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Latin America Mining

The state of mining in South America – an overview – by Keith Campbell (MiningWeekly.com – June 21, 2013)

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

South America: home of the greatest, most alluring, most deadly of mining legends – the myth of El Dorado, the golden one. Over the past 500 years, the con-tinent’s mineral riches, real and imagined, have stimulated amazing feats of courage, daring and endurance, conquest, looting, terrible atrocities and appalling oppression.

From the Victorian era on, mining also resulted in what are still breath-taking engineering feats, such as railways through the mighty Andes mountains, complete with chasm-spanning bridges and impressive tunnels. Mining has helped promote at least some economic and infrastructural development in a number of countries, although this has tended to be uneven.

The continent of South America is the fourth largest continent but is composed of just 12 countries (plus the French territory of Guiana on the mainland and the UK self- governing dependency of the Falklands Islands in the South Atlantic). These countries are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela.

As a result, the continent possesses some of the geographically largest countries in the world, including the fifth biggest (Brazil), the eighth (Argentina), the 20th (Peru) and the 26th (Colombia) – South Africa ranks 25th. Bolivia, which looks quite small on a map of South America, is actually the 28th-largest country in the world.

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Canadian-owned mine must be closed, says archbishop – by Michael Swan (The Catholic Register – June 20, 2013)

http://www.catholicregister.org/index.php

The Archbishop of San Salvador is calling for international support in shutting down a Canadian-owned gold mine just across the border in Guatemala.

Archbishop José Luis Escobar Alas told his weekly press conference June 9 his country should “go to international justice mechanisms” if bilateral talks between El Salvador and Guatemala fail to prevent Vancouver-based GoldCorp from going ahead with the Cerro Blanco mine, which is already extracting gold bearing ore as part of an advanced exploration project.
Escobar believes the Canadian mine will inevitably contaminate Lake Guija, which feeds the Lempa River, El Salvador’s main source of drinking water.

Since 2008 El Salvador has suspended all hard rock mining in the tiny country. Since taking on El Salvador’s most senior Church post in February, Escobar has spoken out frequently in support of a permanent ban on metal mining.

Escobar made his call for international help with a cross-border mining dispute just as Prime Minister Stephen Harper announced a tentative step toward regulating the conduct of Canada’s mining companies abroad.

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UPDATE 2-Brazil mine bill proposes royalty hike – by By Jeb Blount (Reuters U.S. – June 18, 2013)

http://www.reuters.com/

RIO DE JANEIRO, June 18 (Reuters) – Brazil, the world’s second-largest producer of iron ore, unveiled a long-awaited bill to reform the country’s 46-year-old mining code on Tuesday, proposing royalties of up to 4 percent, double the current rate.

Murilo Ferreira, chief executive of Vale SA, the world’s largest iron ore exporter, said the bill would hit miners hard. He estimated the government’s total take from royalties would rise to $4.2 billion reais ($1.93 billion) from $1.7 billion reais.

Even so, provisions of the bill are less onerous than the mining industry had feared when the discussion of reforms began
nearly four years ago. The top rate under the proposal is only one-third of basic royalties charged in Australia, for example.

Brazil is getting ready to enact the reforms at a time when the mining industry is experiencing a sharp slowdown. When the
bill was first proposed in 2009, the industry was in one of its most prosperous periods ever. Vale’s preferred shares, the Rio de Janeiro-based company’s most-active class of stock, rose 1.8 percent in early afternoon trading in Sao Paulo.

The legislation will test the government’s efforts to reduce tensions with investors, many of whom have criticized President Dilma Rousseff’s economic polices as erratic and her attitude toward business “heavy handed.”

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Peru protesters push to stop $5 billion Newmont mine project – by Mitra Taj (Reuters India – June 17, 2013)

http://in.reuters.com/

PEROL LAKE, Peru – (Reuters) – Thousands of opponents of a $5 billion gold project of Newmont Mining circled a lake high in the Andes on Monday, vowing to stop the company from eventually draining it to make way for Peru’s most expensive mine.

Lake Perol is one of several lakes that would eventually be displaced to mine ore from the Conga project. Water from the lakes would be transferred to four reservoirs that the U.S. company and its Peruvian partner, Buenaventura, are building or planning to build.

The companies say the reservoirs would end seasonal shortages and guarantee year-round water supplies to towns and farmers in the area, but many residents fear they would lose control of the water or that the mine would cause pollution.

“Hopefully, the company and the government will see the crowd here today and stop the project,” said Cesar Correa, 28, of the town of Huangashanga in the northern region of Cajamarca. He was one of some 4,000 protesters who arrived at Lake Perol on foot or on horseback, many wearing ponchos, as well as traditional broad-brimmed straw hats or baseball caps.

Some carried blankets and bags of potatoes and rice – planning to camp out at the site for weeks to halt the project. “Why would we want a reservoir controlled by the company when we already have lakes that naturally provide us water?” asked Angel Mendoza, a member of a peasant patrol group from the town of Pampa Verde.

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Horizonte raises $4.7 million for Brazilian nickel project – by Lawrence Williams (Mineweb.com – June 11, 2013)

http://www.mineweb.com/

AIM and TSX junior nickel developer Horizonte Minerals has done well to raise $4.7m in the current climate and has organised an optional facility for a further $12.5m.

LONDON (MINEWEB) – AIM and TSX main board quoted Horizonte Minerals, which is concentrating its efforts on its Araguaia nickel project in Brazil’s Carajás region in Pará state – a deposit which it describes as a world leading asset in terms of size and grade – has just announced it has raised some £3 million ( around US$4.7 million) in an equity issue at 7.5 p/share, fully supported by its two major shareholders, Teck and Henderson Global Investors (HGI).

In addition it has also entered into a term sheet for an equity financing facility (EFF) for up to £8m ($12.5 million) over three years with Darwin Strategic Limited, a subsidiary of HGI. This can be drawn down at Horizonte’s option.

The Araguaia nickel deposit is a saprolitic nickel laterite located in the same area as Vale’s Onça Puma nickel mine as well as some other significant nickel projects including Glencore Xstrata’s Serra do Tapa only 60 km away.

Grades are reckoned as good for a deposit of this type and the resource is big – with considerable scope for expansion. The current NI 43-101 resource is estimated at 39.3 million tonnes grading 1.39% Ni (Indicated) and 60.9 million tonnes at 1.22% Ni (Inferred) at a 0.95% nickel cut-off. At lower cutoff grades the tonnages are far higher.

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Exiting Ecuador the right move for Kinross – by Peter Koven (National Post – June 11, 2013)

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

Kinross Gold Corp. has abandoned plans to develop the massive Fruta del Norte project in Ecuador after refusing to pay a 70% windfall profits tax demanded by the government.

It is a major disappointment for the company. Fruta del Norte was acquired for more than US$1-billion in 2008, and was expected to become one of the Toronto-based miner’s cornerstone operations. But more than two years of fruitless negotiations convinced Kinross that it was not going to get a deal that would generate good investor returns.

The Ecuadorian government played hardball with Kinross from the beginning, insisting on the monstrous windfall profits tax and never backing down. That was by far the biggest sticking point in the negotiations, chief executive Paul Rollinson said in an interview Monday. He is certain that walking away is the best move for shareholders.

“It really was a tough decision, but I do think it was the right decision,” he said. “I’m not prepared to sign anything with a 70% windfall profits tax.” Since taking over as CEO last year, Mr. Rollinson has put an emphasis on boosting profitability rather than building new mines for the sake of growth. This was clearly a project that could not generate a strong return because of the punitive tax regime.

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Why a Canadian Mining Executive Is Trapped in Colombia’s War – by Sebastian Salamanca (TheTyee.ca – June 8, 2013)

http://thetyee.ca/

Kidnapped in January, Gernot Wober is now a pawn in a long fight over resource rights.

Gernot Wober was a long way from his Canadian home when, on Jan. 18, he was taken captive by Marxist guerrillas in the town of Norosí, Colombia.

The reasons Wober is still being held are deeply entwined in a long-running war between rebels and the Colombian government. It’s a five-decade struggle to control the country’s northern region, which is called the South of Bolívar. At stake is a bounty of gold — and who gets to mine it. Multinational mining companies, as one might imagine, are lined up to exploit the resource. But the region is also home to so-called “traditional miners” — home-grown, low-tech operators who scrape out a living sifting gravel, sand and dirt for the precious ore.

Wober, a vice-president of exploration at the Toronto-based Braeval Mining Corp., is a pawn in that war over who gets the gold. And his captors, the National Liberation Army (ELN), are not likely to let him go without a bloody fight or something very valuable in return.

The ELN is the second largest guerrilla group in Colombia with roughly 2,500 armed members and a long historical presence in the South of Bolívar. On the day the ELN invaded a mining camp and took Wober, they also took hostage two Peruvians and three Colombian nationals.

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Cape Breton mines attract Chilean delegation – CBC News Nova Scotia (June 4, 2013)

http://www.cbc.ca/ns/

Chilean delegation interested in Cape Breton’s mining industry and Tar Ponds cleanup

A six-member delegation from Chile is coming to Cape Breton to learn more about managing mine closures and tackling environmental cleanups.

The Enterprise Cape Breton Corporation — a federal Crown corporation that fosters economic development — organized the visit by the delegation, which includes engineers from Chile’s mining and environmental companies and the Canadian Trade Commissioner Service.

Darlene Sponagle, the trade and investment officer for the Enterprise Cape Breton Corporation, said there is a need in South American countries for mine closure plans and there’s much they can learn.

“How we’ve all worked together to accomplish these projects here on Cape Breton Island, specifically around community engagement, stake holder engagement, First Nations engagement, as well as taking a look at some of the practices that were developed here between government and the private sector,” she said. Sponagle said the agenda is packed.

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Barrick delays Pascua-Lama mine start again (Reuters U.S. – June 4, 2013)

http://www.reuters.com/

TORONTO, (Reuters) – Canada’s Barrick Gold Corp said it would delay the startup of its Pascua-Lama gold mine in Chile and Argentina past late 2014 and that the project would probably exceed its current budget of up to $8.5 billion as a result.

In a filing late with Canadian regulators late on Monday, Barrick attributed the delay to water management work required by Chile’s new environmental regulator.

A Chilean court in April partially halted construction of the project, which straddles the border between Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.

Chile’s environmental regulator then put its own halt on work at the gold-silver project in May, citing serious violations.

“While the company is assessing opportunities for potential reductions in certain expenditures, the delay beyond 2014 is expected to result in a related increase in capital cost,” Barrick said in the filing.

While all nonenvironmental work is halted in Chile, construction continues on the Argentine side of the project. The delay is just the latest hurdle for the project, which Barrick has had on its books for more than decade. Last year, the miner pushed back first production by a year and raised its estimate of capital costs by about 70 percent.

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UPDATE 3-Beijing’s forced sale of Glencore Peru mine may play into China’s hands – by Denny Thomas (Reuters India – June 4, 2013)

http://in.reuters.com/

HONG KONG, June 4 (Reuters) – Beijing’s demand that Glencore Xstrata Plc sell a copper mine in Peru may bring rich dividends for China Inc., as two companies linked to Chinese state-backed groups are weighing rival bids for the $5 billion-plus project.

Interest from Chinese state companies in Glencore’s Peruvian mine is a rare case of an asset sale forced by a government as a condition of merger approval working in favour of its own national champions, and underscores China’s new-found clout in regulating global takeovers.

Chinalco Mining Corp International and Hong Kong-listed MMG Ltd, both linked to a Chinese state-owned enterprises, are considering offers for Glencore Xstrata’s Las Bambas mine, according to people close to the matter, less than three months after Beijing blessed Glencore’s $35 billion purchase of Xstrata.

Under the deal struck with Beijing’s Ministry of Commerce in April, Glencore has three months to begin the process of selling Las Bambas, one of the group’s biggest development projects, with the expectation of finding a buyer by the end of August 2014.

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MININGWATCH NEWS RELEASE: Complaint Asks Ontario Securities Commission to Investigate Tahoe Resources After Wiretap Evidence Implicates Employees in Violence at Guatemala Mine

http://www.miningwatch.ca/

Monday, June 03, 2013 – Source: Justice and Corporate Accountability Project (JCAP) – MiningWatch Canada

(Toronto/Ottawa) On Friday, the Justice and Corporate Accountability Project (JCAP) submitted a complaint to the Ontario Securities Commission regarding Tahoe Resources’ (TSX: THO; NYSE: TAHO) poor disclosure about violence in connection with the company’s only mine project in southeast Guatemala.

On April 27, security personnel shot and wounded six people gathered outside of the Escobal mine site. Wiretap evidence gathered under orders of the Guatemalan public prosecutor’s office has implicated company employees.

According to the wiretap evidence, Tahoe’s Security Manager Alberto Rotondo ordered the mine security to attack the protestors. Mr. Rotondo has been charged with causing serious and minor injuries and obstructing justice, which included tampering with evidence at the site of the crime. He is currently under house arrest and awaiting an evidentiary hearing in July 2013.

The security advisor for the company, Juan Pablo Oliva Trejo, has also been apprehended in connection to the attack and charged with concealing a crime. According to wiretap evidence, he helped Mr. Rotondo mobilize in the days following the attack, warning him to leave the country to avoid facing legal problems.

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Argentines hope Lula will pull off miracle on Vale potash mine – by By Samantha Pearson (Financial Times – June 2, 2013)

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

It was an unnerving sight for Vale’s investors. Dressed in a traditional Andean poncho, Brazil’s former president Luiz Inácio Lula da Silva was pictured in Argentina in May discussing the future of the miner’s suspended potash project.

“We are trying to make the venture viable and he seemed open to the idea,” Francisco Pérez, the governor of Argentina’s Mendoza province where the mine is based, said after their meeting.

The visit came less than a month after President Dilma Rousseff also flew to Argentina to discuss the matter, raising concerns that Vale, the world’s second-biggest miner by volumes, is facing growing political pressure to maintain the cash-draining project.

Vale’s Rio Colorado venture was set to be one of the biggest foreign capital investments in Argentina, turning Brazil’s neighbour into a top supplier of potash – the potassium compounds that Brazilian farms so desperately need as fertiliser.

However, after spending $2.5bn completing more than 40 per cent of the project, which includes a port terminal as well as 790km of railway, Vale officially suspended it in March. Rampant inflation and exchange rate controls in Argentina have made the venture commercially unviable, Vale says, almost doubling its cost to $11bn from initial estimates.

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Harper should not be promoting mining interests in Peru – by Gerald Caplan (Globe and Mail – May 31, 2013)

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.

Here’s why Stephen Harper was in Peru last week instead of in Parliament trying to end the crisis that’s destabilized his entire government. The Prime Minister has two great economic passions. The first, of course, is building pipelines to enable ever more quantities of oil to flow from the Alberta tar sands.

Passion number 2 is the promotion of Canadian mining interests across the globe, not least in Africa and Latin America. Why? Okay, you support the oil giants because you think global warning is hooey. But mining? How does it help Canada to have our PM personally advance the interests of our multitude of mining companies in relatively poor foreign countries? How does it help the people of those countries?

In Peru, Mr. Harper announced $53-million in “aid projects” over the next six years, most of them related to extractive industries. But why aid booming Peru when the government is ending all aid to several truly needy African countries. The answer is simple. As pointed out by Ian Smillie, one of Canada’s most thoughtful development experts, the projects Canada is to fund will likely “make life easier for the 75-odd Canadian mining companies operating in Peru”.

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Chile wants Canada’s natural gas – by Richard Blackwell (Globe and Mail – June 1, 2013)

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.

Chile wants to buy Canadian liquefied natural gas to feed its energy-hungry mining industry as it bolsters its efforts to transform into a developed industrial nation and drag its citizens out of poverty.

Chilean President Sebastian Pinera, speaking to The Globe and Mail editorial board on Friday, said his government’s mission is to make Chile the first Latin American nation to become a truly developed country. “[We want to] transform Chile from an underdeveloped country to a developed country before the end of this decade,” he said.

To help Chile reach its development goals, Mr. Pinera is looking to Canada as a potential source of liquefied natural gas (LNG) and has discussed with Prime Minister Stephen Harper the possibility of importing the fuel by ship.

“We will need to import a lot of energy, because we don’t have coal, we don’t have oil,” Mr. Pinera said. While Chile is rich in potential hydroelectric resources, he added, there is opposition to development from environmental groups – both inside and outside the country – and that will delay its hydro-power expansion.

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Chilean President gives Barrick Gold its Pascua-Lama fix-it orders – by Brent Jang and Josh Wingrove (Globe and Mail – May 31, 2013)

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.

VANCOUVER, OTTAWA – Chile’s President says Barrick Gold Corp. must follow 23 steps to comply with orders from his country’s environmental regulator, a message that underscores the tough road ahead for the company to get its crucial Pascua-Lama gold project back on track. Sebastian Pinera, in Ottawa to discuss Canada-Chile economic relations, admonished Barrick for its handling of the $8.5-billion (U.S.) mine development so far.

“The company didn’t comply with all the conditions that were established in that environmental impact assessment,” Mr. Pinera said during a joint news conference with Prime Minister Stephen Harper. “We have identified 23 areas where they will have to improve their behaviour with respect to the environment in Chile.”

Last Friday, Chile’s environmental regulator halted development of the gold and silver mine, citing “very serious violations” by Barrick. Mr. Pinera said Chile wants Barrick to eventually proceed with its Pascua-Lama mine – as long as it obeys environmental rules.

But lengthy delays are likely for the project, due to the time likely required for Toronto-based Barrick to carry out environmental fixes, including canals to divert run-off water away from the Chilean mine.

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