Republic of Mining

China metal producers have two ideas, one good, one bad – by Clyde Russell (Reuters U.S. – November 30, 2015)

November 30, 2015

http://www.reuters.com/

Nov 30 – Chinese metal producers have taken two steps to arrest the slide in prices, one that’s both sensible and has a reasonable chance of working, while the other is bad policy that would only provide a temporary boost.

The good idea is moving to lower output of refined copper, zinc and both refined nickel and nickel pig iron.

The not-so-good idea is to try to convince the government to start buying up various metals, including aluminium, in a bid to soak up surplus production and support prices.

Nine large Chinese copper producers have agreed an initial plan to cut output of refined metal by 200,000 tonnes next year, equivalent to about 5 percent of this year’s output, following a meeting of companies on Nov. 28.

Lifton on Kingsnorth and the global rare earth market – by Jack Lifton (InvestorIntel.com – November 30, 2015)

November 30, 2015

http://investorintel.com/

My colleague, Professor Dudley Kingsnorth, now of Curtin University in Perth, Australia, is arguably the world’s most experienced; up-to-date; and knowledgeable expert in the global rare earths’ markets. To me therefore his keynote address to the Roskill Conference on Rare Earths, two weeks ago in Singapore, was a definitive analysis of the current situation in the global rare earths’ markets.

I believe that he and I are very much in agreement on most of the issues in those markets, and on how we got to where we are today. Prof Kingsnorth and I were, I think, both a bit surprised, although he to a lesser extent than I, that we agreed on which non-Chinese rare earth juniors were the best and were most likely to succeed. Both of us heartily agreed that the other had finally come to his senses on that topic.

I think that in order to have a discussion about the global rare earths’ markets we need first to determine exactly what or which problem(s) we are trying to investigate and understand.

An Interview with Sir Mick Davis – by by Adam Treger (Tregernomics.com – November 23, 2015)

November 30, 2015

http://www.tregernomics.com/

Mick Davis was the CEO of mining company Xstrata, which merged with Glencore in 2013. He is now CEO of a new company, X2 Resources. For services to Holocaust Commemoration and Education, he was knighted as part of 2015 Queen’s Birthday Honours.

Q: Which emerging markets are you most optimistic about?

A: Well, I think emerging markets are generally not in great shape, for a whole range of reasons. This is partly because they are experiencing a decline of their large export markets, as world growth has not been stellar.

Clearly the most dominant emerging market, China, is going through a very important structural adjustment that is impacting its growth rates and is compounded by the anti-corruption drive, which I think is stultifying economic activity in that country.

Sibanye to forge ahead with platinum acquisitions – by Allan Seccombe (Business Day Live – November 30, 2015)

November 30, 2015

http://www.bdlive.co.za/

SHAREHOLDERS in Sibanye Gold and Aquarius Platinum will early next year decide the fate of two large platinum transactions pursued by SA’s largest domestic gold producer.

Sibanye has launched back-to-back bids for the Rustenburg mines owned by Anglo American Platinum and the whole of Aquarius Platinum, which has the Kroondal mine next to the Rustenburg assets as well as the Mimosa joint venture with Impala Platinum in Zimbabwe.

Sibanye was forging ahead with both deals despite a weaker platinum price since they were unveiled in September and October, said CEO Neal Froneman.

NEWS RELEASE: Deloitte Global Report Outlines Top 10 Issues Facing Mining Companies in 2016

November 30, 2015

http://www2.deloitte.com/ca/en.html

Weak Commodity Prices, Declining Grades and Slowdown in Demand From China to Continue

TORONTO, ON–(Marketwired – November 30, 2015) – Weak commodity prices, declining grades and a falloff in demand from China will continue the global mining sectors’ downward cycle well into 2016. However, regulatory mandates, tax burdens and stakeholder expectations remain as high as ever. This is according to the Deloitte Touche Tohmatsu Limited’s Mining Tracking the Trends 2016 report released today.

“It’s an interesting time in the mining industry, just as during the super cycle, people imagined prices would go up forever, people now imagine the market will never recover,” said Philip Hopwood, Deloitte’s Canadian and Global Mining Leader.
“Neither extreme is true, but cycle times are lengthening, which means it could take years to adjust to current market forces — but it’s still a cycle.”

Super Slump: Why there’s no end in sight as resources rout gathers steam – by Ian McGugan and Rachelle Youghlai (Globe and Mail – November 28, 2015)

November 30, 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.

Welcome to the superslump.

Four years after the commodity supercycle began to ebb in 2011, prices for raw materials are hitting surprising new depths. From aluminum to iron ore to nickel to zinc, the basic building blocks of global industry are in free fall.

The forces driving the great decline in commodity prices are no secret – it’s the result of too little demand from a slowing Chinese economy meeting too much supply from mines launched in better times. Still, the ferocity of the downturn has shocked executives and investors. Most frightening of all, there is no sign the rout in raw materials will let up any time soon.

Miners are trapped in a world where next to nobody sees reason to cut production despite obvious gluts.

A diamond is forever. Demand, not so much: The strange economics behind a rock’s worth – by Claire Brownell (National Post – November 28, 2015)

November 30, 2015

The National Post is Canada’s second largest national paper.

A young couple passes an elderly one on a walking path, as an acoustic guitar plays the melody to “Stand By Me.”

The younger woman turns around and smiles. Her fiancé closes his hand around hers, which sparkles with a whopping diamond ring. They look at each other and smile again. “There are two things in the world that last longer than time,” says a voiceover. “Love is one of them. A diamond is forever.”

Just over a week ago, Canada’s Lucara Diamond Corp. announced that it had discovered an 1,111 carat gem-quality diamond in Botswana, the second-largest ever recovered.

Brazil to File $5.3 Billion Suit Against Dam Owners – by Paul Kiernan (Wall Street Journal – November 27, 2015)

November 30, 2015

http://www.wsj.com/

RIO DE JANEIRO—Brazil’s government said it is preparing to sue mining giants Vale SA, BHP Billiton Ltd. and their joint venture Samarco Mineração SA in response to a catastrophic dam failure earlier this month, as Vale acknowledged the presence of toxic elements in a river downstream for the first time.

The civil suit demanding damages of 20 billion Brazilian reais ($5.3 billion) is expected to be filed on Monday, the Attorney General’s office said on Friday in a news release. The proceeds are intended to create a fund to help recovery efforts in the Rio Doce, a major river that was contaminated with mud and toxic mining waste in the wake of the Nov. 5 collapse of Samarco’s dam in Minas Gerais.

As many as 13 people were killed and hundreds displaced as the mud swallowed up entire villages below the dam. An additional 11 are missing.

PRECIOUS-Gold down on dollar, eyes biggest monthly fall in 2-1/2 years – by Clara Denina (Reuters U.S. – November 30, 2015)

November 30, 2015

http://www.reuters.com/

LONDON, Nov 30 Gold edged lower on Monday, heading towards its lowest level in nearly six years as the dollar hit a multi-month high and on track for its steepest monthly slide in 2-1/2 years on prospects of a U.S. interest rate hike this year.

Spot gold slipped 0.1 percent to $1,056.01 an ounce by 1053 GMT, not far off from of Friday’s $1,052.46, the lowest since February 2010. A stronger dollar, up to a fresh eight-month high against a basket of major currencies, weighed on gold and made it more expensive for foreign holders.

Bullion has lost 7.5 percent of its value in November, its biggest monthly dip since June 2013, as investors remained focused on a possibly imminent rate hike in the United States.

The No Breakfast Fallacy: Why the Club of Rome was wrong about us running out of resources – by Tim Worstall (The Adam Smith Institute – 2015)

November 30, 2015

http://www.adamsmith.org/

1. Introduction

The scene is an early morning current affairs radio show. Very important people talk to the nation here. Evan Humphries (for it is he): “Mr. Worstall, why is it that your new report shows that soon all will be dead?”

Worstall: “Evan, it’s 7 am. Currently there is food in the fridges of the nation for breakfast. But in two hours time that will be eaten, gone, there will be no more. Therefore everyone will die because NO BREAKFAST.” Sorry, might I just rerecord that?

Worstall: “Evan, mineral reserves are disappearing at an alarming rate. Official figures show that within 30 years most of them will be used up and there are no more reserves. Industrial civilisation will crash, billions die, because NO MINERALS.”

Rio Tinto And Vale Killed The Commodities Supercycle, Not China Or The Fed – by Tim Worstall (Forbes Magazine – November 29, 2015)

November 30, 2015

http://www.forbes.com/

That the commodities supercycle is over is obvious: we can see that just by looking at the falling values of pretty much all of the commodities. However, there’s a number of implications of this being bandied about which are wrong.

It’s not, for example, slowing growth in China which has killed it, nor will it be the Federal Reserve raising interest rates which gives it the final death blow. It’s much more accurate to say that the producing companies, like say Rio Tinto or Vale in iron ore, which have killed off the cycle.

And as a result of that we can’t quite say that falling commodity prices are symptoms of the global economy about to fall over into depression.

Can India revive the iron ore market? – by Nyshka Chandran (CNBC.com – November 27, 2015)

November 27, 2015

http://www.cnbc.com/

As India embarks on an aggressive drive to become a manufacturing powerhouse and revamp its ailing infrastructure, Asia’s third-largest economy may emerge as bright spot for iron ore demand.

“India comes up as an alternative buyer. It is a country growing in terms of steel and iron ore demand so that might be an area to keep an eye on,” Annalisa Jeffries, associate editorial director for Asia metals at Platts, told CNBC on Friday.

The nation’s potential growth could be the long-awaited catalyst to knock beleaguered iron ore prices out of their bear market. Prices of the commodity, a vital ingredient for steelmaking, tumbled to $43.4 a ton this week, according to the Steel Index—the weakest reading on record.

UPDATE 1-Rio Tinto set to decide on expansion of Mongolia copper mine – by James Regan (Reuters U.S. – November 26, 2015)

November 27, 2015

http://www.reuters.com/

SYDNEY, Nov 26 Rio Tinto is lining up project financing for a $4 billion expansion of its long-delayed Oyu Tolgoi copper mine in Mongolia and will make a final investment decision early next year, a senior executive said on Thursday.

The mine, which started producing from an open pit over two years ago, is the biggest single foreign investment in Mongolia, and resolution of disputes over its second phase in May revived hopes for a string of other stalled mining projects.

“At the end of the day, what we need is consistency and stability and we believe we have the right environment today,” Rio Tinto copper and coal chief executive Jean-Sebastien Jacques said at a Bloomberg News-sponsored forum.

Half of Gold Output May Not Be ‘Viable’ as Price Sags: Randgold – by Danielle Bochove (Bloomberg News – November 27, 2015)

November 27, 2015

http://www.bloomberg.com/

Half of the gold coming from mines may not be viable at current prices, underscoring the industry’s need for consolidation and output cuts, according to the best-performing producer of the metal in the past decade.

“The more we continue to produce unprofitable gold, the more pressure we put on the gold price,” said Randgold Resources Ltd. Chief Executive Officer Mark Bristow.

“In the medium term, it’s a very bullish outlook for the gold industry. The question is, how long are we going to supply it with unprofitable gold?”

Gold fell to a five-year low on Friday as a rising dollar and speculation that U.S. policy makers will boost interest rates next month curbed the appeal of bullion as a store of value.

Call for De Beers chief to step aside – by Allan Seccombe (Business Day Live – November 26, 2015)

November 27, 2015

http://www.bdlive.co.za/

A PROMINENT diamond industry player has called for De Beers CEO Philippe Mellier to step down and make way for someone who better understands the business.

Martin Rapaport, chairman of the Rapaport Group, has also demanded that De Beers and others drop prices for rough diamonds by up to 50% to save the ailing industry.

The global diamond sector has run into severe problems after years of poor decisions in financing the purchasing of rough diamonds by banks, pricing and production by mining companies, and the way the industry treated easy and abundant finance.

Taking specific aim at De Beers, Mr Rapaport, who analysts describe as highly regarded and influential in the polished segment, said the company, 85%-owned by Anglo American, was inflicting damage on the industry.