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

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)

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)

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)

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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Mining Stirs Tensions in Mexico – by Jean Guerrero (Wall Street Journal – May 23, 2013)

OCOTLAN, Mexico—An influx of mining investments throughout Latin America is bringing badly needed investment, but is also causing tensions in some communities, pitting those who see mines as job creators against those who view them as predatory, in some cases threatening scarce resources like water.

Here in the Ocotlán valley in the southern Mexican state of Oaxaca, two outspoken opponents of a subterranean mine run by a small Canadian firm, Fortuna Silver Mines Inc., FVI.T +5.21% were killed in separate incidents in the past year. Dozens were beaten or threatened. Two local government officials who approved the mine, including the then-mayor, were killed by an anti-mining mob.

From 2006 to 2011, mining exploration investment in the region jumped 150% to $4.55 billion, top in the world and equal to one in every four dollars, according to the mining industry information company Metals Economics Group. The investments are creating jobs, roads and other benefits in some of the most neglected corners of the developing world. But it is also creating tensions in a region with a long and complicated history with mining.

In 2012, six anti-mining activists died in clashes with police in Peru, where a $5 billion project by Colorado’s Newmont Mining Corp. NEM +0.81% was put on hold due to concerns about water supply. In central Guatemala, an outspoken mining opponent was shot multiple times by gunmen on a motorcycle in June.

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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)

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)

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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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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Wanted: Miners in Brazil for Anglo American – by John W. Miller (The Wall Street Journal – May 19, 2013)

In Remote Town, Company Must Train a Workforce Before Digging for Ore

CONCEICAO DO MATO DENTRO, Brazil—One key to controlling the wage inflation that bedevils mining companies is finding a captive labor force that’s willing to be trained, such as the one in this remote town, where cows outnumber residents almost two to one.

Nineteen-year-old Augusto Alonso Silva is eager to earn $600 a month as an industrial mechanic at an Anglo American AAL.LN +3.70% PLC iron-ore mine here. The pay is about half what mining wages are elsewhere in Brazil, but Mr. Silva says it is twice as much as he dreamed of earning as a soldier. “Now I have a different dream,” says the 19-year-old, during a break in a basic engineering class.

While rising labor costs have become almost routine for global mining firms—a drill operator in Australia can earn $200,000 a year and a truck driver in Chile $70,000—locals here have been willing to take lower-level jobs such as operating a conveyor belt or maintaining machines for less than $10,000 a year.

Instead of money, the big issue has been lack of skills. The illiteracy rate in this town of 17,000 is close to 18% for people 15 and over.

“There are lots of people in this area who were simply unemployable” when Anglo American arrived in 2007, says Pedro Borrego, the company’s Brazil director of human resources.

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

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)

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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