Republic of Mining

Glencore shrinking its $18 bln commodity inventory mountain – by Sarah McFarlane and Dmitry Zhdannikov (Reuter U.S. – October 29, 2015)

October 29, 2015

http://www.reuters.com/

LONDON – Oct 29 Commodities mining and trading giant Glencore is reducing its $18 billion inventory pile, industry sources say, a move ratings agencies say could help assuage concerns about its balance sheet.

The biggest player in the secretive commodities trading industry to hold a public share listing that requires it to disclose its accounts, Glencore has been battered by the global downturn in commodities prices.

Worries about its $30 billion debt burden saw its share price lose nearly two thirds if its value so far this year. The firm has pledged to reduce its debt by $10 billion by suspending dividends, reducing investments and selling some assets in order to protect its investment grade debt rating.

Sources close to the company say it is also reducing its vast trading inventory, driven in part by the winding up of “contango” market conditions, under which long-dated futures contracts were priced higher than spot prices, encouraging traders to store material to resell it at a profit later.

Barrick posts loss, but makes headway on debt – by Ian McGugan (Globe and Mail – October 29, 2015)

October 29, 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.

TORONTO — Barrick Gold Corp. swung to a loss in the third quarter, but reported strong progress in reducing its mountain of debt and paring production costs as it grapples with a challenging market for precious metals.

The world’s largest gold producer said it lost $264-million (U.S.) or 23 cents a share in the quarter, largely as a result of writing down the carrying value of Zaldivar, its South American copper mine, by $452-million. Revenue was $2.32-billion.

The paper loss was outweighed by an impressive performance in reducing both costs and debt. Earnings excluding one-time items were 11 cents a share, beating the seven cents a share that analysts had expected.

“Overall, it was a very good quarter,” said Sid Subramani, an analyst at Veritas, an independent investment researcher in Toronto.

Goldcorp Inc reports Q3 loss, but maintains guidance – by Peter Koven (National Post – October 29, 2015)

October 29, 2015

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

Goldcorp Inc. reported a loss in the third quarter as it dealt with weak gold prices and struggled to ramp up production at the new Eleonore mine in Quebec.

However, the Vancouver-based miner maintained its production and cost guidance and said it generated a healthy US$168 million of free cash flow despite low gold prices.

Goldcorp said it had an adjusted loss of US$37 million in the quarter, or four cents a share. After stripping out one-time items (including stock-based compensation charges), Goldcorp had a profit of three cents a share, which was still below the average analyst estimate of four cents. It earned nine cents a share (on an adjusted basis) in the same quarter a year ago.

Production from Eleonore reached 86,700 ounces in the quarter. That was double the result in the second quarter, but was still lower than expected as Goldcorp continues to have some challenges with gold recoveries. On the other hand, the company delivered solid results from its Penasquito, Cerro Negro and Musselwhite operations.

INTERVIEW-Poland to dig in over coal, says potential energy minister – by Agnieszka Barteczko (Reuters U.K. – October 28, 2015)

October 29, 2015

http://uk.reuters.com/

WARSAW – Oct 28 Poland’s new government will fight even harder in the European Union to win concessions for its coal-based industry, said Piotr Naimski, tipped to lead the country’s energy ministry following last Sunday’s parliamentary election.

Ninety percent of Poland’s energy is generated from the highly-polluting coal and Warsaw has long opposed an EU drive to curb carbon emissions.

But the conservative, eurosceptic Law and Justice (PiS) party, which won outright parliamentary majority in Sunday’s vote, could take an even harder line than the outgoing centre-right government.

Naimski said the new PiS government would fight “any obstacles” that would prevent Warsaw from sticking to coal rather than developing renewable energy sources.

NEWS RELEASE: Mining industry valuation goes below US$1 trillion according to SNL Metals & Mining’s latest report.

October 29, 2015

The mining industry’s value to investors has fallen for five consecutive months.

London – 29 October 2015 – The market value of the mining industry’s listed companies has fallen below US$1,000 billion for the first time since April 2009. In its recently published Industry Monitor, SNL Metals & Mining notes that the aggregate market capitalization of 2,684 listed companies tracked in the SNL database at the end of September was only US$934 billion, compared with US$1,030 billion at the end of August. This represents a 9.3% month-on-month decline (there was the same number of listed companies).

The industry’s valuation on the world’s stock exchanges has fallen over 43% since the middle of last year, and is now only 39% of the US$2,415 billion valuation achieved in April 2011. On this basis, the industry is worth considerably less than Apple Inc. (US$650 billion) and Google (Alphabet Inc.; US$440 billion). The low point remains November 2008, when the market capitalization of the then 2,390 listed companies was US$656 billion.

The value of the 100 largest listed mining companies is now under US$800 billion, having fallen below the US$1,000 billion mark at the end of July for the first time since June 2009.

NEWS RELEASE: Q3: PotashCorp Reports 2015 Third-Quarter Earnings of $0.34 per Share (October 29, 2015)

October 29, 2015

http://www.potashcorp.com/

Key Highlights

Third-quarter earnings of $0.34 per share1, including $0.03 per share related to notable non-cash charges, primarily in phosphate
Annual earnings guidance adjusted to $1.55 – $1.65 per share
Preparing for closure of Penobsquis mine and inventory shutdowns at Cory, Allan and Lanigan

CEO Commentary

“Broader emerging market concerns have weighed on customer sentiment, contributing to a weaker fertilizer environment in the second half of 2015,” said PotashCorp President and Chief Executive Officer Jochen Tilk. “In response, we are moving forward the permanent closure date of our Penobsquis, New Brunswick mine and planning inventory shutdowns in December at three of our Saskatchewan mines.

Hydro One sale could cost Ontario $500-million a year in lost revenues: budget watchdog – by Ashley Csanady (National Post – October 29, 2015)

October 29, 2015

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

The Ontario Liberals’ plans to sell Hydro One could cost the treasury $500-million annually and will eventually increase the province’s net debt, the financial accountability officer has found.

Stephen LeClair’s inaugural report slams the Liberal government’s plans to sell 60 per cent of the utility — which transmits most electricity in the province — as a short-sighted cash grab that will cost more than it makes in the long run.

The report notes that, in the short term, the sell-off will make it easier for Ontario to balance its budget by its planned deadline of 2017/18, but the lost revenues will hurt the bottom line over the longer term and make it harder to balance future budgets. The plan is to sell a 15 per cent stake in the Crown corporation each year until 2019, when the province’s stake will be reduced to 40 per cent.

“Once the full 60 per cent has been sold, the province would experience an ongoing negative impact on budget balance from foregone net income and payments-in-lieu of taxes from Hydro One,” the report notes, putting that number at $100 million annually.

Iron ore price crashes through $50 – by Frik Els (Mining.com – October 28, 2015)

October 29, 2015

http://www.mining.com/

The price of iron ore dropped for the 12th session in a row on Wednesday falling through the psychologically important $50 a tonne level as bearish fundamentals overwhelm the sector.

On Wednesday the benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin declined 2.6% to $49.50 a tonne, the lowest since mid-July and down 11% in just two weeks according to data provided by The SteelIndex. In July, the steelmaking raw material on a spot price basis, fell to a record low of $44.10.

China forges 46% of the world’s steel and consumes for more than 70% of the world’s seaborne iron ore trade, but years of overproduction and unprofitability at the country’s giant state-owned mills are now bringing 30 years of growing output to screeching halt.

China’s largest steel producers had combined losses of CNY28 billion yuan ($4.4 billion) in the first nine months of 2015, according to the China Iron and Steel Association as mills struggle to remain profitable amid a saturated domestic market.

Lithium – Lifting the Spirits – by Christopher Ecclestone (InvestorIntel.com – October 28, 2015)

October 28, 2015

http://investorintel.com/

You don’t get to hear a specialty metal mentioned often in a Woody Allen movie, but Lithium has managed to score a mention more than a few times. Of course it’s not that the gnomic director has suddenly been converted to a new variety of battery but rather that so many of his characters (and maybe his audience) need a pick-me up of some Lithium to cure (or ameliorate) what ails them.

Then again until 20 years ago the only mention the public ever heard of Lithium was in reference to its medical properties, even though its ceramic applications were massively more important volume-wise. Indeed Lithium was the word on everyone’s lips pre-1950 when it was a standard ingredient in 7-Up (the “up” being literal) and farther back it went into Lithia Coke (give me that over Cherry Coke any day!).

Indeed, it has been speculated (and even tried in some places) that putting Lithium into water supplies might lift people’s mood and reduce suicides. In 1990, a study in 27 counties in Texas found lower rates of not only suicide but also homicide and rape in those where the drinking water contained lithium. In 2009, research in Japan found lower suicide rates in areas with lithium in the water.

[Thunder Bay NAN] Mining summit fosters partnerships – by Brent Linton (Thunder Bay Chronicle-Journal – October 28, 2015)

October 28, 2015

http://www.chroniclejournal.com/

Nishnawbe Aski Development hosted their annual mining summit with the hopes of further creating opportunities for networking.

The two-day event, which continues Wednesday, featured a full agenda of speakers and exhibitors related to the mining industry.

“We’re not alone,” said Mark Podlasly, the senior advisor to the British Columbia First Nations Energy and Mining Council, after his presentation on Tuesday.

“People are going through this around the world. There is no need to reinvent the wheel for every negotiation in-terms of what is possible. Go out and find what is being done and see if you can adapt that back to your own community and dream big.”

Podlasly spoke on the importance of working together in-terms of the size of First Nations and the negotiating leverage that brings.

Merkel’s `Black Gold’ Loses Shine as Lignite Phase-Out Begins – by Tino Andresen (Bloomberg News – October 28, 2015)

October 28, 2015

http://www.bloomberg.com/

Less than two years ago, Chancellor Angela Merkel’s government dubbed lignite East Germany’s “black gold.” Last week, she reached a deal with utilities that analysts at Berenberg and B. Metzler Seel Sohn & Co. see as the start of the phaseout for the dirtiest power-plant fuel.

“The federal government is taking its gloves off,” Guido Hoymann, an analyst at B. Metzler, said by phone from Frankfurt. “That’s the beginning of the end for this type of energy production. The first step is being made.”

RWE AG, Vattenfall AB and Mitteldeutsche Braunkohlegesellschaft mbH agreed to close plants corresponding to 12 percent of the nation’s total lignite generation capacity in a 1.6 billion euro ($1.8 billion) accord as Germany is falling behind its target to cut carbon emissions. For the remaining 56 units, it’s a question of when they will be forced to shut, Lawson Steele, an analyst at Berenberg, said by phone from London.

Lignite, a sedimentary rock formed from compressed peat, has been a mainstay of German power generation for almost a century and helped underpin growth in Europe’s biggest economy.

Lithium prices tipped to rise 20 per cent by 2017 on demand for electric cars – by Peter Ker (Sydney Morning Herald – October 27, 2015)

October 28, 2015

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

Prices for lithium are forecast to rise strongly in the next two years, with widespread adoption of electric cars tipped to be a game changer for the third element on the periodic table.

While most demand for lithium carbonate comes from industrial companies producing ceramics and glass, Citi analyst Matthew Schembri believes demand will rise significantly when electric vehicles become mainstream and need the commodity for lithium-ion batteries.

Citi is very bullish about electric cars, and forecasts production of pure electric models (not hybrids) like the Nissan Leaf or the Tesla Model S to rise from about 150,000 in 2015 to about 290,000 in 2016. By 2020, Citi expects 1.04 million electric cars to be in production, implying sevenfold growth over five years.

In an extensive study of what the boom in electric cars will mean for lithium carbonate markets, Mr Schembri said demand for the commodity would rise almost 65 per cent over the next five years.

Goldman sees significant ‘downside’ risk for iron ore – by Jasmine Ng and David Stringer (Sydney Morning Post/Bloomberg – October 28, 2015)

October 28, 2015

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

Iron ore is sinking back toward $US50 a metric ton as expanding low-cost supply and sputtering demand in China spur concern a global glut will persist into 2016, with Goldman Sachs frecasting significant losses.

“It’s going down significantly,” Katie Hudson, managing director and senior investment manager at Goldman Sachs Asset Management Australia, said in an interview on Tuesday. “The major producers are adding incremental volume at around $US20 a ton, that gives you a sense of where the vulnerability is.”

Ore with 62 per cent content delivered to the Chinese port of Qingdao rose for the first time in seven days, adding 0.9 per cent to $US51.50 a dry ton on Tuesday after falling to $US51.03 Monday, the lowest since July 16, according to Metal Bulletin Ltd. The raw material – which bottomed at $US44.59 on July 8, a record in daily price data dating back to 2009 – is set for the first monthly loss since July.

The renewed decline shows the global market has yet to reach a balance as the biggest miners boost cheap output while steel consumption contracts in China.

Why is beneficiation in the diamond industry failing? – by Nastassia Arendse (Mineweb.com – October 28, 2015)

October 28, 2015

http://www.mineweb.com/

Legislation has become a defining feature of the investment regime and is now a liability.

A beautiful parcel of rough diamonds lies across the table as Ilan Kaplan, Vice Chairman of the Diamond Manufacturers Association shares the story behind the issues faced by a typical beneficiator.

The audience at the Diamond Indaba looks on while he explains that apart from the sourcing of diamonds, one of the issues is finding a manufacturer. One has a choice of using an operation that is either based in Johannesburg (a state-of-the-art operation) or in neighbouring Southern Africa. Once you have sourced the goods, you have to pay VAT on your purchase.

Yes, you might get the VAT back in maybe 60 or 90 days, but it will have a major cash flow impact on your business. This reduces your further purchasing ability if another opportunity arises in the interim.

Kaplan says that 30% of the diamonds on the table cannot be manufactured profitably.

Odisha looks to revive bauxite mining in Niyamgiri hills – by Jatindra Dash and Krishna N. Das (Reuters India – October 28, 2015)

October 28, 2015

http://in.reuters.com/

BHUBANESWAR/NEW DELHI – Odisha is seeking to revive a controversial plan to mine for bauxite in the Niyamgiri hills, a lushly forested area that the Dongria Kondh tribe considers sacred, a minister said on Wednesday.

The proposal, which sparked an angry response from green groups, comes nearly two years after local residents successfully blocked a request by London-listed Vedanta Resources (VED.L) to mine in the area.

“We want the revival of this mining project because some local peoples’ representatives have told us (to do so),” Odisha’s steel and mines minister, Prafulla Kumar Mallik, told Reuters.

“Besides, it’s required to ensure long-term bauxite supply to the struggling aluminium industry including Vedanta.”

Vedanta Ltd (VDAN.NS), controlled by metals mogul Anil Agarwal’s Vedanta Resources, has set up a big alumina plant in Odisha betting on bauxite supplies from Niyamgiri.