Republic of Mining

[Glencore hype?] News versus noise – by Michael McCarthy (Switzer Daily – October 29, 2015)

October 29, 2015

http://switzer.com.au/

A challenge for investors is separating potentially market changing news from the “noise” generated by twenty-four hour trading and the voracious and sensationalist media cycle. Much of the “information” spewed at investors is not only unhelpful, it can be damaging. Wise investors take arms against a sea of media troubles.

Some of the ways the news cycle can hurt investors:

Sometimes, the news is just wrong

A recent example was the description of the situation at global commodity house Glencore. A theoretical view that if current commodity prices were maintained in perpetuity, Glencore could face funding issues over the long term somehow became “Glencore is going broke”. In a perfect illustration of hyperbolic excess, a number of outlets ran with “the commodity markets Lehman Brothers moment”.

Anyone making that comparison with a straight face displayed gross ignorance. Glencore’s balance sheet and funding facilities are public knowledge. A bare minimum of journalistic digging could have turned up the facts in minutes.

Editorial: Teck, Freeport burned by falling oil and gas prices – by John Cumming (Northern Miner – October 27, 2015)

October 29, 2015

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

It must have seemed like a good idea at the time a few years ago when Teck Resources and Freeport-McMoRan management bought deeper into the oil and gas sector and diversified further away from their mining businesses, but those decisions to dabble have come back to sting both companies.

In a new phase of financial reporting, miners like Teck and Freeport are posting major non-cash losses related to falling commodity prices, rather than the scenario several years ago when writedowns more often stemmed from cost overruns at projects under construction, or overpayment for acquisitions.

In its quarterlies released on Oct. 22, Teck recorded impairment charges totalling $2.2 billion on an after-tax basis ($2.9 billion pre-tax), including $1.5 billion on its metallurgical coal assets, $340 million on the Andacollo copper assets and $343 million on its 20% share of the Fort Hills oilsands megaproject in Alberta.

AUDIO: Ring of Fire conference in Thunder Bay aims to examine environmental concerns (CBC News Thunder Bay – October 28, 2015)

October 29, 2015

http://www.cbc.ca/news/canada/thunder-bay?cmp=rss

Extraction project must be ‘ecologically sustainable,’ law professor says of Ring of Fire development

A one-day conference about the Ring of Fire, taking place Friday in Thunder Bay, is looking at how issues would be addressed before resources are extracted from the mineral-rich region.

Lakehead University’s Faculty of Law and Centre of Excellence for Sustainable Mining and Exploration is hosting the discussion, which seeks to build on last year’s conference.

Challenges including sustainable development, the duty to consult and impacts on First Nations communities must be considered and addressed before the extraction project begins, said Jason MacLean, an assistant law professor at Lakehead.

“It would be putting the cart before the horse to speed ahead with the development of the project without ensuring that the project is going to be ecologically sustainable and respectful of indigenous rights,” MacLean said.

African delegates woo India investors in infra, mining sectors (Business Standard – October 28, 2015)

October 29, 2015

http://www.business-standard.com/

Calling Africa a “land of opportunity”, delegates from the world’s second largest continent on Wednesday invited Indian investors to tap opportunities in sectors like infrastructure and mining.

The delegates, who are here for the ongoing 3rd India-Africa Forum Summit, said there were enormous opportunities in infrastructure sector as most of the African countries were facing acute physical infrastructure bottlenecks.

“We invite investors from India as there exists huge opportunities in various sectors, including infrastructure in Africa,” Malawi’s Trade and Industry Minister Joseph Mwanamvekha said here at the India Africa Business Forum.

Wooing local investors, Mwanamvekha said, Africa, whose gross domestic product stood at 2.5 trillion dollars in 2014, also offers great opportunities in other sectors like mining, information and communication technology, water, transportation, housing and sanitation.

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.