Republic of Mining

Gemfields Bets on Gemstone Market’s Growth – by Russell Shor and Robert Weldon (GIA.com – January 26, 2015)

September 24, 2015

http://www.gia.edu/

Established in 1931, GIA is the world’s foremost authority on diamonds, coloured stones and pearls. A public benefit, non-profit institute, GIA is the leading source of knowledge, standards and education in gems and jewellery.

In late November 2014, Gemfields unveiled a 40.23 ct ruby it had just unearthed from its Montepuez ruby deposit in Mozambique. The discovery made headlines, the kind usually reserved for large diamonds.

Indeed, when Gemfields’ CEO Ian Harebottle speaks about the colored gemstone industry, the word “potential” comes up in just about every sentence. He believes that colored gemstones’ share of luxury goods sales could increase greatly around the world—potentially rivaling diamonds—if jewelry manufacturers and retailers could count on regular supplies, stable pricing, consistent grading, and increased marketing support. He has set his company’s goals on doing just that.

Gemfields faces a tall order in catching up to diamonds. Sales of gemstones remain a small fraction of diamond sales worldwide. In the US, they represent about 8% of jewelry store sales by value, according to the 2014 Jewelers of America’s Cost of Doing Business Survey.

Dr. Copper Has Bad News for Mining Stocks – by Isabella Zhong (Barron’s – September 24, 2015)

September 23, 2015

http://www.barrons.com/

The red metal is down 50% from its peak, but miners may suffer as weak demand weighs on copper prices.

Dr. Copper may need a hospital given the kicking being meted out to the red metal. The widely used base metal suffered another body blow on Wednesday after a gauge of China’s manufacturing activity fell to its lowest point in more than six years, heightening concerns about demand for copper in the world’s biggest consumer of the commodity.

The metal has earned the sobriquet Dr. Copper given its ability to predict the direction of global growth because its use tracks industrial activity. Unfortunately, there is only one conclusion to draw from the good doctor’s charts: prognosis, negative. A near 4% slide in the copper price on Tuesday steered the metal to a 50% decline from its February 2011 high of around $4.60 a pound, and analysts expect more pain to come as waning demand collides with too much supply.

Nomura’s Patrick Jones expects copper prices to fall another 8% from current levels in the next two years, and that casts a pall over major producers like BHP Billiton ( BHP.AU ) ( BLT ) and Rio Tinto ( RIO.AU ) ( RIO ), which are already laboring under near decade low iron ore prices.

Editorial: Political risk never far in Guatemala – by John Cumming (Northern Miner – September 16, 2015)

September 23, 2015

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

As miners active in Guatemala sit on the sidelines with furrowed brows, Guatemala has been embroiled in a political turmoil stoked by an anti-corruption drive that has led to the arrest of President Otto Perez Molina and the rise of a genial comic actor as the leading candidate to replace him.

This latest round of national instability kicked off on April 16 with the release of a report by the internationally staffed UN anti-corruption agency International Commission Against Impunity in Guatemala (CICIG) that implicated senior government officials with organized crime — including Vice-President Roxana Baldetti, Guatemala’s first-ever female VP.

The CICIG, working with the country’s attorney general Thelma Aldana, had uncovered a scam known as “La Linea” whereby government officials accepted bribes from importers in return for reducing tariffs.

Popular outrage soon led to the peaceful assembly of tens of thousands of ordinary citizens in Guatemala City to protest government corruption — a remarkable feat for a country with a deeply rooted history of political violence, including death squads.

Rough Cut: Nearly all the world’s diamonds-legal or not-pass through this one Indian city – by Jason Miklian (Foreign Policy Magazine – January 2, 2013)

September 23, 2015

http://foreignpolicy.com/

SURAT, India — The Gujarat Mail is just another red-eye train. Twelve powder-blue passenger cars crisscrossing, like so many hundreds of others, India’s northwestern breadbasket through the dark of night. At five minutes past two, the Mail begins its four-hour journey, lumbering south from Surat to Mumbai. Inside, the third-class cabins are equal parts scurrying roaches and dangling unwashed feet; fading monsoon rains that bleed through the iron-barred windows grant only fleeting mercies.

A few hundred unwilling insomniacs are sandwiched together, helplessly sweating on filthy vinyl benches as the shrieking of the rails splinters dreams along every gentle bend. In this part of the world, it’s an utterly unexceptional journey.

Aside from the $25 million or so in freshly polished diamonds on board, that is. The grungy wagons are filled with dozens of diamond mules, each man secretly carrying tens of thousands of dollars of stones inside custom-made tank tops with hidden stomach pouches.

Everyone sleeps with one eye open. Despite their attempts at traveling incognito, the nervous paces of the conductor — and the fact that the doors are bolted from the outside for the entirety of the trip — belie the false sense of ease. Altogether, the mules on this sweltering, tense train trip shuttle almost every single diamond sold in the world today.

New S.Africa mines minister faces platinum baptism of fire – by Zandi Shabalala (Reuters U.K. – September 23, 2015)

September 23, 2015

http://uk.reuters.com/

JOHANNESBURG, Sept 23 (Reuters) – For South Africa’s new mining minister Mosebenzi Zwane, until now a little-known provincial agriculture official, it was not the ideal first day in the office.

Taking over a sector already bleeding jobs due to the commodity price slump, Zwane was confronted with the price of platinum, one of South Africa’s most valuable exports, hitting a 6-1/2 year low due to the Volkswagen emissions tests scandal.

The concern is that any European consumer backlash against diesel cars, which use platinum in catalytic converters, could torpedo already shaky demand for the white metal, nearly all of which is produced in South Africa.

Platinum’s biggest daily drop in two years is a stark reminder of what lies in store for Zwane as he tries to walk a line between hostile unions, hardline communists in the ruling ANC and mining firms that have done little to change their ways since the end of apartheid two decades ago.

And the platinum sector is still reeling from a five-month strike, the longest in South African history, last year that has forced shaft closures and mine sales.

Shame on VW for its deception. The CEO has to go – by Eric Reguly (Globe and Mail – September 23, 2015)

September 23, 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.

ROME — Martin Winterkorn should be fired, then handed a dictionary so he can learn the meaning of “clean” technology.

Mr. Winterkorn is chairman of the management board (CEO, in effect) of Volkswagen AG, Germany’s mightiest industrial company. It is the world’s No. 2 car maker and one of Germany’s, and the world’s, best-known brands – the very symbol of reliable Teutonic technology, performance and value. Volkswagen, whose marques include VW, Porsche, Audi, Lamborghini and Bentley, can be bought in almost every country; they are status symbols.

The Volkswagen brand, along with the Germany Inc. brand, is worth a lot less than it was before Saturday, when the U.S. Environmental Protection Agency accused the company of rigging the emissions data on almost half a million of its diesel-powered cars sold in the United States between 2009 and 2015. On Tuesday Volkswagen said that 11 million of its cars worldwide had been rigged to fool air-quality regulators, making a mockery of Volkswagen’s “clean” diesel technology push.

World Biodiversity Hotspot Worth Much More than a Nickel – by Jim Yuskavitch (Earth Island Journal – September 23, 2015)

September 23, 2015

http://www.earthisland.org/

Trio of mining proposals threatens Klamath-Siskiyou region

If there were a place in the United States that possessed such biodiversity that it had been designated an “Area of Global Botanical Significance” by the International Union for the Conservation of Nature and also proposed as a UNESCO World Heritage Site and Biosphere Reserve, surely it would be protected from any industrial development that would compromise its ecological integrity. There is, in fact, such a place. But its most recent designation is “endangered” as the area faces threats from three proposed nickel strip mines at its heart.

Spanning the northern California-southwestern Oregon border and encompassing nearly 20,000 square miles, the Klamath-Siskiyou ecoregion includes a complex suite of geology, climate, terrain, and such a remarkable example of temperate climate biodiversity that in 1992 the IUCN recognized the region as an area of global botanical significance. The region is home to 3,500 plant species – 280 of which are rare or endemic. The streams that originate in the Klamath and Siskiyou mountains are among the most productive on the continent, the spawning grounds for wild Pacific salmon and steelhead.

And while the region has the most designated Wild and Scenic Rivers in the US, nearly a dozen wilderness areas, and the 62,000-acre Cascade-Siskiyou National Monument, it also contains the largest area of unprotected forest on the West Coast outside of Alaska.

Platinum prices hit by Volkswagen scandal – by Henry Sanderson (Financial Times – September 23, 2015)

September 23, 2015

http://www.ft.com/

Volkswagen’s emissions scandal has hit the price of platinum — the precious metal used to make diesel catalysts fitted in some of the vehicles at the heart of the affair.

Platinum fell to a six-and-a-half year low of $925.30 a troy ounce on Wednesday, after dropping 4 per cent on Tuesday, its biggest one-day fall in more than two years.

The metal, which is used mostly to make catalysts for diesel vehicles, is already down more than 20 per cent so far this year.

Shares in Johnson Matthey, a maker of car catalysts, have fallen 11.8 per cent this week. They were down 1.9 per cent in morning trading on Wednesday, the worse performer in the FTSE 100 stock index.

Investors are worried VW’s admission it cheated on US emissions tests could hasten the demise of diesel cars in Europe, where they are already under fire in cities such as London and Paris due to air pollution concerns.

UPDATE 2-Vale vows deeper iron ore cost cut as China’s steel demand peaks – by Manolo Serapio Jr and Ruby Lian (Globe and Mail – September 23, 2015)

September 23, 2015

http://www.reuters.com/

QINGDAO, China, Sept 23 (Reuters) – Iron ore miner Vale said it will cut its production cost to less than $13 per tonne by 2018, as the world’s largest producer of the commodity maximises profit margins in an era of weak prices.

A global glut and falling Chinese steel demand have dragged iron ore prices 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.

“Vale is progressing to reach the lowest cash cost of the industry and will be competitive at any price scenario,” Claudio Alves, global director of marketing and sales at Vale, told a conference in China’s port city of Qingdao.

The cost reduction will come after the completion of Vale’s 90-million-tonne expansion project known as S11D in the Brazilian Amazon, Alves said, as the miner focuses on producing more high-quality material.

Vale’s overall cost stood at $15.80 per tonne by the second quarter.

Provinces should replace resource royalty regimes with cash flow taxes: C.D. Howe – by Peter Koven (National Post – September 23, 2015)

September 23, 2015

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

Canadian provinces should scrap their resource royalty regimes and replace them with “cash flow” taxes, according to a new study.

The report by the C.D. Howe Institute, released Wednesday, argues that a cash flow tax is a much fairer way to tax mining and oil and gas companies than a gross-revenue royalty, because it is based entirely on the profitability of their operations.

As C.D. Howe sees it, the cash flow tax would be based simply on a company’s revenue minus its expenses on a given project. Operations that are barely profitable would pay little-to-no tax, while highly profitable operations would have a much bigger tax burden. It thinks this system would allow provinces to collect more money without harming investment.

“The cash flow tax makes the government a silent partner, because the government shares in both costs and revenues,” said Robin Boadway, emeritus professor of economics at Queen’s University and a co-author of the report.

Russian Billionaire’s Miner Sees Gold Pain as Buying Opportunity – by Danielle Bochove (Bloomberg News – September 22, 2015)

September 23, 2015

http://www.bloomberg.com/

Russian billionaire Alexey Mordashov’s gold mining company is positioning for a price recovery by buying more assets, defying an industry trend of cutbacks and closures.

Besides expanding existing mines in Russia, Nordgold NV is looking for early-stage projects that improve its reserve base, Chief Executive Officer Nikolai Zelenski said in an interview Monday from the Denver Gold Forum.

While the world’s biggest producers including Barrick Gold Corp. and Newmont Mining Corp. sell assets and cut spending in a bid to contain debt levels exposed by gold’s more than 40 percent plunge from a 2011 peak, Moscow-based Nordgold sees the downturn and the ensuing drop in valuations as a good time to buy.

“That’s why we’ve been making deals in the recent past and we plan to continue to do so in the future,” Zelenski said.

Nordgold is interested in the Sukhoi Log deposit, considered one of Russia’s largest fields with resources of about 1,953 tons of gold. The government plans to sell the licenses for the Siberian deposit next year.

Bleeding shareholders – by Kip Keen (Mineweb.com – September 22, 2015)

September 23, 2015

http://www.mineweb.com/

Freeport-McMoRan Copper & Gold may sell another $1 billion in new shares.

Diluting majors: Cut to the straight-talk please.

These announcements of voluminous dilution in the middle of a limping mining market should come with apologies. Raw admissions of what you’ve done wrong. Not bland excuses about creating shareholder value and weak markets.

Today came another good example of lame PR work.

Freeport-McMoRan noted it had completed a $1 billion round of new-share sales and added that it might raise another $1 billion doing just that again. In describing the equity raises, Freeport stated the dilution was necessary “in the current period of weak and uncertain market conditions.”

It also said what it’s doing – cutting costs, yes, but also raising cash via new shares – are meant to enhance shareholder value and protect assets for better days when they come.

How U.S. churches are leasing drilling rights despite Pope Francis’s climate call – by Richard Valdmanis (Reuters/National Post – September 23, 2015)

September 23, 2015

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

BOSTON — Casting the fight against climate change as an urgent moral duty, Pope Francis in June urged the world to phase out highly-polluting fossil fuels.

Yet in the heart of U.S. oil country several dioceses and other Catholic institutions are leasing out drilling rights to oil and gas companies to bolster their finances, Reuters has found.

And in one archdiocese — Oklahoma City — Church officials have signed three new oil and gas leases since Francis’s missive on the environment, leasing documents show.

On Francis’ first visit to the United States this week, the business dealings suggest that some leaders of the U.S. Catholic Church are practicing a different approach to the environment than the pontiff is preaching.

Catholic institutions are not forbidden from dealing with or investing in the energy industry.

Clinton’s Keystone opposition puts Liberal, Conservative plans in question – by Steve Chase and Jeffrey Jones (Globe and Mail – September 23, 2015)

September 23, 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.

The signature Keystone XL pipeline project, backed by two of Canada’s major federal party leaders, now has a new foe: the woman who stands a reasonable chance of winning the White House.

Hillary Clinton, who polls suggest is the leading contender for the Democratic Party presidential nomination, declared Tuesday she is against Keystone XL, which would carry Canadian oil-sands crude to Gulf Coast refineries via Nebraska.

Her announcement is another blow for TransCanada Corp.’s Keystone project, which both Conservative Leader Stephen Harper and Liberal Leader Justin Trudeau have supported as a means of creating jobs and getting Canada’s petroleum resources to market.

It lands in the middle of the Canadian federal election where Mr. Harper, Mr. Trudeau and NDP Leader Thomas Mulcair have clashed on the right energy and environmental policies for the country as it grapples with the impact of weak oil prices.

Co-operation, positives and negatives at major gold event [Denver Gold Show] – by Lawrence Williams (Lawrieongold.com – September 22, 2015)

September 22, 2015

http://lawrieongold.com/

The first full day of this year’s Denver Gold Forum opened with an announcement of a co-operative agreement between the Denver Gold Group (DGG) and the World Gold Council (WGC), followed by some extremely interesting presentations and a fascinating and informative panel discussion on paper gold, but which still left some key questions unanswered, or unclear.

Regarding the co-operation – in a joint announcement the DGG and WGC noted that between them the two groups represent almost all the world’s top gold miners in terms of production, mineral reserves and market value. Through closer co-ordination and collaboration they aim to ensure that miners are better informed on demand drivers, market trends and key developments. While both parties may have differing outlooks on the industry, arguably their purposes do coincide.

The DGG’s Executive Director, Tim Wood commenting on the agreement noted: ““For some time the interests of our members have been aligned, so it makes strategic sense to work more closely. After nearly three decades of service to the industry, the Denver Gold Group has evolved as a significant platform for sharing ideas, information and experience.