Republic of Mining

Miners need to invest $150bn to avoid looming supply shortages – by Cecilia Jamasmie (Mining.com – October 16, 2015)

October 16, 2015

http://www.mining.com/

While miners are holding off on new projects and looking to slow the completion of ones in the works as they face the worst commodity price collapse since 2008, research house Wood Mackenzie warns the industry could be paving the way for a major supply shortage.

In a presentation prepared for clients at LME Week in London, the firm’s vice chairman of metals and mining research, Julian Kettle, draws together the overall outlook for metals, citing the challenges of lower commodity prices, pressure from shareholders to curtail investment and a new reality of lower demand growth. Wood Mackenzie concludes that if the industry fails to invest the US$150 billion required to meet future supply needs, looming supply shortages will follow.

“The need for investment is becoming desperate in zinc and lead and will be an issue in copper in the next few years,” Kettle writes. “Unfortunately there is little appetite to invest with prices cutting into the cost curve, low free cash-flow, surpluses building, difficulty in financing and shareholders demanding dividends.”

China yet to hit ‘great wall’

Glencore’s Zinc Rationale Defies History – by Liam Denning (Bloomberg News – October 15, 2015)

October 16, 2015

http://www.bloomberg.com/

“You shut up!/No, YOU shut up!” is how schoolyard scuffles kick off. Miners tweak it slightly to: “You shut down!/No, YOU shut down!”

Ivan Glasenberg, the chief executive of Glencore, has long bemoaned miners’ tendency to literally dig themselves into a hole with too much supply. As concern about Glencore’s swollen debt has hit the stock price, Glasenberg has recently taken himself at his word, ordering a temporary shutdown of some of the company’s zinc output. That caused the price of the metal to jump 10 percent last Friday.

But history suggests Glencore’s fight to raise zinc prices sustainably could be a tough one. Taking yourself out of the market in order to reduce excess supply can be a great strategy— but primarily for those rivals who keep producing and benefit from higher prices while your own reserves stay in the ground.

Sure enough, this week the marketing chief at one of said rivals, BHP Billiton, confessed himself “quite intrigued” about all the talk of cutting production, as he hadn’t seen any capacity being shut-in that was making cash.

Alrosa president ‘concerned’ over synthetic diamonds – by Tom Davis (Jewellery Focus – October 15, 2015)

October 16, 2015

http://www.jewelleryfocus.co.uk/

Andrey Zharkov, president of Russian diamond mining company Alrosa, has warned that the diamond industry is suffering from reputation risks due to synthetic stones.

Speaking at the World Diamond Council (WDC) in Moscow on Tuesday, October 13, Zharkov said that the industry should be concerned by “growing occasions” on the market when natural diamonds are mixed with synthetic diamonds, or when “stones are worked on for the purpose of their improvement.”

Under a new Russian law “stones of synthetic origin, even having characteristics of natural stones, are not considered to be precious ones,” he said. “Therefore, the law determines that synthetic stones cannot be associated with precious stones.”

He said that Alrosa is conducting research into developing faster and more effective synthetic diamond detection devices. The WDC will play a more active role in defending and supporting the “favourable reputation and positive image of the diamond industry”, he said.

UPDATE 2-Rio Tinto lifts iron ore shipments despite China risks, draws on inventory – by James Regan (Reuters U.S. – October 16, 2015)

October 16, 2015

http://www.reuters.com/

SYDNEY, Oct 16 (Reuters) – Rio Tinto on Friday posted a 17 percent rise in third-quarter iron ore shipments and said it was on track to meet a full-year target of 340 million tonnes, shrugging off risks from slower economic growth and peaking steel output in China.

In a sign market conditions may be improving, the miner dipped into its inventories – 4 million tonnes from its Australian operations and 1 million from the Canadian business – after production fell short of shipments.

Rio Tinto shipped 91.3 million tonnes over the quarter, outstripping production of 86.1 million tonnes, data from the company’s quarterly production report showed.

“Clearly, the iron ore market is reasonably tight,” said Shaw Stockbroking mining analyst Peter O’Connor in a note to clients.

Linamar Corp’s biggest deal yet bets that the cars of the future are aluminum – by Kristine Owram (National Post – October 16, 2015)

October 16, 2015

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

Canadian auto-parts maker Linamar Corp. is betting that aluminum will continue to replace steel as automakers strive to produce more fuel-efficient vehicles, announcing the biggest acquisition in its 50-year history Thursday.

The Guelph, Ont.-based company has made an offer to acquire France’s Montupet SA for $1.16 billion plus debt, subject to shareholder and regulatory approval.

Montupet makes complex aluminum castings for the global automotive industry with a particular focus on cylinder heads, complementing Linamar’s existing aluminum machining business.

“Aluminum is becoming more and more prevalent in the vehicle,” Linamar CEO Linda Hasenfratz said in an interview from Paris, where she announced the deal.

Looking Past the Federal Election for Real Results [in the Ring of Fire] – by James Murray (Netnewsledger.com – October 15, 2015)

October 16, 2015

http://www.netnewsledger.com/

THUNDER BAY – EDITORIAL – Most people are focused on October 19th and the election. What is really important, and what is more important for Northwestern Ontario is what happens on October 20th and beyond.

Once the campaign is over, and the rhetoric is safely stored away, it is time for real work.

Our region faces challenges, and Thunder Bay faces challenges.

All of the elected leaders – regardless of their political party – need to start to really work hard on solving these issues. If not, nothing will change, and for Thunder Bay the long-term costs are going to be very high both financially and socially.

Many of the really important issues that have long-term impact on the health and well-being of residents across Northwestern Ontario still need to be addressed and solved.

Supreme Court rejects Rio Tinto’s efforts to dismiss Innu class-action lawsuit – by Ross Marowits (Canadian Press/Vancouver Province – October 15, 2015)

October 15, 2015

http://www.theprovince.com/

MONTREAL – The Supreme Court of Canada has refused to end a class action lawsuit filed by two Innu communities against the Iron Ore Co. of Canada and the Quebec North Shore and Labrador Railway Co.

The country’s highest court dismissed with costs their appeal of a Quebec Court of Appeal ruling. No reasons were provided Thursday as is customary when the court makes such a decision.

The Innu First Nations of Uashat Mak Mani-Utenam (Uashaunnuat) and Matimekush-Lac John claim the IOC, which is majority owned by Rio Tinto (NYSE:RIO), has violated their rights for nearly 60 years and are seeking $900 million in compensation.

The Innu claim the mines and other facilities have ruined the environment, displaced members from their territory and prevented them from practising their traditional way of life.

They also say a 578-kilometre railway between Schefferville and Sept-Iles has opened up their territory to “numerous other destructive development projects.”

‘Keep on going’, urges Freeport chief – by Henry Sanderson and Neil Hume (Financial Times – October 15, 2015)

October 15, 2015

http://www.ft.com/

Copper miner CEO says tough decisions needed as low prices reign

“If you’re going through hell, keep on going.” That is how Richard Adkerson, chief executive of US copper miner Freeport-McMoRan, summed up sentiment at his company’s party to mark the end of LME Week in London.

The song by Rodney Adkins was an apt metaphor for this year’s annual gathering of miners, traders and smelters, who are dealing with commodity prices at their lowest levels since the financial crisis.

Miners and traders look forward to Freeport’s party every year, but Wednesday’s bash at the Intercontinental Hotel in Park Lane reflected the new austerity: gone were the oysters and the large arrays of sushi stations. Delegates picked at marshmallows dipped in chocolate instead.

One attendee reflected on the boom years, remembering how people would retire to private clubs nearby for all-night parties, providing their Chinese guests with lavish entertainment.

BHP says shutting down mines won’t help commodity prices – by James Chessell (Australian Financial Review – October 15, 2015)

October 15, 2015

http://www.afr.com/

A senior BHP Billiton executive has played down the impact of production cuts by miners such as Glencore, arguing that commodity prices will not be affected because most of the mines being shut down are unprofitable.

Asked if prices of key commodities such as copper would benefit from higher-cost “marginal” producers cutting back production, BHP marketing president Arnoud Balhuizen said it would not make a significant difference.

“I am quite intrigued by all the conversation about cutting down production because I haven’t seen any production being shut which is making cash,” Mr Balhuizen told journalists in London on Wednesday.

“So for me it is just a normal rational economic decision. If you have a cash negative operation you shut it but it doesn’t do anything for price. You should have done it anyway.”

COLUMN-Glencore changes the debate, but can it change the zinc market? – by Andy Home (Reuters U.S. – October 15, 2015)

October 15, 2015

http://www.reuters.com/

Oct 15 (Reuters) – Everyone’s talking about Glencore. The Swiss trading and mining giant is the hot topic of conversation in the myriad meetings and cocktail parties taking place in London for LME Week.

And, Glencore executives will be pleased to note, this isn’t speculation as to whether the company is about to go bust. That particular panic seems to have passed for now after a flurry of announcements intended to shore up its balance sheet, most recently the proposed sale of two copper mines.

Rather, it was Glencore’s announcement on Friday of massive cuts to its zinc and lead production portfolio that has been exercising the minds of the thousands of metal executives meeting in London this week.

The London zinc price went on a super-charged rally on the news, exploding from its opening at $1,701 per tonne to $1,875 in a matter of hours. As with last month’s announcement of 400,000 tonnes of copper cutbacks, the timing was exquisite, catching off guard a market that had been grinding steadily lower for months under the weight of relentless short selling.

Inuit-owned firm explores for minerals in western Nunavut (Nunatsiaq News – October 15, 2015)

October 15, 2015

http://www.nunatsiaqonline.ca/

Nunavut Resources Corp. teams ups with Transition Metals Corp.

An alliance between the Inuit-owned Nunavut Resource Corp. and a Sudbury, Ont.-based company called Transition Metals Corp. has turned up potential sites for gold and base metal exploration following aerial surveys on Inuit-owned land done this past summer, Transition Metals said Oct. 8 in a news release.

In April 2013, the two firms struck a deal to work together for five years hunting for potential mineral deposits within an area known as the Izok Corridor.

The Izok Corridor is an area stretching from Izok Lake to Coronation Gulf that’s the proposed location for a moribund scheme promoted by MMG Ltd. to build a chain of lead-zinc mines linked by an all-weather road.

MMG halted that project in 2013 because of low metal prices and there’s no sign that MMG will restart it any time soon.

Sudbury PoV: Job losses cause for concern – Don MacDonald (Sudbury Star – October 14, 2015)

October 15, 2015

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

The numbers are depressing — 4,200 jobs gone in Greater Sudbury since June, according to the latest figures from Statistics Canada. At the same time, Sudbury’s unemployment rate has jumped from 5.9 to 7.3 per cent.

StatsCan said Sudbury had 84,700 jobs in June; that number dropped to 81,700 in September.

It seems likely the bleeding will continue: in recent months, First Nickel announced it would close Lockerby Mine, while KGHM International will be shutting down its McCreedy West Mine. With that, several hundred jobs will be or have been lost.

The companies blame low metal prices, especially for nickel, for their decisions. Analysts earlier in 2015 had predicted nickel would be selling at $9 a pound or so by this time; instead, nickel is well below $5.

Now, there is speculation Glencore, another key employer in Sudbury, is looking at cutting nickel production.

BookFilter: Homer Hickam, The Author Whose Story Inspired “October Sky,” Soars Again – by Michael Giltz (Huffington Post – October 14, 2015)

October 15, 2015

http://www.huffingtonpost.com/

Best-selling author Homer Hickam has enjoyed a varied and acclaimed career, ranging from decorated Vietnam veteran to scuba instructor to working as an aerospace engineer at NASA where he contributed to spacecraft design and crew training. Hickam even had a satisfying creative outlet in a stream of magazine articles capped by an honest-to-goodness military history hit about U-boats attacking the US coast during World War II. Called Torpedo Junction, it was published by the Naval Institute Press (the first home of Tom Clancy), got great reviews and is still in print today.

But all that is dwarfed by the Cinderella story of his first memoir. It began as an article commissioned by the relatively obscure Air & Space/Smithsonian magazine in 1995. Hickam talked about growing up as a kid in coal mining country and how Sputnik inspired he and his friends to start shooting off rockets with gleeful abandon and scientific rigor, scoring a top prize at the national science fair when kids from coal mining towns never even went to science fairs.

Gold Analysts Split on Fed View as Rate Doubts Spur Volatility – by Luzi-Ann Javier, Eddie Van Der Walt and Ranjeetha Pakiam (Bloomberg News – October 14, 2015)

October 15, 2015

http://www.bloomberg.com/

The Federal Reserve is giving the gold market a splitting headache.

With mounting doubts over when Fed policy makers will raise U.S. interest rates this year, traders and analysts are becoming increasingly divided on where prices go from here. Half of the respondents in a Bloomberg survey expect bullion to drop for a third straight year in 2015, and the rest are predicting a gain.

As the outlook got cloudier for interest rates — which can erode the appeal of holding metals that don’t offer yields — gold volatility has jumped close to a three-month high. Hedge funds have been befuddled, betting the wrong way on price moves in four of the past seven weeks.

Even the two most-accurate forecasters over the past quarter are at odds over what the Fed moves mean for bullion, data compiled by Bloomberg show.

“Some people are just going crazy waiting,” said Alan Gayle, a senior strategist for Atlanta-based RidgeWorth Investments, which oversees $40 billion.

LMEWEEK-BHP gloomy on iron ore price, but cautiously optimistic on China – by Maytaal Angel and Eric Onstad (Reuters U.S. – October 14, 2015)

October 15, 2015

http://www.reuters.com/

LONDON, Oct 14 (Reuters) – BHP Billiton, the world’s largest miner, was downbeat on Wednesday about iron ore prices as low-cost producers continue to swamp the market and as the intensity of China’s demand for the steel making raw material ebbs.

However, there were some positive signs on the economic outlook for top commodity consumer China, BHP officials told a briefing during the LME Week industry gathering.

A global glut and falling Chinese steel demand have dragged spot iron ore prices .IO62-CNI=SI to less than $60 a tonne from a high of nearly $200 in 2011. The price is forecast to drop to $50 over the next two years, a Reuters poll showed.

“By the end of this year, there will be additional iron ore coming from Australia, from Brazil,” Arnoud Balhuizen, president of the group’s marketing unit, told a media briefing. “Our expectation is that the iron ore market cost curve will continue to flatten and continue to come under pressure.”