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Norilsk Sees Nickel Surplus Shrinking Next Year on Idled Plants – by Yuliya Fedorinova & Marina Sysoyeva (Bloomberg News – September 27, 2013)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel, the world’s largest producer of the metal, urged producers to start idling unprofitable operations to fight a surplus that has damped prices and caused losses.

Consecutive quarters of losses should push companies to cut output, which may narrow the nickel surplus 30 percent to 70,000 metric tons in 2014 from 100,000 tons this year, according to Anton Berlin, marketing director at ZAO NormetImpex, a unit of Norilsk Nickel.

Nickel, used in stainless steel, tumbled into a bear market in May and is set for a third yearly loss, as demand waned and China increased output of a substitute derived from lower-grade ores. Additions to Chinese nickel pig iron capacity outstrip closures, creating a third consecutive annual surplus in 2013, according to a Deutsche Bank AG report in August.

“Unfortunately, we don’t see significant changes on the nickel market yet compared with what we had at the start of the year,” Berlin said in an interview Sept. 25. “From 35 to 40 percent of producers are still loss-making and the gap between supply and demand remains high.” Nickel traded at about $13,887 a ton on the London Metal Exchange by 10:35 a.m. local time, down 19 percent this year, making it the worst performing industrial metal.

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Innovators work to diversify the U.P. economy – by Kathleen Lavey (Detroit Free Press – September 22, 2013)

http://www.freep.com/

Gannett Michigan – Seven hundred feet below the surface of the earth, John Mason drives a truck through the heart of Eagle Mine, the tires crunching on irregular pieces of rock at the bottom of the tunnel.

He points to a section of the rock that’s a slightly different color than the rest. It gleams a little in the artificial light from the lamp on his hard hat.

“There,” Mason says, “is the ore body. Right there.” Four percent copper. Five percent nickel. An estimated 550 million pounds of usable metal in a mine near Marquette.

That’s no match for the purity of the copper hewn from the U.P.’s ancient rock formations during its 19th- and 20th- Century mining boom. But these days, getting it out is worth an investment of more than $1 billion and an effort that will keep a crew of up to 220 miners busy for at least eight years.

The new mine, scheduled to begin extracting ore late next year, is the next chapter in the Upper Peninsula’s long history of making a living from natural resources.

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Vale’s Manitoba Operations has reached 95 per cent of cost savings goal, Lovro Paulic says – by John Barker (Thompson Citizen – September 18, 2013)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000. editor@thompsoncitizen.net

But smelter and refinery “base case” is still to close sometime in 2015

Vale, which is trying to find $100 million in cost savings at its Manitoba Operations in Thompson, has achieved 95 per cent of that goal over the last year – a cost savings of $95 million with $5 million still to go, vice-president Lovro Paulic told the Thompson Chamber of Commerce Sept. 11.

Paulic said $60 million was saved last year and $35 million has been saved so far this year. Ninety per cent of the money was saved between September 2012 and last April, while anther five per cent has been saved since then. That leaves another five per cent to go to reach the $100 million target.

The result of the collective cost-savings effort across the operation was a reprieve for Birchtree Mine from being mothballed again for a second time. Birchtree Mine, which was discovered for its nickel deposit in 1963 and opened in 1968, was previously on care and maintenance for nearly 12 years from 1977 to 1989, although regardless if it is mothballed or not, the current life of mine plan anticipates closure at some point in the next 10 years in any event.

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Lundin Sees Growth in Rio’s Michigan Cast-Off: Corporate Canada – by Gerrit De Vynck (Bloomberg News – September 18, 2013)

http://www.businessweek.com/

Lundin Mining Corp., the best performer among Canadian base-metal companies, is betting that a cast-off from the world’s second-biggest miner will help double output.

Lundin agreed to buy the Eagle nickel and copper mine from Rio Tinto Group for $315 million in June and plans to bring it into production by the end of next year, Chief Executive Officer Paul Conibear said. Eagle is the company’s first new mine after emerging from two aborted takeovers in 2011. Conibear said he wants to boost companywide annual output to about 500,000 metric tons within five years.

“We’re back to basics to re-grow our company,” he said Sept. 13 in a telephone interview. “We’re looking at trying to increase our cash flow through producing facilities.”

Lundin plans to expand while mining companies including Rio and BHP Billiton Ltd. (BHP), the world’s largest, sell assets and reduce spending amid lower prices. Copper has slumped 11 percent this year, nickel dropped 19 percent and zinc is down 11 percent on the London Metal Exchange after growth slowed in China, the world’s largest consumer of metals.

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Vladimir Potanin plans Norilsk Nickel overhaul – by Courtney Weaver and Charles Clover (Financial Times – September 9, 2013)

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

Moscow – After years of vicious shareholder infighting, lawsuits and mudslinging, Norilsk Nickel’s oligarch shareholders are scrambling to overhaul its investment strategy and management structure following the steep fall in metals prices.

In an interview, Vladimir Potanin, Norilsk Nickel’s single biggest shareholder with 30 per cent and chief executive, said the company had hired western consultants including McKinsey and BCG to advise the nickel, platinum and palladium producer, which has a market capitalisation of $20.6bn.

According to Mr Potanin, Norilsk has never managed to shake off its Soviet legacy and develop into a 21st century multinational, despite being the world’s largest nickel producer with $12bn in annual revenues and close to $5bn in earnings before interest, tax, depreciation and amortisation.

“To put it simply, the company should become more modern. It’s still working like a Soviet ministry,” Mr Potanin says. “There is a lot of red tape and other things that need to be done away with, given today’s difficult financial markets.”

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Chris Verbiski Turned A Nickel Mine Discovery Into Two Of The Finest Fishing Lodges In The World – by Monte Burke (Forbes Magazine – September 4, 2013)

http://www.forbes.com/

This story appears in the September 23, 2013 issue of Forbes.

The best Atlantic salmon fishing outfit in Labrador–and just possibly in all of North America–was born in the gloaming of Sept. 16, 1993, when two mineral prospectors made the discovery of a lifetime. Chris Verbiski, then 25, a college dropout from Newfoundland with an obsession for rocks, had teamed up with a man named Albert Chislett, then 45, to scour the wild, windswept crags of Labrador for diamonds on behalf of a small mining company.

It had been a rough summer. The two men were sun-blistered and swollen with bug bites. They’d burned through their advance money and were nearly broke. Worse: Only a few weeks remained before the weather shut down prospecting in this harsh, beautiful region on the northeast coast of Canada.

On that early evening, as they headed back to camp in the Inuit community of Nain, they spotted something from their helicopter: a thick stripe of rust-colored rock on a hill above Voisey’s Bay. They hovered over it. Verbiski marked the spot on his survey map. But they were low on fuel and couldn’t descend. It seemed promising–perhaps the indicator of a surge of metals that had been pushed to the earth’s surface a billion years ago. After the fruitless summer that hope was all they had.

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Indonesia plans to soften foreign miners’ divestment rule (Reuters U.S. – September 5, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Indonesia plans to relax a rule forcing foreign miners to sell majority stakes and allow those who make downstream investments to keep bigger holdings, a spokesman at the Energy and Mineral Resources Ministry said on Thursday.

Last year, the Indonesian government said foreign companies must reduce their stake in a mine to 49 percent or less within 10 years of production starting, though it has been unclear how the rules will be applied.

The rule was part of a push by Indonesia, which is the world’s top nickel ore, refined tin and thermal coal exporter, to generate more profits and influence in commodities markets.

“For those companies that integrate the upstream and downstream mining activities, they may have that divestment relaxation policy. Instead of divesting 51 percent to be achieved on year 10 of its activity,” ministry spokesman Saleh Abdurrahman said in an email.

“They may divest less than that, depends on the negotiation,” he said, adding there would be a revision to the current government regulation. He gave no timeframe for the change, but new regulations and rules can often get delayed in the lengthy Indonesian legislature system.

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Stephen Harper Arctic tour: Big hopes, bigger challenges – by Tonda MacCharles (Toronto Star – August 24, 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.

Prime Minister Stephen Harper has a strong vision for Canada’s North, but what stands out in his latest trip to the region is the immense challenge of making it a reality.

RAGLAN MINE, QUE. — It was a long way to come for what seems like comparatively little. Prime Minister Stephen Harper arrived in Inuit territory Friday in northern Quebec, 400 kilometres above the tree line, to visit a nickel mine and talk about clean energy.

Or at least the exciting possibility of it. Last year, the Conservative government injected $720,000 into a feasibility test that one day may help resolve the problem of shipping diesel to the North to power many Arctic communities and lower costs of massive mining developments trying to operate far from hydro dams and other sources of energy.

Yet like so much of what the Conservative government leader has tried to do on his eighth trip to the Arctic, what stands out is the immense challenge of it all. Harper has defended his record and called his investments in the North “groundbreaking,” though he has not quite lived up to his early boastful promises of armed icebreakers and brand-new deepwater sea ports for the region.

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Indonesia to see declining revenue from mineral – by Amahl S. Azwar (The Jakarta Post – August 16, 2013)

http://www.thejakartapost.com/

The government is preparing to see a decline in revenue from the mineral sector as the ban on the exports of unprocessed mineral ore is expected to take effect next year, a top official has said.

The restrictions on raw ore exports is aimed at giving added value to the mining products as well as moderating mineral exploitation.

The Energy and Mineral Resources Ministry’s coal and minerals director general, Thamrin Sihite, said on Thursday the country needs to tame the overexploitation of minerals in a bid to protect its resources.

“It is very crucial for us to control the current production to ensure the sector will be sustainable,” he said.

According to the 2009 Mining Law, miners will have to process their mineral ore at their own smelters or at independent smelters as of January 2014, before exporting their mineral production.

Miners that do not have a smelter or are reluctant to process their raw minerals at other smelters will be banned from shipping their unprocessed ore overseas.

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Nunavik mine owes $72 million to creditors; Chinese owners turn project over to Toronto bank – by Jane George (Nunatsiaqonline.ca – August 14, 2013)

http://www.nunatsiaqonline.ca/

Canadian Royalties Ltd. owes $53.6 million to eight Nunavik companies

Canadian Royalties Ltd.‘s Nunavik Nickel mine, which was to be Nunavik’s second operating mine, spinning out minerals for hungry markets abroad, appears so far to have left a trail of debt throughout Nunavik.

The creditors owed a total of nearly $54 million by the Chinese-owned mine include Nunavut Eastern Arctic Shipping, Desgagnés Transarctik Inc., the fuel division of the Fédération des Coopératives du Nouveau-Québec, Laval Fortin Adams, Iglu Construction and Nuvumiut Developments (Ganotec-Nunavumiut and Kiewit-Nunavumiut), which all have links to Nunavik Inuit organizations or individuals.

The construction firm Laval Fortin Adams is owed about $14 million, the largest amount of any of the Nunavik-based companies left holding the bill for work on the mine and docking complex. L’Echo Abitibien says another $16.4 million is owed to Construction Promec de Rouyn-Noranda.

Now the Chinese owners of the mine have turned the cash-strapped Nunavik Nickel mine over to a private merchant bank in Toronto, which will see if there’s hope of salvaging the project, where workers are still stockpiling ore.

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NEWS RELEASE: Wallbridge Mining Provides Mid-Year Exploration Update (August 13, 2013)

Toronto, Ontario — August 13, 2013 – Wallbridge Mining Company Limited (TSX: WM, FWB: WC7) (“Wallbridge”) today provided a 2013 mid-year exploration update. Exploration activities to date in 2013 have included over 4,000 metres of exploration diamond drilling on the Sudbury area projects. Exploration activities are ongoing, focused on joint venture projects with partners Lonmin Plc (“Lonmin”), Impala Platinum Holdings Limited (“Implats”), and Xstrata Nickel (“Xstrata”). In addition, work is continuing to advance the Broken Hammer PGE-copper project through feasibility and into production.

On the Parkin Offset Joint Venture, which covers a nine kilometre strike length of the Parkin Offset, a review and compilation of the existing and historical drill information has been completed and an updated geological model was created in the first half of 2013. Various targets have been identified within the Parkin Offset Dyke from surface down to 1500 metre level. Follow up drilling and geological interpretation has been proposed for the 2013-2014 exploration program. This $1.0 million 2013/2014 program was approved by the Management Committee. Implats has elected to not participate in the 2013/2014 program. In light of this, Wallbridge will implement a reduced program on the joint venture this year.

The Parkin Offset Dyke hosts platinum, palladium, nickel, copper and gold mineralization typical of other offset dykes in Sudbury with examples at Vale’s Copper Cliff North and South mines and Vale’s Totten mine development. Mineralization on the Parkin Offset includes the Milnet Mine with reported past production of 157,130 tons averaging 2.25 g/t platinum, 2.98 g/t palladium, 0.93 g/t gold, 1.49 % nickel and 1.54 % copper.

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Glencore, Vale should join forces, analyst says (CBC News Sudbury – August 9, 2013)

http://www.cbc.ca/sudbury/

For an indepth radio report, click here: http://www.cbc.ca/video/news/audioplayer.html?clipid=2400108515

Merging the two mining giants will help reduce redundancies, particulary in Sudbury operations

In a search for cost cutting measures, one mining analyst says a merger between Vale and Glencore should be an option that’s considered. Brazilian mining company Vale released its second quarter results Thursday, which showed an 84 per cent drop in profits.

Base metal prices are also down across the board. Terence Ortslan, managing director with TSO and Associates, an independent mining, metals and fertilizer research firm, said combining operations could help reduce redundancies.

“I think the question is, is it going to be out of necessity, or is it going to be creative in doing things? I think the assets have to be put in a pool to see who can do better and how it’s going to be streamlined in terms of a critical path.”

Glencore recently took over Xstrata — a firm that took over Sudbury’s Falconbridge Ltd. in 2006. Sudbury residents have, for decades, heard and talked about mergers between Falconbridge and Inco Ltd., the company now known as Vale.

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Vale mulls hedge tactic – by Reuters and Star Staff (Sudbury Star – August 9, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

As they continue to work on making their nickel operations more efficient, Vale officials say they may adopt hedge-accounting rules to smooth out the impact of currency fluctuations like those that slammed the company’s second-quarter earnings. Chief Executive Murilo Ferreira made the comments Thursday as the company discussed its second quarter results with analysts and reporters.

Under hedge accounting, companies set aside some dollar-denominated export proceeds to compensate for the impact of exchange-rate moves on the local-currency value of debt, spreading currency gains and losses over several years. The practice is allowed under the International Financial Reporting Standards of the IFRS Foundation, the accounting rule-book used by Vale.

As Brazil’s real currency has weakened, companies have seen the local currency value of dollar debts soar and the cost of servicing the debt rise. Staterun oil company Petroleo Brasileiro SA, Brazil’s largest company by revenue, last month said it had begun to use hedge accounting in May.

“We had a strong financial performance in a challenging environment,” Ferreira said in a conference call with analysts and journalists. “The financial impact of forex does not reflect our true operations.”

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Vale aims to stay competitive despite loss in profits (CBC News Sudbury – August 8, 2013)

http://www.cbc.ca/sudbury/

Totten Mine in Sudbury still on track to open and create 200 jobs

For a detailed interview with Vale spokesperson Angie Robson, click here: http://www.cbc.ca/video/news/audioplayer.html?clipid=2400029133

Mining giant Vale is reporting its worst profit decline in a decade. In its second quarter report, the company said its profit was $2.78 billion less than in the same quarter last year — and that foreign currency fluctuations are to blame.

In Sudbury, Vale spokesperson Angie Robson said local operations need to continue to focus on reducing costs while minimizing the impact on staff. She noted the company is working to continue being competitive.

“One of the things that we have happening, as an example, is we’re opening Totten Mine by the end of the year,” Robson said. “It’s our first new mine in Sudbury for more than 40 years … we have to continue to look to the future and look for new sources of ore so that we continue to create jobs and so forth.”

She noted the new mine will create about 200 jobs.

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UPDATE 2-Vale profit dives on FX charge; cost-cutting continues – by Jeb Blount (Reuters U.S. – August 7, 2013)

 http://www.reuters.com/

RIO DE JANEIRO, Aug 7 (Reuters) – Brazilian miner Vale SA said on Wednesday its second-quarter profit plunged after the company recorded a surprise $2.78 billion in foreign exchange losses on currency derivatives and debt, one of its worst bottom-line results in a decade.

In the three months ending June 30, net income fell 84 percent to $424 million, compared with a profit of $2.6 billion in the year-ago quarter, Vale said in a statement. The result was below market expectations. The average estimate of 18 analysts surveyed by Reuters was for profit to fall 7.63 percent to $2.46 billion.

Vale said the losses resulted from extraordinary, one-time, non-cash, financial charges that do not reflect its improved operational results. The Rio de Janeiro-based company is the world’s largest iron ore producer, No. 2 nickel miner, and a major producer of copper and fertilizers.

While a stronger dollar led to financial losses and lower profit, it also helped Chief Executive Murilo Ferreira to cut $736 million from the cost of salaries, research, equipment, construction and other goods and services.

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