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Glencore seen still hungry after swallowing Xstrata – by Clara Ferreira-Marques (Reuters U.K. – May 2, 2013)

http://uk.reuters.com/

LONDON, May 2 (Reuters) – After years of on-off talks, months of brinksmanship and often bitter negotiations, Glencore’s head Ivan Glasenberg gets to complete the $30 billion acquisition of Xstrata on Thursday, the mining industry’s biggest takeover yet.

But even as the champagne pops, investors and rivals are asking where the highly ambitious South African will look for his next deal. Many are already pointing to vulnerable or undervalued rivals, including Anglo American.

“This is not the endgame, this is the beginning,” analyst Chris LaFemina at Jefferies said. “Glencore wants to buy when no one else wants to buy, and what no one else wants to buy – that is when no one else is bidding and you can buy things cheap. That time is clearly now.”

Xstrata began just over a decade ago with a collection of zinc and ferroalloy assets and coal mines bought from Glencore, building itself up under now departing chief executive Mick Davis into one of the world’s largest diversified miners.

The combination of commodities trader Glencore and producer Xstrata, long Glasenberg’s ambition, creates a mining and trading powerhouse with over 100 mines around the world, some 130,000 employees, and an oil division with more ships than Britain’s Royal Navy.

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Xstrata Zinc’s Brunswick mine closes, bestowed safety award – by Henry Lazenby (MiningWeekly.com – May 1, 2013)

http://www.miningweekly.com/

TORONTO (miningweekly.com) – After 49 years of operation, Xstrata Zinc’s Brunswick mine closed on a high note on Tuesday, as the company announced it had recently learned that it would be awarded this year’s John T Ryan Award for outstanding safety performance in the metal mine category in the Quebec and East Region.

Located in northern New Brunswick, 30 km south-west of the city of Bathurst, Brunswick mine was one of the world’s largest underground zinc/lead mines providing direct employment to about 700 people.

“I am extremely proud that Brunswick’s workforce has been awarded one of our industry’s most prestigious safety awards. It’s especially significant because as we come near to the end of the life of the Brunswick mine, the challenges of safely mining the remaining ore becomes even greater.

“This award is a recognition of the tremendous effort that has gone into creating our ‘safety first’ culture and I can think of no better way to crown nearly half a century of operations than by receiving this honour,” Brunswick mine GM Greg Ashe said in a statement.

The Ryan Awards were presented to mines with the lowest accident frequency, with trophies granted across metal, coal and select mine categories. This was the ninth regional honour for the mine, having won this trophy in 2010, 2007, 2006, 2004, 2003, 1996, 1995 and 1994 and came after winning the national award in 2011.

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Glencore clinches Chinese approval with copper deal – by Clara Ferreira-Marques (Reuters U.S. – April 16, 2013)

http://www.reuters.com/

(Reuters) – China’s antitrust authorities removed the last obstacle to Glencore’s (GLEN.L) $30 billion takeover of miner Xstrata on Tuesday after the commodities trader agreed to sell a $5.2 billion mining project to ease its grip on copper.

Xstrata’s Las Bambas mine in Peru had been expected to be sacrificed to secure the approval of China’s Ministry of Commerce, but Glencore also agreed 8-year commitments covering the supply of copper, zinc and lead to China.

Chinese regulators have rarely demanded asset sales to improve competition after a major tie-up, but the importance of the metals that Glencore mines and trades for China’s economy meant the merger was unlikely to go through without changes.

In the event, the newest and least predictable of global regulators was also the toughest. Glencore had already signaled that Chinese authorities were focused on its hold on the copper market, reflecting China’s appetite for metal and the political side of the regulator’s mission, as much as Glencore’s own weight.

Glencore and Xstrata combined account for roughly 7 percent of global copper supply, and analysts and traders have estimated Glencore controls between 10 and 14 percent of Chinese copper concentrate imports.

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Davis agrees to step down as Glencore-Xstrata merger clears last major hurdle – by Idéle Esterhuizen (MiningWeekly.com – April 16, 2013)

http://www.miningweekly.com/

JOHANNESBURG (miningweekly.com) – Xstrata CEO Mick Davis has agreed to not take up the six-month role of CEO and executive director of the combined Glencore Xstrata group – one of the conditions set by China’s Ministry of Commerce (Mofcom) for it to approve the $33-billion deal.

Swiss commodities trader Glencore announced on Tuesday afternoon that Mofcom had given its conditional approval for the merger. CEO Ivan Glasenberg will assume the role of CEO of the combined group from the effective date, which was anticipated to be May 2.

Davis would serve as consultant to Glencore Xstrata until June 30 to support the integration process. Glencore had awaited approval of the deal from Chinese authories for several months.

This followed Glencore and Xstrata shareholders’ approval of the merger and the creation of the $90-billion natural resources group Glencore Xstrata.

Following receipt of approval in China and Glencore having given effect to the commitments required by the European Commission, the completion of the merger was now only conditional upon completion of the Xstrata court process.

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Glencore concessions to China expected for Xstrata deal – by Clara Ferreira-Marques (Reuters U.S. – April 14, 2013)

http://www.reuters.com/

(Reuters) – Trader Glencore is expected to agree to concessions this week to ease Chinese worries over its grip on the supply of copper, clearing the final regulatory hurdle in its $32 billion acquisition of miner Xstrata.

After months of negotiations, Glencore is expected to have agreed to yield some ground, with analysts and market sources pointing to a likely sale from among Xstrata’s promising – though challenging – greenfield copper projects, which could include Las Bambas in Peru, due to begin production in 2015.

Industry sources said a solution might also involve giving China a guaranteed slice of the group’s copper production.

Xstrata is already the world’s fourth-largest producer of copper and aims to increase output by more than 50 percent from 2011 levels by 2015, as projects like the $5.2 billion Las Bambas mine ramp up.

Xstrata and Glencore combined account for around 7 percent of global copper supply, a percentage expected to rise, with mines in Chile, Peru, Australia and in emerging regions like Africa’s copper belt.

As a result, Chinese regulators reviewing the biggest ever mining tie-up have focused on the new group’s presence in the red metal, and specifically copper concentrate, the intermediate product that feeds smelters and refineries.

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NEWS RELEASE: Koniambo Nickel produces first nickel metal; on track to achieve full production rate by the end of 2014 Koné, 11 April 2013

Xstrata Nickel’s Koniambo Nickel project has gone into production with first metal tapped this week.

Production marks a key milestone for this complex $5 billion greenfield project in New Caledonia, which has been under construction for the past six years and has been a flagship component of Xstrata’s organic growth programme. At the height of its construction more than 6,000 people were employed in building the project and its associated infrastructure.

First metal production signals the start of Koniambo Nickel as a multi-decade, tier one asset with long-term cash costs at the bottom of the second quartile. At peak production the mine will further cement New Caledonia’s position as one of the most important nickel producers in the world and provide steady employment for approximately 800 workers, with a focus on local employment, and indirect employment for thousands of others.

Ian Pearce, Chief Executive of Xstrata Nickel, said: “All components of the mining and smelting process have now been successfully tested, leading to production of metal from Line 1. The production of first nickel metal at Koniambo after six years of complex design and construction is a huge achievement and a source of great pride for all of our employees. We are on track to deliver the full production rate of 60,000 tonnes per annum by the end of 2014 as scheduled, while maintaining excellence in terms of environmental and safety performance at this world-class industrial complex.”

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Xstrata starts nickel mining in New Caledonia – by Esmarie Swanepoel (MiningWeekly.com – April 12, 2013)

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

PERTH (miningweekly.com) – Swiss-listed Xstrata’s nickel division has started production at its Koniambo project, in New Caledonia.

The diversified miner said on Friday that the start of production marked a key milestone for the $5-billion greenfield project, which has been under construction for the past six years and has been a flagship component of Xstrata’s organic growth programme.

“We are on track to deliver the full production rate of 60 000 t/y by the end of 2014 as scheduled, while maintaining excellence in terms of environmental and safety performance at this world-class industrial complex,” said Xstrata Nickel CEO Ian Pearce.

“All components of the mining and smelting process have now been successfully tested, leading to production of metal from Line 1. The production of first nickel metal at Koniambo after six years of complex design and construction is a huge achievement and a source of great pride for all of our employees,” he added.

At the height of its construction, more than 6 000 people were employed in building the project and its associated infrastructure.

First metal production signaled the start of Koniambo as a multi-decade, tier-one asset with long-term cash costs at the bottom of the second quartile, said Pearc.

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Swiss firm to invest $80M in PolyMet’s Iron Range mine – by Dee Depass (Minneapolis-Saint Paul Star Tribune – April 10, 2013)

http://www.startribune.com/

PolyMet Mining’s long-awaited plans for a copper-nickel mine in Minnesota’s Iron Range received welcome news Wednesday when a Swiss-based commodity trading and mining firm pledged to invest $20 million and help raise another $60 million in new equity financing.

The involvement from Glencore AG, which includes $20 million in bridge loans and up to $60 million in new equity, is expected to be finalized in June, pending regulatory approvals in the United States and Canada.

The investment will allow PolyMet to complete the lengthy environmental review and permitting process that has already been six years in the making at a cost of $50 million to date. Environmental permits and state regulatory approvals are required before mill work and mine construction can begin.

“So this is a pretty exciting day for us,” said PolyMet CEO Jon Cherry. Glencore’s financing arrangement will involve the issuance of new stock to existing and new shareholders through a secondary offering process known as “a summary of rights offering.” It is not yet known how many PolyMet shares Glencore will ultimately own, but it will not exceed 49.99 percent.

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So who got hosed? [Canadian mining foreign takeovers] – by Eric Reguly (Globe and Mail – March 29, 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.

Yes, Canada lost a lot of head offices in the foreign takeover binge, but we sure sold out at the right time

The $165-billion merger of AOL and Time Warner in 2000 was so disastrous that it was celebrated as the biggest, stupidest deal ever, one that will be studied for decades by MBA students with a taste for financial gore (all currency in U.S. dollars). The copycat calamities in other industries, if on somewhat smaller scales, will make for fun reading too.

In banking, one of the biggest debacles came in 2007, when the carve-up of Dutch bank ABN Amro helped wreck the Royal Bank of Scotland (it had to be nationalized by the British government after the 2008 financial crisis). The mess is now bringing down Italy’s Monte dei Paschi di Siena, which bought the Italian arm of Amro at an outlandish price. In mining, Rio Tinto, one of the world’s largest mining companies, bought Montreal’s Alcan at the peak of the market in 2007 (a bad year, that one) for an eye-watering $38 billion. Since then, Rio has written down Alcan’s value by about $30 billion. For his sins, Rio CEO Tom (Honey, I Shrunk the Equity) Albanese was fired this past January.

Albanese was not alone in the bonehead department. Many foreign takeovers of Canadian companies made between 2006 and 2008 – the bubble years – have come to grief, with writedowns galore. Indo-European steel giant ArcelorMittal vastly overpaid for Hamilton’s Dofasco.

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Xstrata hoping to keep the Kidd deep mine running beyond 2020 – by Len Gilles (Timmins Times – March 22, 2013)

http://www.timminstimes.com/

The Xstrata Kidd Mine in Timmins has a life expectancy of perhaps another eight years, but everything is being done to make the mine run as efficiently, as sunstainably and as profitably as possible.

And from that, there is the possibility that maybe, just maybe, another few years of mine life might be found.

That was part of the message Thursday from Xstrata Copper Kidd Operations general manager Tom Semadeni who was the guest speaker at the Timmins Chamber of Commerce luncheon event at the Dante Club.

He said the Kidd mine is still quite large, still quite rich and still expensive to run. The Kidd Mine is not only the deepest mine in Canada, it is the deepest base metal mine in the world at more than 9600 feet down.

Semadeni said that the copper, zinc and silver ore at Kidd is very rich. On the other side of the coin, because the mine is now so deep, everything involved in running the mine is more expensive.

It takes longer for the miners to get from surface down to the work areas. It takes longer to ship equipment and materials from surface to the lower levels. Ventilation and the cost of moving fresh air into the mine and removing stale air and blasting gases is significantly higher. And it takes longer to bring the ore to surface.

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Xstrata outlines future in Timmins – by Thomas Perry (Timmins Daily Press – March 21, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – When Xstrata Copper talks the Timmins Chamber of Commerce listens … especially when the words of wisdom contain good news for the community.

Tom Semadeni, general manager of Xstrata Copper, provided chamber members with an update on the efforts to extend the life of the company’s Kidd Mine during Thursday’s instalment of the President’s Series Luncheons at the Porcupine Dante Club.

“Xstrata is the fourth largest mining company in the world and we are split into seven commodity groups,” Semadeni said. “There is a coal group, there is a copper group, there is a zinc group, there is an alloys group, their is a nickel group, those are the main ones.”

And with more than 1,000 full-time workers – including 823 at the Kidd Mine and 220 at the Met Site – Xstrata Copper remains one of the largest non-government employers in the Timmins area. The company also employs an additional 165 contract workers.

Xstrata Copper has hired 250 employees at its Timmins operations in the past two years and 546 in the past five years, partially due to retirements. In addition, it is facing up to 400 more potential retirements during the next seven years.

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Morien Resources Corp. interested in purchasing Donkin mine – by Sharon Montgomery-Dupe (Cape Breton Post – March 20, 2013)

http://www.capebretonpost.com/

DONKIN — There may be a light at the end of the Donkin mine. Xstrata Coal officials confirmed Wednesday the company is in discussions with Morien Resources Corp. about purchasing Xstrata’s 75 per cent interest in the mine. Morien Resources has a 25 per cent interest in the Donkin coal project.

“We have had some initial discussion, and with all commercial transactions there will be ongoing discussions between ourselves and Morien,” said Val Istomin, Xstrata business development manager.

However, Istomin said the Donkin mine remains up for sale in the meantime. “We haven’t stopped the sale process,” he said.

“At the end of the day all we want to do is exit this asset and hand it on to new people and they can continue on to the process. “If another company comes along and wants to buy the mine, we will be happy to talk to them about that.”

Xstrata Coal had recently issued a statement that it was unable to find a third-party buyer for its 75 per cent stake in the Donkin coal project. When the Cape Breton Post contacted Morien Resources Corp. for comment, president and CEO John Budreski issued a press release announcing the company’s intention to purchase Xstrata’s share.

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‘There will be more nickel needed’ – by Carol Mulligan (Sudbury Star – March 21, 2013)

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

There’s good news and bad news emerging from China when it comes to nickel production, says a mining analyst with a keen interest in Sudbury.

The bad news is Chinese nickel production is at a record high as the country imports cheap sources of laterite and converts it into low-percentage nickel, said Terry Ortslan. “Nickel pig iron (NPI) production we speak,” said the Montrealbased analyst. “And it’s not any mom and pop operation. It’s been very sophisticated, high-technology operations with big furnaces, and serious investments have gone into it.” The good news is the nickel being made in China is costing $6 or $7 a pound because of the cost of power to convert the ore and the cost of raw materials.

Because of the amount of stainless steel needed for expansion and development in China, nickel pig iron can only “contribute so much nickel to the whole equation. There will be more nickel needed in China and elsewhere,” and that could benefit Canadian producers such as Vale, said Ortslan. He has long been outspoken about the high cost of capital and operating costs at nickel operations in Sudbury, “but what we’re seeing now with the Chinese costs is they aren’t very low, as well,” he said.

That causes Ortslan to speculate on the need for “major expansion plans in the traditional areas” such as Sudbury where nickel is produced. Vale Ltd. has been focused on cutting costs at its operations around the world, including Canada, laying off 30 non-union employees this week in the latest round of belt-tightening.

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Profits Drop at Big Five Miners – by Reuters (New York Times – February 12, 2013)

http://www.nytimes.com/

MELBOURNE — Global mining companies are set to unveil their biggest profit decreases in more than a decade and are clearing the decks with multibillion-dollar write-downs on poorly performing assets as they bring in new chief executives.

A sharp drop in commodity prices is likely to have driven down profits for the second half of last year by 40 percent to 50 percent at the top five mining companies when compared with the same period in 2011, forcing them to shelve expansion projects, slash costs and sell assets.

For the top three — BHP Billiton; Vale, based in Brazil; and Rio Tinto — iron ore earnings are likely to cushion losses in coal, aluminum and nickel for the period.

Chief executives are being punished for splurging in the boom years on projects and acquisitions instead of rewarding shareholders more generously, and investors are calling for Rio Tinto and BHP to rethink their policies.

One of the 10 largest shareholders in BHP and Rio Tinto’s Australian-traded stocks said his fund had been pressing both to pay out more of their profit to shareholders. The shareholder, Ross Barker, the managing director of Australian Foundation Investment, said that the companies were not paying higher dividends to shareholders so they could use the funds for investments that would deliver attractive returns.

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Xstrata Copper’s Kidd Operations launches project to give local birds a wing up

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Xstrata Copper’s Kidd Operations has launched an avian biodiversity project in partnership with R. Ross Beattie Senior Public School in Timmins. The Raptor Nesting Project is taking flight through the support of a $1,500 donation from the Kidd Operations’ Community Partnership Program to the Technological Studies program at the school. The goal is to enhance the habitat and breeding success of local raptor species such as falcons, ospreys, owls and eagles.

As part of the project, students will construct four nesting platforms for birds of prey, which will be installed at sites near the Kidd Mine and its metallurgical plant. Ontario’s Ministry of Natural Resources and Aboriginal traditional knowledge will be involved in the selection of the location of these platforms.

“In line with Xstrata’s Corporate Sustainable Development Policy, Kidd Operations is committed to preserving the long-term health, function and viability of the natural environment around our operations,” said David Yaschyshyn, Superintendent of Environment at Kidd Operations. “The goal of this project, therefore, is to help enhance the unique biodiversity of our region now and in the future once our operations cease.”

“As part of our efforts to encourage the community to participate in sustainable environmental endeavours, we have partnered with R. Ross Beattie Senior Public School and its Technological Studies students to construct these four nesting platforms,” added. Mr. Yaschyshyn. “This will provide students with an opportunity to gain both hands-on woodworking experience and increased knowledge of the biodiversity of the community.”

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