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Latin America Mining

BRICS chafe under charge of ‘new imperialists’ in Africa – by Pascal Fletcher (Reuters India – March 26, 2013)

http://in.reuters.com/

DURBAN, South Africa – (Reuters) – “BRICS, Don’t Carve Africa” reads a banner in a church hall in downtown Durban where civil society activists have gathered to cast a critical eye at a summit of five global emerging powers.

The slogan evokes the 19th Century conference in Berlin where the predominant European colonial states carved up the African continent in a scramble historians see as epitomising the brash exploitative capitalism of the time.

Decades after Africans threw off the colonial yoke, it is the turn of the blossoming BRICS group of Brazil, Russia, China, India and South Africa to find their motives coming under scrutiny as they proclaim an altruistic-sounding “partnership for development, integration and industrialization” with Africa.

Led by that giant of the emerging powers, China, the BRICS are now Africa’s largest trading partners and its biggest new group of investors. BRICS-Africa trade is seen eclipsing $500 billion by 2015, with China taking the lion’s share of 60 percent of this, according to Standard Bank.

BRICS leaders persist in presenting their group – which represents more than 40 percent of the world’s population and one fifth of global gross domestic product – in the warm and fuzzy framework of benevolent South-South cooperation, an essential counterweight to the ‘old’ West and a better partner for the poor masses of the developing world.

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Canadian ‘invasion’ of Guatemala’s mines causing conflicts – by Catherine Solyom (Montreal Gazette – March 22, 2013)

http://www.montrealgazette.com/index.html

MONTREAL — With her broad, patient smile, her work-worn hands folded over a traditional, woven skirt, Lolita Chavez is hardly a menacing figure. Yet in Guatemala, Chavez has been branded a threat to national security and a terrorist for speaking out against the development of Canadian-owned mines against the people’s will.

In Montreal Friday as part of a cross-country tour to draw attention to ongoing conflicts around mines — called “Plan Nord, Plans Sud” in Quebec — Chavez spoke to a crowded auditorium at UQÀM about her experience and Canadians’ responsibility in the “new invasion” of her country.

First came the Spanish conquest, then the civil war in Guatemala that claimed some 200,000 lives, now come the Canadians, Chavez told the crowd of students, academics and activists.

“Canadian companies are the main protagonists in this invasion that brings only death and destruction,” said Chavez, the spokesperson for 87 indigenous K’iche’ (Mayan) communities in Santa Cruz del Quiché, about 145 kilometres north west of Guatemala City. “And when we say we don’t want it, they say we are ignorant, or brutes, or we don’t understand the benefits. But we have a right to say no.”

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

ELIEZER BATISTA (BRAZILIAN MINING – VALE AND GOVERNMENT LEADER)

Eliezer Batista was born Eliezer Batista da Silva in 1924 in Nova Era, a town in the mining state of Minas Gerais in Brazil. His parents, Jose and Maria, were emigrants from Portugal and his father, a saddle maker, built up a substantial business in Minas Gerais. In due course Jose went into agriculture and ranching in the region and was able to comfortably support his two sons and four daughters.

Batista was educated first in Nova Era and then went to secondary school in Ouro Preto and St Joao del Rei, respectively to the south and west of Belo Horizonte. He was a bright but difficult pupil and his academic excellence was treated suspiciously by his monastic teachers who were largely Dutch. His interest was engineering and it was to study this that he took himself off to the cosmopolitan Federal University of Parana in Curitiba in the south of Brazil, graduating in 1948. Batista was a rebel in those days and after university he travelled extensively, helped by a natural bent for languages.

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Detained Barrick Gold shipment [Dominican Republic] seen as shot across the bow- by Pav Jordan (Globe and Mail – March 20, 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.

Barrick Gold Corp. managed to get its shipment of gold out of the Dominican Republic this week, but that may not spell the end of travails in the Caribbean country that is demanding a greater share of profits from its newest gold mine.

In the latest incarnation of resource nationalism in the hemisphere, Barrick is being asked by the government to renegotiate how it shares profits from the $3.7-billion Pueblo Viejo gold mine with the impoverished state.

Barrick argues that its current contract is legally binding, and will see 50 per cent of net cash flow – or some $11-billion – go to the government over the 25-year life of the mine, jointly owned by fellow-Canadian miner Goldcorp Inc.

“They are going to have to come up with some sort of compromise that will allow Barrick to continue to operate the mine profitably and allow the government to really save face on this, because the government has put a lot of political capital into what they’ve said they are going to do,” said John Gravelle, Canadian mining leader for consultancy PricewaterhouseCoopers.

Dominican President Danilo Medina said in speech to the nation in February that the current deal with Barrick was “unacceptable” and threatened to impose a windfall tax on profits if no deal is reached.

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Vale Says Suspended Argentina Project to Cost $11 Billion – by Michelle Yun & Juan Pablo Spinetto (Bloomberg.com – March 18, 2013)

http://www.bloomberg.com/

Vale SA (VALE5), the world’s biggest iron- ore producer, said the cost to develop its suspended potash project in Argentina had almost doubled to near $11 billion amid a dispute with the nation.

Inflation and exchange rate fluctuations led the cost of the Rio Colorado project in Mendoza province to surge from the budgeted $5.9 billion, Murilo Ferreira, chief executive officer of Rio de Janeiro-based Vale, said today at the Credit Suisse Asian Investment Conference in Hong Kong.

Vale has joined BHP Billiton Ltd. (BHP) and Rio Tinto Group in shelving projects or cutting spending on expectations a decade- long mining boom has peaked as growth slows in China. Vale said March 12 it mothballed the potash project after the government refused to give it tax breaks. Argentina said last week it will strip Vale of licenses for the project if it fails to resume work.

“We’ve tried to reach some agreement with the government for many and many months, in fact, since the beginning of May 2012,” Ferreira said. “We didn’t receive until the end of 2012 any answer about our demand, and our demand was precisely because of the gap we have in terms of the investment of the project.”

Vale gained 0.3 percent to 33.70 reais in Sao Paulo today, its highest close since March 12.

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Vale $15 Billion Tax Verdict Seen Fueling Gain: Corporate Brazil – by Juan Pablo Spinetto, Raymond Colitt & Ney Hayashi (Bloomberg.com – March 15, 2013)

http://www.bloomberg.com/

Vale SA (VALE5) investors stand to benefit as a decade-long court battle over $15 billion in back taxes that’s been weighing on the miner’s stock nears an end.

The Supreme Court is set to rule by June on a similar case brought by Coamo Agroindustrial Cooperativa, a farming group from the southern state of Parana that’s suing tax authorities to avoid levies on profits from foreign units. A ruling in favor of the group would be in line with the legislation of most other countries, according to Peixoto & Cury Advogados, a legal firm that specializes in corporate law, including tax issues.

The case is being watched as a benchmark for Brazil’s biggest exporters — from Vale to beermaker Cia. de Bebidas das Americas to steelmaker Gerdau SA (GGBR4) — who are fighting a combined $44 billion in tax claims. A win would be a boon for Vale because investors have already priced in much of the tax losses, said Empiricus Research’s Roberto Altenhofen.

“The market is overreacting a bit about the chances of Vale having to pay all the taxes that are being claimed,” the analyst at the Sao Paulo-based consulting firm said in a phone interview. “It’s almost impossible to predict the outcome of this trial, but what we can say is that Vale seems to be willing to negotiate with tax authorities so a deal can be reached. Vale may end up paying something, but not the full amount.”

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Barrick gold shipment detained by Dominican Republic – by Reuters (Globe and Mail – March 14, 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.

Barrick Gold Corp., the world’s largest gold miner, said on Thursday that a shipment of gold from its Pueblo Viejo mine in the Dominican Republic had been detained by customs officials in the Caribbean nation.

The delay comes just weeks after Dominican President Danilo Medina demanded that the company renegotiate its operating contract for the rich gold mine and threatened to clamp a windfall tax on profits if the contract was not modified.

Toronto-based Barrick said in a statement it was investigating the cause of the delay and seeking confirmation that the shipment can resume. It gave no further details. Fernando Fernandez, director of customs in the Dominican Republic, said the shipment was halted because of a problem with documentation.

“When it is resolved, the shipment will go out,” he told reporters. Pueblo Viejo, one of world’s largest new gold projects, is jointly owned by Barrick and Canada’s second largest gold miner, Goldcorp Inc.

On Feb. 27, in a speech marking the 169th anniversary of the Dominican Republic’s independence, Mr. Medina said the terms of the contract with the two Canadian miners were unacceptable and demanded more benefits from the mine.

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First Quantum has its work cut out on Cobre Panama – by Pav Jordan (Globe and Mail – March 14, 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.

It took six months and more than $5-billion for First Quantum Minerals Ltd. to get its hands on Cobre Panama, one of the world’s largest copper projects.

The trick now will be to build the mine on time and on budget in a world where costs have skyrocketed and the outlook for metals prices is murky. Moreover, Cobre is to be built in a country, Panama, that has virtually no mining industry to speak of.

Vancouver-based First Quantum gained control of the project this week with the hostile takeover of Inmet Mining Corp., and hopes it can shave as much as $1-billion (U.S.) from the $6.2-billion construction cost budgeted by its current owner.

The mine, already fully financed under Inmet, will be the largest ever in Central America and represents the most ambitious development project in Panama since the building of the Panama Canal. After it comes into production in 2016, it is expected to produce about 300,000 tonnes of copper a year for 40 years.

Analysts are divided on whether First Quantum can build Cobre Panama more cheaply than Inmet, pointing to such massive cost escalation across the mining industry that it has felled free-spending CEOs and decimated smaller companies.

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First Quantum believes hostile bid for Inmet likely to succeed – by Henry Lazenby (MiningWeekly.com – March 13, 2013)

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

TORONTO (miningweekly.com) – Base-metals miner First Quantum Minerals on Tuesday said it expected to close its C$5.1-billion hostile takeover bid for Inmet Mining on March 21, after unveiling Inmet shareholders had tendered about 61.45% of the company’s outstanding shares to the offer as on Monday at 23:59 Eastern Daylight Time (EDT).

First Quantum on Tuesday changed the cash-and-stock offer to allow the minimum tender condition to be satisfied when more than 50% of the outstanding Inmet shares (on a fully diluted basis) had been validly deposited, before the newly extended expiry time of the offer closed at 23:59 EDT on March 21.

“We are delighted with the overwhelming support that Inmet shareholders have shown for our offer. We have varied our offer such that the minimum tender condition will now be satisfied if more than 50% of the Inmet shares have been tendered at the revised expiry time of the offer.

“Accordingly, with all regulatory approvals already received, it is our expectation that we will be in a position to complete the offer and begin taking up and paying for shares shortly, following the expiry of the offer on March 21,” First Quantum chairperson and CEO Philip Pascall said.

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Junior Focus – Horizonte developing major nickel project in Brazil – by Lawrence Williams (Mineweb.com – March 13, 2013)

http://www.mineweb.com/

Nickel junior Horizonte Minerals is defining a significant lateritic nickel project in Brazil’s Carajás area where there is great local infrastructure and very low power costs.

LONDON (MINEWEB) – There are hundreds of gold junior explorers – many of them in deep trouble at the moment – but if nickel is your thing then there aren’t many serious junior players in the nickel sector, not least juniors with a great resource in terms of tonnage and grade in an area surrounded by successful nickel operators with currently profitable projects, good infrastructure and a market on their doorstep.

One that does tick these boxes is 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 – but it would say that wouldn’t it!

However Horizonte does have the figures to, at least partially, back this claim up, if not the money to develop it, although it has sufficient capital (around US$9 million in cash) to keep it going through its next stage of producing a Prefeasibility study on the back of a recent encouraging Preliminary Economic Assessment (PEA), and some good backing – notably Teck, which owns just short of 42%.

The Araguaia 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 Xstrata’s Serra do Tapa only 60 km away.

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First Quantum takeover of Inmet crosses finish line Pav Jordan (Globe and Mail – March 13, 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.

First Quantum Minerals Ltd. has gained control of Inmet Mining Corp. after a drawn-out hostile bid, charting a course to the major leagues of copper mining as it takes on the massive Cobre Panama project.

Vancouver-based First Quantum said on Tuesday that holders of just over 61 per cent of Inmet stock had tendered to the $5.1-billion cash-and-stock bid. First Quantum also lowered the minimum threshold for acceptance to 50 per cent and extended the deadline another 10 days.

In winning Inmet, First Quantum will get Cobre Panama, one of the world’s largest undeveloped copper projects. When it is up and running some time in 2016, the project will add around 300,000 tonnes a year of copper production for the next 40 years.

The First Quantum deal could in theory still be scuppered by a surprise white knight bidder, but that is seen as increasingly unlikely at a time when the mining world is facing some of its grimmest times since the financial crisis of 2008. The anticlimactic outcome of the deal, with no higher offer made by First Quantum, reflects the sombre state of the mining industry, which is coping with lower prices, uncertain demand and a string of recent writedowns due to overpriced deals done in the industry’s high-flying days a few years ago.

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Vale Shelves Potash Venture in Argentina to Preserve Cash – by Juan Pablo Spinetto (Bloomberg.com – March 11, 2012)

http://www.bloomberg.com/

Vale SA (VALE3), the third most valuable miner, mothballed a $5.9 billion potash venture in Argentina as the Brazilian company drops projects and writes down assets.

The Rio de Janeiro-based company’s decision was communicated to Argentina’s government today, according to an e- mailed statement. Vale’s shares rallied in Sao Paulo.

Work at Rio Colorado, billed to make Argentina the third- largest exporter of the crop nutrient, was suspended in January so Vale could reassess the project in light of inflation, exchange rate fluctuations and demands from provinces, Chief Executive Officer Murilo Ferreira said Feb. 28. Vale sought tax breaks and partners to make the venture more profitable.

“Major miners are continuing to shed assets, especially those that have greatly surpassed their cost expectations, and slash budgets,” said Robert Verderese, a trader at Knight Capital Group Inc. in New York. “I would expect more to come from Vale.”

Vale erased a loss to rise after the announcement 1.4 percent to 35.22 reais at the close of trading. The stock was the most traded by value on the Brazilian Bovespa index today at 84 percent of its three-month daily average volume.

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First Quantum makes last-minute plea for Inmet investors to accept $5.1-billion deal – by Pav Jordan (Globe and Mail – March 11, 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.

First Quantum Minerals Ltd. made a last-ditch plea to shareholders of Inmet Mining Corp. on Monday to tender their shares to a $5.1-billion takeover offer, promising to unleash greater value in the giant Cobre Panama copper project in Central America.

Vancouver-based First Quantum’s cash-and-stock offer for Inmet expires at one minute before midnight on Monday, unless extended.

“By tendering today, as First Quantum shareholders you will have immediate exposure to the Company’s strengths and renowned project capabilities on Cobre Panama, a project at a critical juncture of its development in a challenging environment,” the company said in a statement.

“Our vision of the two companies combined is that a major geographically diversified copper company will be created,” it said. “We have already outlined the superior growth prospects of the combined entity. To achieve this vision, the combination needs to be established soon in order to exploit First Quantum’s strengths and capabilities on the Cobre Panama Project.”

Cobre Panama is one of the world’s few large copper projects in development. It would be one of the most ambitious projects ever in its native Panama, home to the namesake canal that joins the Pacific and Atlantic oceans. The mine would be the largest ever in Central America.

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HudBay bets big with Constancia project as rivals pull back – by Pav Jordan (Globe and Mail – March 8, 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.

Toronto-based HudBay Minerals Inc. is a rare breed these days. In an industry reluctant to spend on anything beyond operating costs, the base metals miner is plowing ahead with a copper project in Peru called Constancia that will cost it nearly as much to build as the company’s entire market capitalization.

Even as global miners report billion-dollar cost overruns and asset writedowns and the industry is buffeted by demand headwinds in commodity markets – HudBay is spending $75-million a month on Constancia, where thousands of workers are already on site.

“It’s a relatively small company with a big project in development in Constancia and that’s got the market a little bit concerned,” said John Hughes, an analyst with Desjardins Securities in Toronto, who nevertheless has a “buy” on the stock and a target price that is 30 per cent higher than where it’s currently trading.

Others share not only his concerns, but also his enthusiasm about potential growth at the company, and 80 per cent of analysts polled by Bloomberg News have a “buy” rating on HudBay, which closed at $10.12 a share on Thursday.

“They’re basically betting their market cap on one mine,” said George Topping, an analyst with Stifel Nicolaus in Toronto, who also has a “buy” on the stock, with a target price of $13.75 a share.

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Not responsible for killing at Guatemalan mine, HudBay says – by Jeff Gray (Globe and Mail – March 6, 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.

As the widow of a slain Mayan community leader looked on, lawyers clashed in a Toronto courtroom on Tuesday over whether a Canadian mining company, HudBay Minerals Inc., can be held liable for alleged violence at a Guatemalan mine owned by a subsidiary.

Lawyers for HudBay, who are trying to have the case tossed out, say allowing it to proceed would “wreak havoc” with the well-established corporate law principle that parent companies are not liable for the actions of their subsidiaries. They also claim it would encourage “meritless” cases against other mining companies.

“They are trying to change the law,” HudBay lawyer Robert Harrison told court Tuesday on the second day of a two-day hearing on the firm’s motions to have the case thrown out.

Lawyers for the plaintiffs, and Amnesty International Canada, which intervened in the case, denied their arguments are radical. They argued that HudBay itself can be held liable for alleged negligence in the case, alleging the company’s executives made key decisions “on the ground” for its subsidiary about its security guards, relations with nearby indigenous people, and the “forced evictions” of Mayan protesters who claim the mine’s land as their own.

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