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Glencore blames rivals for creating metals glut – by Silvia Antonioli (Reuters U.K. – May 7, 2015)

http://uk.reuters.com/

LONDON – The head of global mining and trading company Glencore (GLEN.L) said rivals were to blame for an oversupply of metals which depressed its share price.

Despite a partial recovery in the last few months, Glencore’s shares are down about 6 percent from a year ago, under pressure from a rout in prices for most of the commodities it produces and trades.

“Unfortunately our competitors in the world have produced more supply than demand and commodity prices are down for that reason,” Glasenberg said at the company’s annual meeting.

“I am doing my level best to convince my competitors we should understand the words demand and supply,” he added in response to a question from an investor about the share price.

Glasenberg has criticised rivals such as Rio Tinto (RIO.L) and BHP Billiton (BLT.L) (BHP.AX) at various times, blaming them for oversupplying the market, particularly in iron ore, a commodity Glencore has little exposure to.

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Kidd Mine, Minister Gravelle announce legacy fund – by Alan S. Hale (Timmins Daily Press – May 5, 2015)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Kidd Operations is looking to maintain its practice of supporting local non-profit organizations beyond the year 2021, when their mining operations in Timmins are set to come to an end.

On Monday, the mining company announced that it and the Ontario Trillium Foundation will spend $500,000 each over the next six years to create a $1-million “legacy” endowment fund. After the mine is closed, the fund will be managed by the foundation and will be distributed as grants by a volunteer board.

According to Kidd Operations’ general manager, Tom Semadeni, the deal to create the new fund with the government-run foundation was two years in the making.

“We realized that Kidd has had a very significant involvement in the community, and we’re aware that when we leave there will be a potential void. So we want to provide a lasting legacy, where we could still provide support to the community,” said Semadeni. “We worked together with the Trillium Foundation on what would be a reasonable sized endowment that could be managed going forward.

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UPDATE 2-Glencore disappoints with weak first-quarter metals output – by Silvia Antonioli (Reuters U.K. – May 5, 2015)

http://uk.reuters.com/

LONDON, May 5 (Reuters) – Miner and commodity trader Glencore reported weaker than expected first quarter output at some of its mining assets, with production of its top earner, copper, down 9 percent due to lower grades at two South American mines.

Glencore has a bigger exposure to base metals than iron ore compared with its large rivals. The company has a large commodity trading division, in addition to its mining and oil assets.

Bernstein analyst Paul Gait called the production figures “disappointing”, with base metals and coal lagging expectations.

Copper output was 350,700 tonnes in the first quarter, below most analysts forecasts. The fall was due to lower grades at the Alumbrera mine in Argentina and the Antamina mine in Peru, and to a maintenance shutdown at Collahuasi, in Chile.

Coal production rose 4 percent in the first quarter to 35.6 million tonnes, thanks to the commissioning of two new thermal coal projects in South Africa.

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Biggest Coal Exporter Says Climate Change Won’t Strand Assets – by Jesse Riseborough (Bloomberg News – April 28, 2015)

http://www.bloomberg.com/

Glencore Plc, the top exporter of coal used in power stations, expects efforts to curb climate change by keeping its fossil-fuel reserves in the ground to fail in the face of world energy demand.

Shareholders won’t be “prevented from realizing the full value of Glencore’s fossil fuel assets,” Ivan Glasenberg, 58, Glencore’s billionaire chief executive officer, said Tuesday.

His comments are a snub to a growing campaign that wants investors to shun fossil fuels that cause climate change. The world can’t safely extract all its oil and coal reserves, meaning some will end up as worthless stranded assets, campaigners say. Investors from Stanford University to the British Medical Association plan to cut fossil fuel holdings.

Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell Plc are among those defending their interests with the argument that the only way the world can feed its appetite for cheap, reliable energy is by burning fossil fuels. Coal supplies the world with about 30 percent of its main energy needs and more than 40 percent of its electricity, according to the World Coal Association. Global coal output reached a record 7.8 billion metric tons in 2013.

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Australia’s Hockey vs Glencore’s Glasenberg – by Kip Keen (Mineweb.com – April 9, 2015)

http://www.mineweb.com/

Treasurer’s tough comments on Glencore-Rio Tinto merger could be read as a stern warning by Australia’s government.

Taken at face value Australia’s treasurer Joe Hockey has declared Rio Tinto untouchable. As widely reported now by media, Hockey is quoted as saying by numerous sources at a recent meeting including mining executives that there was “no way” he’d let Glencore merge with Rio Tinto “on his watch”. Assuming the reports are accurate, the question becomes, is Hockey serious?

If he is, then Australia truly has a curious way of dealing with possible foreign takeovers. Yes, it’s ultimately up to the treasurer (a political position equivalent to finance minister in other parliaments) to decide on big deals like this where the “national interest”, e.g. major tax revenue, is at stake.

But then the decision is usually taken as part of, or at least after, some due diligence. Australia’s Foreign Investment Review Board (FIRB) usually makes unbinding recommendations on such deals to the treasurer. Then the treasurer decides, however he/she and his/her government want.

Now, if Hockey truly means “no way” on another (hypothetical) attempt by Glencore to merge with Rio Tinto, he would effectively be turning the whole process on its head.

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Australia treasurer would block a Glencore-Rio Tinto merger – by Sonali Paul (Reuters U.S. – April 8, 2015)

http://www.reuters.com/

(Reuters) – Australia’s treasurer has told business representatives he would not allow Glencore Plc to merge with Rio Tinto due to concerns about losing tax revenue, a person familiar with his comments said on Wednesday.

Treasurer Joe Hockey said based on the tax implications he had seen from the treasury, he would not allow a Glencore takeover of Rio, Australia’s second biggest miner and one of its biggest taxpayers, the person said. He declined to be identified due to the sensitivity of the issue.

Treasurer Joe Hockey’s office declined to confirm the comments. Four people said Hockey had spoken at a private meeting on March 30 organized by the Business Council of Australia and including members of the Minerals Council of Australia, but three would not give details.

Glencore approached Rio Tinto about a merger last July that would have created a $160 billion mining and commodities trading giant. Rio revealed in October it had rebuffed the approach, but under UK takeover rules, Glencore is now free to make a new bid, following a six-month breather.

“Any takeover would have to go through the normal processes at FIRB (Foreign Investment Review Board),” a spokesman for Hockey said.

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Mining firms in Sudbury benefit from energy program – by Carol Mulligan (Sudbury Star – April 8, 2015)

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

Making the Northern Industrial Electricity Rate Program permanent will help Sudbury’s two largest mining companies lower their costs and remain competitive globally, say their executives.

Sudbury Liberal MPP Glenn Thibeault announced Tuesday that the Government of Ontario will keep funding the program, which was to conclude in 2016, to the tune of about $120 million a year.

Twenty-three companies in Northern Ontario — including forestry companies and stainless steel producers — will benefit from the program.

Vale Ltd. will receive about $20 million annually to offset the cost of energy and Glencore’s Sudbury Integrated Nickel Operations will receive about $13 million.

Marc Boissonneault, Glencore vice-president of Sudbury Integrated Nickel Operations, said the program is one of the pieces of a puzzle that will allow his company to continue to mine beyond 2020.

Glencore has said its resources will run out in five years unless it develops two new mines, the Onaping Depth at its Levack complex and an extension of Nickel Rim Mine called the Nickel Rim Depth.

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Miners Offer Bull Rings, Clinics as Protests Ice $25 Billion – by Firat Kayakiran and Andre Janse Van Vuuren (Bloomberg News – March 17, 2015)

http://www.bloomberg.com/

(Bloomberg) — Schools and clinics. Soccer fields and bull rings. Even plump guinea pigs — to eat. From South America to Africa, mining companies are throwing all that and more at communities to quiet growing opposition to controversial projects.

“There’s something like $25 billion worth of projects tied up or stopped,” Mark Cutifani, chief executive officer of Anglo American Plc, said in an interview. “We have to get all those relationships right.”

While opposition to mines is nothing new, the issue is a growing concern for miners like Anglo American and executives are increasingly speaking out. Billions of dollars are at stake, they say. Their opponents say the companies despoil the environment and often fail to benefit local economies, or at least not as much as they claim.

Push-back has been growing since the 1980s, when communities were rarely consulted about new mines. Now, local support is critical, according to Thras Moraitis, head of strategy at Xstrata Plc before its 2013 takeover by Glencore Plc.

“You can’t get a permit without involving full and prior consent of the local communities,” he said. Communities from Peru to South Africa are mobilizing to negotiate more successfully with the companies, according to two studies released late last year. Residents who are relocated to make way for mines are demanding more in return.

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Can Mick Davis build another Xstrata? – by Stephen Bartholomeusz (Business Spectator – March 6, 2015)

http://www.businessspectator.com.au/

Mick Davis’s announcement overnight that his X2 Resources has raised $US5.6 billion could be a signal that he is about to begin the much-anticipated reprising of the game-plan that created Xstrata. Or else it could be another false dawn.

X2 announced that it had successfully completed its “initial” capital raising, securing $US5.6 billion in equity capital from a small number of “word-class” investors to create a new “mid-tier diversified” mining and metals group.

It described the raising, which comprises $US4 billion in committed capital available for immediate drawn-down and $US1.6 billion in conditional equity, as “one of the largest ever first-time raises by a private vehicle”.

The uncertainty about what the raising foreshadows relates to three earlier announcements by X2. The first, in 2013, not long after the merger/takeover of Xstrata by Glencore that saw Davis ousted as chief executive, announced that Noble Group and TPG had agreed to invest $US500 million each in X2.

The second, in March last year, was an announcement that X2 had secured $US2.5 billion in committed capital and another $US1.25 billion in conditional capital from five investors, including Noble, TPG, sovereign wealth and pension fund investors.

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Former Xstrata CEO poised for a comeback with X2 Resources – by Eric Reguly (Globe and Mail – March 4, 2015)

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.

Mick Davis, the mining boss who sold Xstrata to Glencore for $50-billion (U.S.), has reached $5.6-billion in investor capital to finance a mining investment campaign that will almost certainly turn his comeback vehicle, X2 Resources, into an operating company this year.

X2 announced the finish of its capital raising effort from a roster of international “blue chip” investors Wednesday night in London. If debt leverage is added to the figure the new company would have considerable firepower, making it capable of buying assets or operating companies valued at $15-billion to $20-billion.

The $5.6-billion includes $4-billion in committed equity capital that can be spent immediately, and US$1.6-billion that can be spent under certain conditions. A year ago, X2 announced that it had raised $3.75-billion in unconditional and conditional capital, none of which has been spent. The new figure includes the amount raised last year.

The capital comes from 20 investors, of which only two have been identified. They are Noble Group of Hong Kong, one of the world’s largest commodities trading and infrastructure companies, and TPG Capital, the private American investment firm with $65-billion in capital under management. The others are sovereign wealth funds and pension funds, several of which are Canadian.

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UPDATE 2-Trading cushions Glencore from commodity price plunge – by Silvia Antonioli (Reuters India – March 3, 2015)

http://in.reuters.com/

LONDON, March 3 (Reuters) – A 15 percent rise in earnings at Glencore’s trading division partially offset a hit last year from the slide in commodity prices, leaving the mining company’s core profit just two percent lower.

Swiss-based Glencore makes about a quarter of its earnings from commodities trading, which differentiates it from mining rivals and has allowed it to withstand a steep fall in oil and metal prices slightly better than its peers.

Glencore posted 2014 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $12.8 billion, in line with expectations. Earnings at its trading division rose to $3.0 while mining earnings fell 7 percent to $9.8 billion.

The company has also been helped by its relatively small exposure to iron ore, the first major commodity to start a violent downward spiral two years ago.

Still, the more widespread slide in oil and metals prices last year forced Glencore to take a $1.1 billion accounting hit, with about half stemming from a pause in the development of iron ore projects it inherited from Xstrata in 2013.

The rest of the charge was largely due to an oil exploration project in Cameroon and lower platinum prices.

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Rio Tinto boss Sam Walsh: Glencore merger is ‘fantasy’ – by Matt Chambers (The Australian – February 25, 2015)

http://www.theaustralian.com.au/

RIO Tinto managing director Sam Walsh says a merger with Ivan Glasenberg’s Glencore will never happen because it would not clear regulatory hurdles even if Glencore came up with an offer that provided value for Rio.

And the mining boss claims BHP Billiton’s planned South32 spin-off, which BHP chief Andrew Mackenzie describes as a “key differentiator”, is just portfolio management that Rio has already completed.

At a Chatham House event in London, Mr Walsh said the much-hyped prospect of Glencore making a bid for Rio when a six-month “put up or shut up” moratorium ends, and then somehow taking Rio over, was fantasy.

“Part of the reason is value but part of the reason is the anti-trust and people who collect tax and what have you, they’re simply not going to let it happen,” he said.

Mr Walsh added that BHP’s failed $US160 billion takeover of Rio in 2007 fell over primarily because anti-trust regulators would not let it happen.

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Renewable future for mine power shines bright – by Simon Rees (MiningWeekly.com – February 10, 2015)

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

TORONTO (miningweekly.com) – Renewable power is reliable, proven and continues to offer the mining industry an attractive means to obtain lower-cost energy at remote operations, Hatch director of renewable power Michel Carreau told an audience at a seminar hosted by the Canadian German Chamber of Industry and Commerce’s Competence Centre for Mining and Mineral Resources on Friday.

The mining and renewable energy sectors must continue engaging with each other to develop joint solutions, he added. “This is a meeting of two worlds that, until quite recently, hadn’t worked together.”

Before a mining company selects a renewable component – whether wind, solar or another option – it must consider the economic viability and rate of return against the estimated mine life. The longer a mine is operational, the greater benefits renewables can deliver.

“Levels are typically fixed. For example, 15 cents per kW an hour would be a good bargain across 25 years,” Carreau said. “And while fuel costs are lower right now, remember this is just a moment in time; it will go up [in price].”

The level of power penetration by a renewable component varies; most provide mine sites with between 10% and 20% of their energy when in use. The goal of both the industries is to push this to a much higher level over the next five to ten years.

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Rio Tinto to defy mining pain with big payout while rivals suffer – by Sonali Paul and Silvia Antonioli (Reuters U.S. – February 10, 2015)

http://www.reuters.com/

MELBOURNE/LONDON – (Reuters) – Rio Tinto is expected to star among the top five global miners with a return of billions of dollars to shareholders at its annual results, even as the firm is set to report its worst half-year profit since 2009.

It will likely be all downhill for investors in the megaminers after Rio Tinto reports on Feb. 12 as they are all tipped to report sharp slides in earnings, gutted by weaker prices for almost everything they produce.

Iron ore will be the biggest source of pain, even though it remains the most lucrative product for Brazil’s Vale, Rio Tinto and BHP Billiton, and investors’ main concern is how the big miners are going to shore up cash flow. The top three producers have wounded the industry by flooding the market with new supply, knocking iron ore prices down nearly 50 percent in 2014, a steeper slide than anyone anticipated.

While boosting output, Rio has bolstered its cash flows by slashing costs, cutting capital spending and reducing debt, putting it in the best position to return cash to shareholders. BHP took the same steps, but has been whacked by plunging oil prices.

“In our opinion Rio has significantly greater flexibility (than BHP) at this point in time to pursue short-term capital management initiatives,” said Ben Lyons, a portfolio manager at ATI Asset Management.

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Sudbury needs premier needs to act boldly [turn Laurentian in global Harvard of hardrock mining] – by Stan Sudol (Sudbury Star – February 9, 2015)

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

Note: this is the second of two parts.

Sudbury: Paris of the Mining World

While I can’t remember who coined the phrase, “Sudbury, the Paris of the Mining World” – I wish I had been that clever – there is an amazing amount of truth to the statement. Obviously, in no uncertain terms, does any part of Sudbury remind anyone – even in a drugged or drunken state – of Paris.

However, my lake-filled, mid-sized hometown does have a wide variety of retail, tourist, educational and other amenities that most tiny isolated mining towns do not and it is located only 400 km north of Canada’s largest city, Toronto.

A few years ago, a colleague who moved from Red Lake to Sudbury almost considered herself in “mining heaven” with the abundance of amenities not found in that tiny gold mining centre.

In addition to the Ontario government’s new differentiation and international student outreach policies, there are many other reasons why all post-secondary mining programs should be relocated to Sudbury’s Laurentian University.

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