Republic of Mining

Major South African gold producers fly into the danger zone – by Lawrie Williams (Mineweb.com – August 18, 2015)

August 18, 2015

http://www.mineweb.com/

Many of South Africa’s major gold mines will be making losses on an AISC basis at current gold prices and it is hard to see the industry recovering much failing a major bullion price increase.

LONDON -A few months ago, Mineweb published a thought-provoking article suggesting the South African Gold Mining industry as we know it might not survive beyond the end of the decade (See: Could SA’s gold mining industry be gone by 2020?).

In it Patrick Cairns reported on a talk by Peter Major, mining specialist at Cadiz Corporate Solutions, to JSE’s Power Hour in Cape Town, where he laid bare the serious problems facing the industry which have almost brought it to its knees. The current gold price is now around, or below, many of the miners’ latest AISC guidance levels and if the forecasts of most mainstream analysts are to be believed – the future of the industry looks bleak.

Major’s talk pointed to numerous political and union-related changes that have already seen the industry reduce to a fraction of the size it was only a decade or so ago. And unless there is a major pick-up in the gold price there would seem to be little prospect of any recovery.

Nickel woes push South32 shares to fresh low point – by Michael Roddan (The Australian – August 18, 2015)

August 18, 2015

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

BHP Billiton spin-off South32, which launched on the sharemarket with high hopes in May, tumbled to a new low on the ASX today amid a global commodity crunch, with shares down more than 30 per cent from their high point shortly after listing.

The diversified miner (S32), which holds BHP’s former non-core coal and base metal assets, has been hit by weak commodity prices and soft global demand amid a rising US dollar.

The shares, which hit a peak of $2.37 after listing, fell as much as 3.4 per cent to $1.56 in today’s trade, taking the total decline from the posting-listing high to 34 per cent.

South32, a miner of metals such as nickel, coal, silver, aluminium and zinc, has seen commodity prices crash during its short life. Bloomberg’s commodities index slumped to its lowest point in 13 years recently.

The prices of nickel, copper and zinc are all hitting their lowest points since 2009, as concerns about slowing economic growth in China are pushing industrial metals down.

UPDATE 2-Barrick scraps co-president structure in management shuffle – by Euan Rocha (Reuters U.S. – August 18, 2015)

August 18, 2015

http://www.reuters.com/

Aug 17 (Reuters) – Barrick Gold Corp said on Monday that Jim Gowans, a veteran miner and one of its co-presidents, was retiring and that he would not be replaced, as the miner moves to thin out its ranks and create a leaner operating structure.

In the latest reshuffle, Kelvin Dushnisky, who has served as co-president with Gowans for a year, has been named as president and will continue to report to Executive Chair John Thornton, a former Goldman Sachs executive.

Toronto-based Barrick said Gowans would step down as co-president immediately, but stay on as an adviser to the chairman until he retires at the end of the year.

Analysts said the exit of Gowans, who has four decades of industry experience, leaves a void of first-hand mining know-how in Barrick’s senior ranks.

“The loss of a senior executive with the mining experience of Jim Gowans does reduce the ‘bench strength’ of the overall management team,” noted Barclays analyst Farooq Hamed in a note to clients on Monday.

Glencore swoops on Sirius’ nickel – by Peter Ker (Sydney Morning Herald – August 18, 2015)

August 18, 2015

http://www.smh.com.au/

Glencore’s financial troubles have not prevented the Swiss giant from swooping on the remaining offtake from Sirius Resources’ Nova mine in WA. In a deal that completes the offtake process for Sirius for the time being, Glencore will buy half of the nickel and copper concentrate produced at Nova for the first three years of the mine.

The agreement comes after BHP Billiton agreed in March to buy half of the first three years’ concentrate from Nova, and Trafigura agreed to buy copper concentrate from the mine.

Both BHP and Glencore have nickel operations within a few hundred kilometres of the Nova mine but while the concentrate bound for BHP will go into its Nickel West smelter at Kalgoorlie, Sirius said the concentrate bought by Glencore would be shipped overseas out of either Esperance or Geraldton ports.

Nova is not expected to come into production until late 2016, and the fact that 100 per cent of production for the first three years has already been sold amid a weak nickel market is a tribute to the expected high quality of the Sirius concentrate.

Canada’s natural-resource wealth must be included on balance sheets – by Lyn Brown and Julie Desjardins (Globe and Mail – August 18, 2015)

August 18, 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.

Lyn Brown is managing director of the Council for Clean Capitalism. Julie Desjardins is director, reporting and capital markets, of the Chartered Professional Accountants of Canada.

The amount of natural-resource wealth within Canada’s borders is impressive. Natural-resource assets, which include timber, oil, natural gas and other subsoil minerals, have been valued by Statistics Canada at about $1-trillion. This puts Canada in an enviable position relative to other countries.

As with financial and produced or physical assets, natural capital (land, ecosystems and natural-resource stock) generates economic value in various ways. Accounting for Canada’s natural capital enables informed policy and capital-allocation decision making. While Statistics Canada has valued our natural-resource assets, it has not as yet fully incorporated natural capital into its national macroeconomic accounts.

To understand the importance of accounting for and integrating natural capital in public accounts, consider the private sector.

Will a smaller global commodities appetite benefit Canada? – by Jeff Rubin (Globe and Mail – August 18, 2015)

August 18, 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.

Popular opinion suggests any slowdown in resource demand from China, which is becoming more desperate in its attempts to revive its flagging economy, will be especially bad for a commodity-dependent economy such as Canada’s.

That may well be the case, but it does overlook at least one key silver lining. Sharply lower commodity prices are now offering Canada an opportunity to push the reset button on an economy that’s become distorted by an overdependence on resource markets.

Whether you’re talking about oil, coal, or copper, it seems as if all roads have led to China for going on 20 years. With the sun now appearing to set on China’s track record of robust economic growth, questions are now being asked about whether the country might follow the example of Japan’s economy, which set the world on fire decades ago before sliding into a protracted period of stagnation that it’s still struggling to shake off.

Whether it’s stimulus spending, rate cuts or a recent devaluation of the yuan, Beijing’s attempts to prod China’s once seemingly unstoppable manufacturing sector back to its former heights continue to fall short.

Ontario’s Power Trip: How Hydro is walloping Ontario business – by Parker Gallant (National Post – August 19, 2015)

August 18, 2015

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

Over the past several months there has been a constant din of noise from all business segments in Ontario about the high price of electricity and its effects. Electricity prices have risen as they have absorbed the high costs of 20-year contracts for renewable energy in the form of wind and solar as additions to Ontario’s electricity grid. Ontario currently has a huge surplus which results in as much as 20 per cent of our generation exported at fire sale prices.

Couple that with a drop in demand, annual spending of $400 million on conservation messages, smart meters that allow time of use (TOU) pricing and the Hydro One, OPG and other Ministry of Energy employees enjoying wages and benefits that outstrip the private sector means electricity bills for all segments of businesses and households are now a drain on the economy versus an attraction for new business and the jobs they might create.

The foregoing recently manifested itself in a report from the Ontario Chamber of Commerce entitled: “Empowering Ontario: Constraining Costs and Staying Competitive in the Electricity Market.” The report stated soaring electricity prices would cause one (1) in 20 Ontario businesses to shut their doors within the next 5 years.

Decimated Toyota cars, mangled cargo containers: Tianjin blast forces companies to suspend operations – by Erika Kinetz (Associated Press/National Post – August 18, 2015)

August 18, 2015

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

SHANGHAI — Foreign companies have suspended operations around the Tianjin port as officials scramble to contain the toxic fallout of last week’s deadly chemical explosions, which dealt a blow to northern China’s emerging economic hub.

Toyota said over half its China production capacity would be offline at least through Wednesday. The company has operations near the blast evacuation zone and said Monday that it had suspended three production lines, which can produce 530,000 vehicles a year.

Thousands of Volkswagen, Toyota, Hyundai and Renault cars, mostly pricey imports, parked on lots near the blast were decimated.

The operations of Panasonic, logistics company Singamas Container Holdings and, reportedly, Deere & Co. have also been disrupted.

The list of name-brand companies impacted by the blast is a testament to Tianjin’s rise, but regulatory and safety lapses at the hazardous goods warehouses that exploded have drawn attention to the sometimes shaky infrastructure China has laid down as it pursues ultra-fast growth.

COLUMN-Chinese gold demand limbers up for bull-bear tussle – by Clyde Russell (Reuters U.S. – August 17, 2015)

August 17, 2015

http://www.reuters.com/article

LAUNCESTON, Australia, Aug 17 (Reuters) – Gold investors are trying to work out whether the yuan’s depreciation and the recent turmoil in Chinese equity markets is good, bad or indifferent for demand for the precious metal in the world’s biggest buyer.

It’s possible to construct plausible-sounding arguments why the recent drama in China’s financial markets could be both bullish and bearish for gold.

At the heart of most of the arguments is a view on how Chinese consumers will respond to the recent developments but it seems this is largely guesswork on the part of analysts, as there are few precedents to serve as a guide to future behaviour.

One big question is whether the yuan’s sudden 3 percent decline against the U.S. dollar last week and the swings in equity valuations are likely to be important drivers of Chinese gold demand, or whether other factors with a lower media profile are at work.

Looking at the yuan depreciation first, and the important thing seems to be that the authorities are signalling the drop last week was a one-off move, not part of any sustained weakening.

Colorado Spill Heightens Debate Over Future of Old Mines – by Julie Turkewitz (New York Times – August 16, 2015)

August 17, 2015

http://www.nytimes.com/

SILVERTON, Colo. — When the mine here opened in the early 1890s amid a frenzy of frontier gold exploration, its founders gave it a lofty name: the Gold King, reflecting their great hopes for finding riches in its depths. Over the next decade, the Gold King went on to become one of the most productive mines in Colorado’s San Juan County, with three shifts of men working 24 hours a day in its dark corridors.

But the mine’s prosperity proved short-lived. When the economy hit a recession in the early 1920s, its operators abandoned it, with open tunnels that filled with snowmelt and rainwater that eventually turned to acid, leaving behind a toxic legacy that this region has struggled to clean up for decades.

Then, on Aug. 5, the Gold King split open while a team contracted by the Environmental Protection Agency was investigating the source of a leak. The accident sent a yellow plume south into the Animas River and turned Western waterways into a mustard ribbon, causing three states and the Navajo Nation to declare states of emergency.

The accident heightened a debate here over the future of this region’s old mines, and served as a reminder, some critics say, that the Gold King’s toxic demise could be repeated at any of thousands of abandoned mines around the country.

[U.S. Coal] ET TU, TRIBE? – by Andrew Rice (New York Magazine – July 28, 2015)

August 17, 2015

http://nymag.com/

LAURENCE TRIBE, the president’s longtime confidant, is fighting the White House climate plan on behalf of Big Coal. His friends are furious at him, which breaks his heart.

Just after noon on June 18, Laurence H. Tribe, the nation’s foremost scholar of constitutional law, fired off an angry and anguished self-defense. “I just finished my roughly half-hour interview on WNYC with Brian Lehrer,” he wrote in an email to the publishers of his most recent book about the Supreme Court, Uncertain Justice. “I suppose I did well enough, but the interview was a complete disaster. Please let the Brian Lehrer Show know that I felt totally sandbagged.”

The appearance had begun innocuously, with a discussion of the most recent Supreme Court decisions — what the Harvard Law professor later called June’s “series of thunderclaps.” Tribe’s credentials as a liberal legal activist are the stuff of legend — counsel in Bush v. Gore, slayer of archconservative Supreme Court nominee Robert Bork — and he is as informed about the Court’s opaque inner workings as any outsider can be.

He taught Elena Kagan and John Roberts at Harvard and played an unusually involved role in Barack Obama’s education in the law; for a brief time during Obama’s first term, he served at the Justice Department.

Polish Black-Hole Mining Risks Labor Unrest Before Election – by Maciej Martewicz and Dorota Bartyzel (Bloomberg News – August 16, 2015)

August 17, 2015

http://www.bloomberg.com/

Poland’s struggle to help Kompania Weglowa SA, the European Union’s biggest coal producer, return to profitability risks unleashing union-led protests before October’s general election.

A threatened eruption of street demonstrations next month may seal Prime Minister Ewa Kopacz’s fate, with the ruling party already trailing the opposition in opinion polls. The cabinet extinguished demonstrations in January by scaling back its plans to shut unprofitable mines and agreeing to revamp Kompania with the aid of state-controlled utilities.

The government has missed two self-imposed deadlines for the overhaul and has a third looming on Aug. 31 as it seeks to stem the coal industry’s 1.4 billion-zloty ($372 million) loss in the first half of 2015.

Power producers are reluctant to invest in an industry they regard as a black hole, especially as this month’s heatwave triggered electricity supply curbs which, according to UBS AG analyst Michal Potyra, may raise calls for further investment in infrastructure by utilities.

South African nuclear power plan stirs fears of secrecy and graft – by Joe Brock (Reuters U.S. – August 14, 2015)

August 17, 2015

http://www.reuters.com/

JOHANNESBURG, Aug 14 (Reuters) – Fears are growing in South Africa that agreements to build nuclear power plants that could be the most expensive procurement in the country’s history will be made behind closed doors, without the necessary public scrutiny.

Among those voicing concern, two government sources say the Treasury is not being included in procurement discussions, despite the massive budgetary implications of a project that experts say may cost as much as $100 billion.

Construction on the first plant is due to start next year, breakneck speed compared with the years of regulatory and environmental checks for nuclear projects in countries such as Britain and the United States.

The Democratic Alliance, the main opposition party, believes the pace of the deal will prevent proper analysis before contracts are signed and huge sums of money change hands.

African trade partners feel the bite of China’s yuan devaluation – by Geoffrey York (Globe and Mail – August 15, 2015)

August 17, 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.

JOHANNESBURG — For African countries that have bet heavily on China as their economic saviour, the sudden devaluation of the Chinese currency is a painful reminder of the risks of over-dependence on the Asian giant.

The devaluation of the yuan, coupled with a broader slowdown of the Chinese economy, is likely to weaken demand for the commodities that have spearheaded Africa’s booming trade with Beijing. It could also help Chinese manufacturers to compete even more ruthlessly against African producers as Beijing’s exports become cheaper.

China, hungry for minerals and oil, has rapidly gained dominance in African markets over the past decade. Its trade with Africa last year was more than $220-billion (U.S.), three times greater than U.S. trade with Africa. It’s the biggest trading partner of most African nations. But while this has helped spur African growth, it also leaves the region vulnerable to a slowdown or a devaluation.

Alberta and Norway: Two oil powers, worlds apart – by Brian Milner and Jeff Lewis (Globe and Mail – August 15, 2015)

August 17, 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.

OSLO AND CALGARY — s world oil production outstrips demand, China’s outlook darkens and prices plumb levels not seen since the Great Recession, energy-exporting countries around the world face a prolonged period of thinner revenues and deepening economic woes.

The chill winds have now reached Norway, long regarded as the world’s most prudent manager of an economy heavily exposed to the ups and downs of commodity prices.

Faced with the steepest decline in oil and gas spending in a decade and a half and the biggest job losses since the global financial meltdown, the centre-right Norwegian government is pledging to tap more of the country’s accumulated resource wealth in an effort to stanch the bleeding.

The sudden decline in its fortunes has put a spotlight on Norway’s unusual handling of its gusher of resource cash over the years, parking 100 per cent of the government’s revenue from royalties and dividends in a fund that is barred from investing a krone in the domestic economy.