year moratorium on new mining licenses to calm tensions in mostly indigenous communities opposed to the industry.

“We are bringing a bill to congress in which we declare a two-year moratorium,” Perez said in a speech late Tuesday night. “We are asking congress to not give any more metal-mining licenses.”

In May, Guatemala’s government declared an emergency in four towns, suspending citizens’ rights to protest in an area where people died during demonstrations against the Escobal silver mine belonging to Canadian miner Tahoe Resources Inc.

Tahoe Resources received the final operating permits in April for its Escobal mine. The company’s top executive, Kevin McArthur, has said he does not expect the project to be affected by the moratorium request.

Government officials said they hope the request for the moratorium will also encourage congress to consider reforms to Guatemala’s mining law, including a proposal presented last year to hike mining royalties from 1 percent of a company’s gross income to 5 percent.

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The growing political risk to miners posed by water shortages – by Will Thomson (Mining.com – July 9, 2013)

http://www.mining.com/

In response to the growing global demand for metals and minerals, the mining industry has stepped up exploration and development of mines in various inhospitable places the world over. Though this trend has recently reversed in the wake of softening global demand, 136 new projects were announced in 2012, according to Ernst & Young. Despite the soft medium-term global economic outlook and rapidly decreasing capital expenditures by major miners, the long-term demand expectations of the developing world remain high, and thus so too does the need to continue exploration for metals and minerals in the world’s far-flung places.

Unsurprisingly, the development of difficult resource deposits has occurred in increasingly sensitive environments, far from the infrastructure necessary to meet the immense challenges of large-scale mining operations. One of the most common risk factors mining firms are faced with, in the frontier and emerging economies where these new deposits have been found, is a lack of the rivers, lakes, and water sources that are so important to a successful mining operation.

Access to a secure and stable water supply is essential for most mining operations, as water plays a vital role in every step of the mining process, from initial extraction to the refinement of ore. Water is often used to separate high value metals and minerals from the rock that ore is found in, is used to cool drill bits, and is essential for dust control. For mines that focus on the some of the world’s most important resources, such as gold and copper, water is a necessity. As the easy-access deposits of such valued resources have become increasingly scarce, and reliance on low-quality ores has increased, so too has the demand for water for the mining and refinement process.

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Chavez’s 70% Gold Bet Unravels as Reserves Plunge: Andes Credit – by Charlie Devereux & Corina Pons (Bloomberg News – July 4, 2013)

http://www.bloomberg.com/

The bet on gold that former Venezuelan President Hugo Chavez made in the final years of his life is collapsing at the wrong time for his country.

Chavez, who argued that Venezuela should move away from the “dictatorship of the dollar,” stockpiled more than 70 percent of Venezuela’s foreign reserves in gold by 2012, the highest percentage among all emerging-market countries and more than 50 times that held by neighbors Colombia and Brazil, according to the World Gold Council.

After rewarding Venezuela with a rally of almost 400 percent in the past decade, gold has tumbled 25 percent this year, helping drive the central bank’s reserves to an eight-month low and compromising the government’s ability to repay foreign debt. The yield on Venezuela’s dollar-denominated bonds has risen 62 basis points, or 0.62 percentage point, to 11.84 percent in the past month, compared with an average increase of 57 basis points for other countries in Latin America.

“Venezuela’s reserves have taken a big hit,” Francisco Rodriguez, an economist at Bank of America Corp., said by phone from New York. If current gold price levels continue, “then you will see an increase in perception that Venezuela’s capacity to pay is weakening.”

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Editorial: This is what a washout looks like [Barrick Gold] – by John Cumming (Northern Miner – July 3, 2013)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists. jcumming@northernminer.com

Barrick Gold is the world’s leading gold company, and its Pascua-Lama gold-silver megaproject under construction on the Chilean-Argentine border is its leading development project. And so the gold industry watches in dismay as the major grapples with the project’s ballooning capital costs and construction delays, slumping gold prices, writedowns, job cuts and a pummelled share price.

At the time of writing, Barrick’s shares trade for only $15.29 — or US$14.69 — off 56% this year alone, and 74% since their peak in April 2011. Here again, Barrick is the leader of the gold sector that has seen overall share price declines around 50% this year.

Barrick has also led in terms of corporate-suite excess, with the pink-slipped minions at head office bearing the brunt. Fired CEO Aaron Regent was paid US$12 million last year, mostly as severance, while the whole management team pulled in an astonishing US$57 million, up 148% year-over-year. In April, Barrick shareholders finally had enough, and there was heated opposition to the $17-million pay package offered to incoming co-chairman John Thornton, a former president of Goldman Sachs.

Barrick may yet prove to be a leader in accumulating unwieldy debt and tabling enormous writedowns as Pascua-Lama moves forward. At the end of the first quarter, Barrick had US$2.3 billion in cash and US$15 billion in debt.

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NEWS RELEASE: Vale obtains installation license for [Brazil iron ore project Carajás] S11D – (July/03/2013)

http://www.vale.com/en/Pages/default.aspx

Vale informs that it has obtained the installation environmental license (LI) to the iron ore project Carajás S11D, the highest grade and lowest cost world-class project in the industry. With the issuance of the LI, Vale’s Board of Directors approved the complete S11D program, comprised of investments in the mine, processing plant, railway capacity and port.

The LI was issued by Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis (IBAMA) and is part of the project’s second phase of licensing, which authorizes the plant construction. S11D is the largest project in Vale’s history and also in the iron ore industry, being a major lever for value creation, production capacity growth and for maintaining Vale’s undisputed leadership in the global market in terms of volume, cost and quality. A high value-adding project.

The total capex for S11D is US$ 19.671 billion, estimated at a 2.00 BRL/USD exchange rate, encompassing: the development of mine and processing plant (US$ 8.089 billion) and logistics (US$ 11.582 billion).

The project has a nominal capacity of 90 million metric tons per year (Mtpy) of iron ore with proven and proved reserves of 4.240 billion metric tons with an average ferrous content of 66.7%, low impurities and estimated cash cost (mine, plant, railway and port after royalties) of US$ 15.00 per metric ton (at a 2.00 BRL per USD exchange rate). S11D is expected to start-up in 2H16 and to deliver full capacity production in the 2018 calendar year.

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Special Report: Why Brazil’s new middle class is seething – by Paulo Prada (Reuters U.S. – July 3, 2013)

http://www.reuters.com/

SÃO GONÇALO, Brazil (Reuters) – André Tamandaré isn’t supposed to be so angry. Over the past decade, the 33-year-old high-school dropout has moved into his own house, got a steady job and earned enough income with his longtime girlfriend, Rosimeire de Souza, to lead their two kids into Brazil’s fast-rising middle class.

Now a public health worker in a sprawling suburb east of Rio de Janeiro, Tamandaré is the kind of citizen that Brazil’s government thought was fulfilled. Instead, he is one of the more than one million people across Latin America’s biggest country who have hit the streets in a wave of mass protests.

Brazilians are railing against poor public schools, hospitals and transport. They are protesting soaring prices, crime and corruption. They are lambasting a political class so self-satisfied that it failed to see, much less address, the mounting dissatisfaction that led to the protests.

Combined, the concerns reflect growing unease among Brazil’s nearly 200 million people that the country’s long-promised leap into the developed world has fallen short once again.

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In La Rinconada, Peru, searching for beauty in ugliness [gold mining] – by Marie Arana (Washington Post – February 28, 2013)

http://www.washingtonpost.com/

Gold. The Aztecs killed for it. The Inca enslaved whole populations for it. Spain sent legions of marauding conquistadors up and down the Americas in a hallucinatory hunt, believing that gold was so abundant that chieftains rolled in it, washing away the glittering residue in their daily morning swims.

Down the centuries, the quest for El Dorado has held the South American continent in thrall, luring generations of fortune hunters to its far reaches, from 1st-century warlords to 21st-century adventurers. The earth beneath them has not disappointed. The geologic exuberance known as the Cordillera of the Andes has yielded a fount of treasure: the emeralds of Boyaca, the silver of Potosi, the gold of Cajamarca.

Indeed, when Pizarro conquered Cajamarca in 1532, he demanded a roomful of gold from the emperor Atahualpa; when it was produced, he chopped off the Inca’s head and established a new kind of Golden Rule. So it was that a mineral became king and a craze began.

Nowhere has Peru’s frenzy for gold been so fevered as in the mountains that surround Lake Titicaca. And nowhere has that fever been so intemperate as in a town tucked into a glacial aerie: La Rinconada, the highest human habitation in the world.

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Environmental headwinds buffet BHP in Colombia – by Brian Robins (Sydney Morning Herald – July 1, 2013)

 http://www.smh.com.au/

In the wake of heightened environmental sensitivities to the activities of mining companies in Latin America, BHP Billiton’s plans to expand a nickel mine in Columbia have been blocked.

Governments in the region from Chile to Argentina have forced several global mining companies to rethink mine applications in response to growing criticism over the industry’s rising incursions.

Late last week, Colombia’s environmental licensing authority, Autoridad Nacional de Licencias Ambientales, turned down a request from BHP Billiton’s Cerro Matoso nickel mine to expand the site, according to wire reports. Cerro Matoso is the second largest producer of ferro nickel globally.

The request was denied because existing environmental permits cannot be modified to enable mining projects to be expanded, the environmental authority said.

The BHP Billiton project, which has operated for many years, produced more than 47,000 tonnes of nickel last year. The mine taps a laterite nickel deposit that is used as feedstock at a ferro-nickel smelter nearby. Most nickel is used to produce stainless steel.

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Barrick may wipe out retained earnings with huge Pascua-Lama writedown – by Peter Koven (National Post – July 3, 2013)

The National Post is Canada’s second largest national paper.

Barrick Gold Corp. is poised to wipe out all of its retained earnings for the second time in less than four years.

An anticipated writedown of US$4.5-billion to US$5.5-billion on the bungled Pascua-Lama project would eliminate the US$3.9-billion in retained profits that the gold giant reported at the end of the first quarter. Back in 2010, Barrick wiped out more than US$2.2-billion of retained earnings when it took a US$5.2-billion charge to close out its hedge book.

It is highly unusual for a company of Barrick’s size and profitability to be in this position twice in such a short time. And while these are non-cash charges, experts said they point to a troubling trend of poor decision-making and oversight at the world’s largest gold producer.

“The writedowns impact them in perception,” said George Topping, an analyst at Stifel Nicolaus.

The red ink could be a lot bigger when the company reports second quarter earnings in four weeks. Barrick warned of other possible impairments last Friday, and analyst Greg Barnes of TD Securities estimated they could total close to US$10-billion.

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Brazil’s Vale: Outlook for Iron Ore Hasn’t Changed – by Paul Kiernan (Wall Street Journal – July 1, 2013)

http://online.wsj.com/home-page

RIO DE JANEIRO–Brazilian mining giant Vale SA VALE -1.36% hasn’t seen China’s appetite for iron ore weaken despite the recent tumult in global markets and hopes to follow through with costly expansion plans despite skepticism from some quarters.

Slowing Chinese growth and the possible withdrawal of easy-money policies in the U.S. have sent the dollar higher against other currencies such as the Brazilian real and raised concerns about demand for commodities. Worries about the world’s second-largest economy have weighed particularly heavily on Vale’s shares, which are trading near four-year lows.

But Jose Carlos Martins, Vale’s executive director of ferrous minerals and strategy, said the company has felt “no negative impact in terms of demand” and sees a silver lining in the recent depreciation of the Brazilian real. Vale, the world’s number three mining company and top producer of iron ore, mines the key steel ingredient in Brazil and sells most of it abroad, at dollar-denominated prices.

“Putting everything together–the positive and negative effects of all this confusion–the truth for us is that we haven’t had big changes in the scenario for iron ore,” Martins said in an interview. He noted China’s renminbi is “one of the only currencies in emerging countries that hasn’t suffered,” meaning Vale’s costs relative to Chinese iron-ore producers have declined.

Still, Vale’s preferred shares are down 34% this year, having underperformed Brazil’s Ibovespa stock index as well as rival mining majors BHP Billiton BLT.LN -0.12% and Rio Tinto RIO -1.42%.

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