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Latin America Mining

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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FEATURE-Evaporating water supply poses costly risk for miners – by Julie Gordon (Reuters U.S. – May 30, 2013)

http://www.reuters.com/

May 30 (Reuters) – High in Chile’s bone-dry Atacama desert, mining engineer Enrique Miranda surveys a metal structure filled with a pungent mix of earthworms and woodchips. Sprinklers inside the enclosure snap to life, shooting waste water from the nearby mining camp into the wriggling mass, which serves as a natural filter.

“That’s lunch for the worms,” says Miranda, an environmental supervisor who has worked at Barrick Gold Corp’s Zaldivar copper mine for 18 years.

The worms munch through all the waste water generated each day at the mine’s camp and office facilities (not from the mine itself) and eventually produce irrigation quality water. The experimental process forms part of Barrick’s efforts to get more than 90 percent of Zaldivar’s annual water needs from recycling. The mine also reuses much of the water used in the extraction process, reducing the amount of new fresh water needed.

The recycling plant highlights the lengths that miners like Barrick, BHP Billiton Ltd and Antofagasta Plc have to go to assure adequate supplies of water for everything from toilets for their workers to separating the valuable metals in the ore body from waste rock and tamping down dust that heavy trucks kick up.

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Canadian mine giant Barrick fined a record $16.4M in Chile – by Canadian Press/CBC News (May 25, 2013)

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

Native population complains of cancerous growths and aching stomachs

The Diaguita Indians live in the foothills of the Andes, just downstream from the world’s highest gold mine, where for as long as anyone can remember they’ve drunk straight from the glacier-fed river that irrigates their orchards and vineyards with its clear water.

Then thousands of mine workers and their huge machines moved in, building a road alongside the river that reaches all the way up to Pascua-Lama, a gold mine being built along both sides of the Chile-Argentine border at a lung-busting 5,000 metres above sea level.

The crews moved mountaintops in preparation for 25 years of gold and silver production, breaking rocks and allowing mineral acids that include arsenic, aluminum and sulfates to flow into the headwaters feeding Atacama desert communities down below.

River levels dropped, the water is murky in places and the Indians now complain of cancerous growths and aching stomachs. There’s no way to prove or disprove it, but villagers are convinced Barrick Gold Corp. is to blame for their health problems.

“We don’t know how much contamination the fruit and vegetables we eat may have,” complained Diaguita leader Yovana Paredes Paez. “They’re drying up the river, our farms aren’t the same. The animals are dying of hunger. Now there’s no cheese or meat. It’s changed completely.”

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Barrick Assesses Impact of Chile Resolution on Andes Mine – by Liezel Hill & James Attwood (Bloomberg News – May 24, 2013)

http://www.bloomberg.com/

Barrick Gold Corp. (ABX), the world’s largest producer of the metal, is studying details of a Chilean resolution that imposed a fine and ordered work to safeguard water supplies at its $8.5 billion Pascua-Lama mining project.

Construction work at the site on the border with Argentina can’t resume until measures have been taken to prevent contamination, Chilean environmental agency SMA said in a statement on its website today.

Barrick is “fully committed” to complying with the resolution, the company said in a statement. The shares fell 2.1 percent after trading resumed following an earlier halt.

Construction on the Chilean side of the mine was stopped by a Chilean court last month. Chief Executive Officer Jamie Sokalsky told the Bloomberg Canada Economic Summit on May 21 that Toronto-based Barrick won’t continue making significant investments if there’s uncertainty about the project’s future. He said Barrick has already invested $5 billion in the mine.

“I think Barrick should seriously consider canceling the project,” Pawel Rajszel, a Toronto-based analyst at Veritas Investment Research Corp. who has a buy rating on the stock, said today by phone.

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Harper visit to Peru targets better use of mining royalties to alleviate poverty – by Heather Scoffield (Canadian Press/CTV News – May 22, 2013)

http://www.ctvnews.ca/

LIMA, Peru — Canadian mining companies hope that Stephen Harper’s visit to Peru will lead to better use of the billions in royalties and taxes that are sitting idle in a country where poverty is still a large problem.

Harper met mining executives Wednesday before a lengthy tete-a-tete with Peruvian President Ollanta Humala Tasso.
The executives stressed the need for regional governments to invest the royalties and taxes in local initiatives that will help alleviate poverty that affects more than half the rural population of Peru.

Humala, too, said he wants to see better social inclusion as a result of the mining activity that dominates his country’s economy.

Regional governments are sitting on up to $4 billion in unspent royalties, money lying idle in government bank accounts.
The pressure to “publish what you pay” in Peru is part of a push from mining companies and G8 governments that is gaining momentum around the world, said Glenn Nolan, president of the Prospectors and Developers Association of Canada. Nolan was in Lima to meet Harper.

“We want to see good laws and transparency so that our (royalties) go back into the community,” Nolan said in an interview.

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In Peru, PM’s officials say Harper will answer questions on Senate controversy – by Heather Scoffield (Canadian Press/CTV News – May 22, 2013)

http://www.ctvnews.ca/

LIMA, Peru — The Senate expenses scandal is turning Prime Minister Stephen Harper’s visit to South America into an awkward communications exercise.

Harper’s officials have indicated that the prime minister will finally take questions early this afternoon on the Prime Minister’s Office involvement in reimbursing Senator Mike Duffy $90,000 for improper housing expense claims.

But Harper will be next to Peruvian President Ollanta Humala Tasso in a joint presentation that was supposed to be about boosting the mining sector to aid development in Peru.

So Harper took the rare step of announcing a $53-million aid package and the text of the joint statement well before holding any meetings with Peruvians in the hopes of garnering some attention for his policy plan.

The $53 million will be spread over six years and go towards mining-related initiatives and education — a new and controversial approach for Canada’s aid and foreign policy that places natural resource extraction and promotion of Canadian business at the centre.

“Canada is committed to working with countries in the Americas to support development through sustainable economic growth and improved education,” Harper said in a news release.

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