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Latin America Mining

NEWS RELEASE: Chile ranked third as most attractive country for copper mining investments (Merco Press – May 21, 2013)

Chile is the third most attractive country for copper mining investments behind Canada and Australia according to a report from the Chilean Copper Committee, Cochilco that includes fifteen leading countries in the industry and was released this week by Mining minister Hernan de Solminihac in Santiago.

“After analyzing all variables, Chile is placed in third place among the most attractive countries for investments behind developed mining powerhouses such as Canada and Australia”, said Solminihac.

The ranking was based taking into account structural aspects of the different economies from the World Economic Forum and the Heritage Foundation records, as well as information on investing conditions in the mining sector in countries provided by the Fraser Institute.
According to the Chilean minister Cochilco took into account six variables: macroeconomics, political stability, labour specialization, business infrastructure, licences and geological potential.

“The work included the fifteen countries with the largest copper mining developments in the next decade with a total of 120 projects which imply investments in the range of 240 billion dollars”, said Solminihac. Of that number of projects, 32% are in Chile.

Chile is also the world’s leading producer and exporter of copper and is enjoying the benefits of world demand bonanza led by China.

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Ecuador pushing ahead with reforms to lure mining investors (Reuters India – May 17, 2013)

http://in.reuters.com/

May 16 (Reuters) – Ecuador’s government on Thursday presented a mining bill to Congress that should pave the way for the signing of contracts with several investors, including Canada’s Kinross Gold Corp.

Ecuador does not have a large-scale mining industry, but the country is largely unexplored and could potentially have big copper, gold and silver deposits. Socialist President Rafael Correa, who won a sweeping re-election victory in February, is eager to attract investment to reduce the economy’s dependence on oil exports.

“We’ve sent a bill labeled as urgent … it contains the reforms to the mining law. Our mining law is very good, but we made some mistakes and it was too strong in some aspects and there were not as many investments as we expected,” Correa told reporters.

Negotiations with Kinross Gold over its $1.3 billion Fruta del Norte gold project are well behind schedule, in part because OPEC-member Ecuador is trying to reap high benefits from the nascent sector.

“Investors asked for some reasonable things and that’s why we’re changing the law,” said Correa. Lawmakers are likely to pass the bill promptly, since the ruling Alianza Pais political party has nearly three-quarters of the seats in Congress.

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A nugget of wisdom for gold miners: Think small – by Eric Reguly (Globe and Mail – May 11, 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.

ROME — I think I have figured out Canadian gold mining executives. They assume that gold is not a mineral; it is a perishable commodity that will rot in the ground, like a potato, unless it is dug up immediately.

And not just immediately but in vast quantities. Canadian gold mining executives are obsessed with the concept of bigness. They want projects they can label “game changers,” ones capable of vaulting medium-sized firms into the big leagues, or thrust the biggies to the very top of the global heap. Bigness permeates their lives. They drive big cars, live in big houses. Some, like Barrick Gold Corp. boss Peter Munk, bob around the planet in the biggest of yachts.

The problem with bigness is that it translates into trouble when it’s extended to corporate development. Big projects are big gambles. They invariably come in far over budget, sometimes billions over budget, which gets shareholders rather annoyed. Big projects also attract lots of attention from environmental activists, politicians and aboriginal peoples. The result is expensive delays and bad publicity.

Canada’s gold mining sector is a mess, with share prices down by about half even though the gold price is down by only 20 per cent from its high of almost $1,800 (U.S.) an ounce last October. Executives are being tossed into the garbage like the remains of a steak lunch. Returns on equity are sinking into single-digit territory or, in Barrick’s case, turning negative. Problems at flagship projects are not going away – in some cases they’re intensifying – after years of fix-it efforts.

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South Americans Face Upheaval in Deadly Water Battles [Mining conflicts] – by Michael Smith (Bloomberg Markets Magazine – February 13, 2013)

http://www.bloomberg.com/markets-magazine/

People streamed into the central square in Celendin, a small city in the Peruvian Andes, the morning of July 3, 2012. They were protesting the government’s support for Newmont Mining Corp. (NEM)’s plan to take control of four lakes to make way for a new gold and copper mine. By midday, there were 3,000.

Some hurled rocks at police and brandished clubs. Then assailants shot two officers and an Army soldier in the leg.

Blocks away, construction worker Paulino Garcia left home on foot to buy groceries. As he approached the central square, he encountered chaos. People ran for cover as federal troops fired their weapons, Bloomberg Markets magazine will report in its March issue.

One bullet struck Garcia as he watched the mayhem. It ripped open his chest and exited through his back. The 43-year-old father of two fell to the ground and died. Another three people were shot and killed, and more than 20 were wounded.

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Illegal mining Colombia’s new bane – by Paul Harris (Globe and Mail – May 9, 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.

Canadian junior miners on front lines as criminal gangs, demobilized paramilitaries and guerrilla groups mine gold outside the law

MEDELLIN, COLOMBIA — In Segovia, a prosperous Colombian town of 50,000 people in northeastern Antioquia, the shops are closed by 6:30 p.m. and the streets empty. Segovia is a boom town, one of the country’s richest gold production centres, but tension is in the air as criminal gangs, demobilized paramilitaries and guerrilla groups flock to the area to mine gold illegally.

In Colombia, gold is the new cocaine as outlaw groups increasingly move into mineral-rich parts of the country on their own terms to take advantage of the metal’s strong price.

“The relatively high price of gold, the fact that the final product is legal and its production sources cannot easily be traced, means that illegal groups can operate large, profitable operations without the risks involved in the drug trade,” said Daniel Linsker, vice-president of global services for Latin America, at Control Risks, an international business risk consulting firm.

It’s estimated that illegal mining accounts for most of Colombia’s gold production. Production was an estimated 66 tonnes in 2012, according to the country’s National Mining Agency. About 10 tonnes comes from legal mines and about 10 tonnes from scrap such as old jewellery, meaning more than 40 tonnes is produced illegally, estimates CIIGSA, one of Medellin’s gold refineries.

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Canadian mining company got embassy help amid controversy in Mexico: Advocacy group – by Julian Sher – (Toronto Star – May 6, 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.

Mining Watch issues report on what Canadian embassy in Mexico knew about the murder of Chiapas anti-mining activist, whose accused killers had ties to Calgary company Blackfire.

Secret diplomatic emails and briefings suggest the Canadian embassy in Mexico provided “active and unquestioning support” to a Canadian mining company before, during and after it became embroiled in controversy over the murder of a prominent local activist in Chiapas and corruption allegations, according to a report issued Monday by MiningWatch Canada.

The study, made available by the advocacy group to the Star and La Presse, is based on 900 pages of documents obtained through Access to Information from the Department of Foreign Affairs and International Trade about its dealings with Calgary-based Blackfire Exploration.

In late 2009, three men with links to the company were arrested after the drive-by shooting of Mariano Abarca, who was leading the fight against Blackfire’s barite mine in the often turbulent state of Chiapas.

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Canadian Mining Industry Continues to Face Opposition in Central America (The Costa Rica News – May 5, 2013)

http://thecostaricanews.com/

Canadian mining operations have faced fierce opposition from numerous Latin America countries and communities over the past decade continuing most recently in Guatemala and Costa Rica.

In 2008 a Latin American independent report, Investing in Conflict—Public Money, Private Gain: Goldcorp in the Americas condemns the business practices of Canada mining companies, focusing on the largest, Goldcorp Inc., and discusses the Canadian mining industry’s socially and environmentally destructive practices in the Americas.

Even before this report, a Canadian mining operation met strong resistance in Costa Rica. In 2003 Canadian mining corporation Glencairn, started open pit mining in Miamar Costa Rica, ignoring concerns by locals and scientists of the riskiness of the area for large-scale open-pit mining, and an impending ban on open-pit mining in the country. [Reported on http://www.earthworksaction.org]

The company set up a mine using “cyanide heap leaching” at Bellavista, close to Miamar, which is a process where intensely toxic cyanide trickles through massive mounds of ore and removes the gold from the ore.

In July 2007, earth movements caused by geological instability and rainfall cracked the mine’s leach pad liner, allegedly leaking cyanide and contaminating the groundwater near the community of Miramar.

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Guatemala declares emergency in four towns to quell mining protests – by Sofia Menchu and Mike McDonald (Reuters U.S. – May 2, 2013)

http://www.reuters.com/

(Reuters) – Guatemala declared an emergency in four southeastern towns on Thursday, suspending citizens’ constitutional rights in an area where deadly protests over a proposed silver mine have erupted in recent weeks.

Guatemalan President Otto Perez announced the move in an effort to quell protests targeting the mine belonging to Canadian miner Tahoe Resources Inc. Two people have been killed in the demonstrations.

The company’s security guards shot and wounded six demonstrators on Saturday, said Mauricio Lopez, Guatemala’s security minister.

The next day, protesters, who say the Escobal silver mine near the town of San Rafael Las Flores will contaminate local water supplies, kidnapped 23 police officers, Lopez said. One police officer and a demonstrator were killed in a shootout on Monday when police went to free the hostages, said Lopez.

“I am not going to allow this to continue,” Perez told reporters. “We have conducted a six-month investigation in this area with the attorney general’s office for various criminal activities.” Police and military raided the four towns on Thursday, arresting 15 people suspected of kidnapping, weapons theft and destruction of private property.

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Peru rolling back indigenous law in win for mining sector – by Mitra Taj and Teresa Cespedes (Reuters India – May 1, 2013)

http://in.reuters.com/

LIMA – (Reuters) – Peru’s mining minister is winning a crucial cabinet battle by swaying President Ollanta Humala to water down a law that gives indigenous groups more say over new mines and oil projects – and a deputy minister will likely resign in protest.

According to half a dozen people with direct knowledge of the internal tug-of-war, Mines and Energy Minister Jorge Merino has prevailed in excluding Quechua-speaking communities in the mineral-rich Andes from being covered by the law.

Sources said he fears applying the law throughout the highlands – as the government once said it planned to do – would delay a pipeline of mining investments worth $50 billion. Several people in Merino’s office declined repeated requests by phone and email for comment.

The tussle underscores a quandary facing Peru, one of Latin America’ fastest-growing economies: how to develop its vast mineral wealth while also addressing a legacy of inequality from its colonial past.

The “prior consultation law,” which Humala touted during his 2011 campaign as a salve for widespread conflicts over natural resources, requires companies to negotiate agreements with indigenous communities before building new mines or oil wells around their lands.

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Brazil on cusp of domestic potash and phosphate revolution – by Simon Rees (MiningWeekly.com – April 25, 2013)

http://www.miningweekly.com/

TORONTO (miningweekly.com) – Fertilisers and their increased application will be vital in driving Brazil’s status as a global agricultural powerhouse. The country is already the world’s fourth-largest consumer, according to Reuters.

Rather than rely on imported raw material for fertiliser production, Brazil’s government is keen to facilitate the growth of a robust domestic potash and phosphate industry. Several significant projects are already in various stages of development, including those being advanced by MBAC, Brazil Potash and Verde Potash.

MBAC is close to bringing on stream its Itafós project, located in the vast Cerrado area, Brazil’s new agricultural frontier.

Construction work is just more than 90% complete, with proven reserves standing at 15.9-million tons and probable reserves at 48.9-million tons. Life of mine is estimated at 19 years, with an average ore grade of 5.08% P2O5 (phosphorus pentoxide). Yearly output is estimated at an initial 500 000 tons single super phosphate (SSP).

“We’ve accomplished a lot over the last four years: we’ve drilled over 75 000 m; obtained the necessary permits and filed the necessary technical reports; [and] secured financing in difficult market conditions,” MBAC VP corporate development Steve Burleton told Mining Weekly Online.

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Mexican mining royalty plan passes committee in Congress – by Gabriel Stargardter (Reuters India – April 18, 2013)

http://in.reuters.com/

MEXICO CITY – (Reuters) – A proposal to levy a new 5 percent royalty tax on mining profits in Mexico, the world’s largest producer of silver, passed a congressional committee on Thursday as the country attempts to boost its paltry tax take.

The plan put forward by lawmakers in President Enrique Pena Nieto’s Institutional Revolutionary Party (PRI) aims to boost revenues from an industry where companies enjoy a more generous tax regime than in other Latin American countries.

The proposal, which was approved by the economics committee of the lower house of Congress, aims to redistribute profits to the states where foreign and domestic companies mine.

The plan is part of a broader drive by Pena Nieto to improve Mexico’s tax take, which is the lowest in the 34-nation Organization for Economic Co-operation and Development.

Under the proposal, mining firms would pay a 5 percent charge on net profits before tax. Mines not yet producing would pay a low, almost symbolic per-hectare fee on their concession. Seventy percent of the revenues would go to the states and municipalities where mining occurs, for infrastructure and development, with the rest going to a federal development fund.

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UPDATE 2-Vale Q1 profit falls despite big cost cuts – by Jeb Blount (Reuters U.K. – April 25, 2013)

http://uk.reuters.com/

RIO DE JANEIRO, April 24 (Reuters) – Brazil’s Vale SA , the world’s second-largest mining company, reported an 18 percent slide in first-quarter net profit as bigger-than-expected cuts in operating costs failed to offset lower sales and a hit from taxes and foreign exchange.

Despite the drop, the result beat analysts expectations and may help boost Vale’s stock as the company responds to investor calls for a tighter reign on spending amid concerns over weaker metals prices as growth in China slows.

Net income of $3.11 billion in the three months ending March 31 beat the $2.71 billion average estimate of eight analysts surveyed by Reuters and reversed a fourth-quarter loss, Vale’s first quarterly loss in a decade.

The result was still down on $3.79 billion a year earlier, and 25 percent below the average $4 billion quarterly profit the world’s largest producer of iron ore has recorded for the previous 11 quarters.

The lackluster outcome may add to nervousness that a decade-long mining boom led by ravenous Chinese demand for steel and other metals is ending, despite a rebound in iron ore prices after a steep drop last year. Like rivals BHP Billiton and Rio Tinto , who have been cutting costs and shunning expensive acquisitions, Vale slashed planned 2013 investment 24 percent in December.

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Vale’s former iron man sets sights on Africa – by Silvia Antonioli and Clara Ferreira-Marques (Reuters U.K. – April 23, 2013)

http://uk.reuters.com/

LONDON (Reuters) – At the helm of Brazil’s Vale for a decade, Roger Agnelli turned the conservative iron ore producer into a global heavyweight. Now, he is back in the game.

The 53-year-old, ousted from Vale two years ago, is betting on the world’s hunger for resources, Africa’s potential and his team’s ability to operate where others fear to tread.

“You have a lot of financial guys looking to invest, looking for opportunities,” said the former banker, sitting back in the library of a smart central London hotel. “But guys who go into the middle of the forest, into the middle of the desert to implement a project, those are still scarce.”

Agnelli set up AGN Participacoes, a holding company, shortly after leaving Vale, to invest in biofuel. Last July, he teamed up with billionaire Andre Esteves’ investment bank BTG Pactual to set up B&A Mineracao, a mining group focused on fertiliser, iron ore and copper, in Latin America and Africa.

That $520 million venture – one of a handful of investment ventures set up by an outgoing generation of mining executives – has already put its cash to use, investing $160 million in fertiliser projects and copper.

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Barrick rebellion: With gold miner’s stock in the dumps, investors push back – by Peter Koven (National Post – April 20, 2013)

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

This has been the worst month in Barrick Gold Corp.’s modern history. It is about to get worse. On Wednesday, the Toronto-based gold miner will be greeted by some very frustrated shareholders at its annual meeting. The company does not usually face hostility from investors at its AGMs, but this year appears to be different.

Virtually everything has gone wrong for Barrick lately. And as gold began a steep descent last week and the company’s key project was partially halted, the stock price plunged 33% in six days. It is an gut-wrenching freefall for a company of Barrick’s size and it takes the stock to its lowest levels since 1993 when gold averaged just US$360 an ounce.

Remarkably, an even bigger source of investor ire emerged on Friday. Seven of Canada’s largest pension funds announced that they are opposing the US$11.9-million “signing bonus” that Barrick paid to co-chairman John Thornton last year, and plan to vote against the entire compensation committee. Mr. Thornton received a whopping US$17-million in 2012, and he was not the only beneficiary of Barrick’s largesse. Chairman Peter Munk (US$4.3-million), chief executive Jamie Sokalsky (US$11.4-million) and “ambassador” Brian Mulroney ($2.5-million) all received big pay hikes despite a bad year for the stock price.

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Huge Barrick mine in Chile faces long delay as obstacles pile up – by Alexandra Ulmer (Reuters U.S. – April 16, 2013)

http://www.reuters.com/

SANTIAGO, April 15 (Reuters) – Barrick Gold Corp faces some tough legal obstacles to complete its up to $8.5 billion Pascua-Lama gold mine after a recent court decision, and even the possibility that its Chilean environmental permit might
be canceled.

In the latest of several recent blows to the country’s mining and power industries, a Chilean court last week suspended
construction of the mine, which straddles the border of Chile and Argentina, while it weighs claims by indigenous communities that the mine destroys pristine glaciers and harms their water supply.

The ruling is one of several challenges facing Pascua-Lama, which was originally touted as one of the world’s largest and
lowest-cost gold mines. Experts say there is a risk that the unpopular project faces months, or even years, of legal limbo, damaging Chile’s investor-friendly reputation.

Moreover, politicians are unlikely to intervene during an election year on behalf of the project, a hot potato in Chile. “Pascua-Lama’s legal path looks difficult,” said Luis Cordero, law professor at the Universidad de Chile. “If the company isn’t able to adequately negotiate a plan to meet (demands), its permit could be revoked.”

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