Republic of Mining

UPDATE 1-Sierra Leone economy to shrink one-fifth amid mining crisis- IMF (Reuters India – september 15, 2015)

September 16, 2015

http://in.reuters.com/

(Reuters) – Sierra Leone’s economy will contract by 21.5 percent this year, following growth of 4.6 percent in 2014, due to a crisis in the mining sector triggered by a collapse in iron ore prices and the impact of the ongoing Ebola epidemic, the IMF said.

A shortfall in government revenues due to a halt in mining production will push the budget deficit to 4.8 percent of gross domestic product (GDP).

The International Monetary Fund said the near- and medium-term outlook for Sierra Leone was challenging, with the economic situation in 2016 to remain relatively unchanged.

“Sierra Leone continues to battle the adverse impact of two severe exogenous shocks: the Ebola epidemic and the crisis in the mining sector that began with the collapse of iron ore prices and culminated in the cessation of production in April 2015,” the Fund said in a statement after its staff completed a visit to Freetown.

Southern Ontario ‘The New Rust Belt,’ The Economist Declares – by Daniel Tencer (Huffington Post – August 31, 2015)

September 16, 2015

http://www.huffingtonpost.ca/

The Economist magazine has published an article on the “puzzling weakness” of Canadian manufacturing, noting the sector’s years-long slide, which the magazine says has turned southern Ontario, Canada’s manufacturing heartland, into a “new rust belt.”

Observers had been expecting Canadian manufacturing to put in a strong performance this year, thanks to a steeply lower loonie that makes exports more competitive.

But so far, the rebound hasn’t happened. Output in Canadian manufacturing was 2.3 per cent lower this May than it was a year earlier, the latest month for which data is available, and job growth has been at half the pace of the broader economy, after years of declining job numbers.

The Economist article adds an interesting talking point to the debate: In 2000, manufacturing was 18 per cent of Canada’s economy, the same level as Germany. By 2013, it had fallen to 10 per cent, the same level as the U.S. and U.K. It attributes that to the long period during which the Canadian dollar was high thanks to high oil prices, harming the competitiveness of non-oil exporters.

Are concerns about China overblown? – by Patrick Cairns (Mineweb.com – September 15, 2015)

September 16, 2015

http://www.mineweb.com/

The Chinese economy is in better shape than headlines suggest.

CAPE TOWN – In the wake of the recent market volatility a lot of the talk has been about the Chinese economy. Much has been made of how China is coming off the boil and may even be in some kind of crisis.

Headlines around the world tell a story. “The Chinese economy is on a slippery road to nowhere” was one in Australia, while MarketWatch carried the warning that “China’s economy may be in worse shape than people think”. The Wall Street Journal even ran an article under the headline: “A global recession may be brewing in China” and Forbes asked “Will China collapse?”.

The largely accepted narrative is that China’s economy is not only slowing, but also heading into a debt crisis. The big drop in Chinese stocks during August and the decision to devalue the yuan have been taken by many as confirmation that the economy is in big trouble.

However, this view is not universal. Although largely drowned out by the negative sentiment, a number of other headlines propose a different view of the situation.

Ford’s Bet On Lightweight Aluminum Is Just Beginning – by Joann Muller (Forbes Magazine – September 15, 2015)

September 16, 2015

http://www.forbes.com/

When Ford Motor redesigned the F-150 pickup from lightweight aluminum, many thought the company was crazy to risk messing with the successful formula behind its best-selling vehicle. There were other ways to meet tougher fuel economy standards than using costly aluminum, some competitors argued.

But rather than backing off, Ford is signaling it plans to use even more aluminum in future vehicles, including its new super-duty trucks, which go on sale next year.

The automaker is teaming up with aluminum supplier Alcoa AA +0.00% to develop future high-strength alloys that will be easier to form into complex shapes, giving engineers new freedom to incorporate the lightweight material into their designs.

Ford is the first automaker to use Alcoa’s new proprietary Micromill technology, which produces an aluminum alloy that is 40 percent more formable than today’s automotive aluminum and 30 percent stronger and 30 percent lighter than high-strength steel. It allows Ford to design complex, creased parts from aluminum that were not possible before, such as the inside panels of car doors and external fenders.

New Study: We’re Nowhere Near Peak Coal Use in China and India – by Frank Holmes (U.S. Global Investors – September 15, 2015)

September 16, 2015

http://www.usfunds.com/

Resource investors, take note: By 2025, just 10 years from now, energy consumption in Asia will increase a whopping 31 percent. A whole two-thirds of that demand, driven largely by China and India, will be for fossil fuels, most notably coal.

That’s according to a new research piece by financial services group Macquarie, which writes that the estimated rise in fossil fuel demand is equivalent of “three times Saudi Arabia’s current (all-time-high) oil production.”

Macquarie’s research is in line with BP’s “Energy Outlook 2035,” released earlier this year, which predicts that more than half of the world’s energy consumption will come from China and India by the year 2035.

Many readers might approach this news with a healthy dose of skepticism. Haven’t we been told that fossil fuels are falling out of favor? Aren’t governments placing caps on coal use to appease environmentalists and climate change crusaders?

It’s true that coal demand in China has declined a huge 6 percent so far in 2015, the result of anti-air pollution laws that temporarily restricted not just coal use but also factory operations and the amount of driving you can do.

Vale Rules Out Following Glencore Path as Mining Pain Deepens – by Juan Pablo Spinetto (Bloomberg News – September 15, 2015)

September 16, 2015

http://www.bloomberg.com/

The world’s top iron-ore miner is betting that cost cuts and growing market share will be enough to endure low prices, shunning the path of equity sales and halted dividends taken by rival Glencore Plc.

Vale SA, the Brazilian mining giant which is also the largest nickel producer, is focused on reducing expenses further as the start of its lowest cost producing project approaches, Chief Executive Officer Murilo Ferreira told reporters in Belo Horizonte, Brazil, during an industry gathering.

“We aren’t studying a model like the one taken by Glencore, because we don’t consider it necessary for Vale,” Ferreira said, adding that he only has “superficial” knowledge of the operations of the Baar, Switzerland-based trader.

“The Vale team did the diagnosis of the end of the supercycle at the right moment. There was an expressive reduction in Vale’s costs and there is a lot still to come.”

Candidates discuss bridging gap btw industry, FNs – by Alan S. Hale (Timmins Daily Press – September 15, 2015)

September 16, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – First Nations within Canada have become a major factor in the county’s efforts to exploit its natural resources.

Many Aboriginal communities have parlayed their treaty rights and the government’s constitutional obligation to consult them and reasonably accommodate their concerns into a great deal of power over the resource industry as a whole.

First Nations now often hold the keys when it comes to deciding if a major mining or forestry project will go ahead or not. Enbridge’s Northern Gateway Pipeline to carry Alberta bitumen to Northern B.C. has withered on the vine in the face of Aboriginal opposition, and progress on the Ring of Fire chromite development here in Northeastern Ontario has ground to a halt due in large part to local First Nations’ concerns.

Because gaining First Nation support for projects has become so important to the future of Timmins area’s economy, The Daily Press asked the candidates of Timmins-James Bay how they would build the relationship with First Nations required to allow the resource industry to continue to grow.

Global coal benchmarks fall below 2009 crisis levels – by Henning Gloystein (Reuters U.S. – September 15, 2015)

September 15, 2015

http://www.reuters.com/

SINGAPORE, Sept 15 (Reuters) – Three leading global thermal coal price benchmarks have fallen below levels last seen during the global financial crisis of 2008-2009, knocked by a sharp slowdown in demand, especially in Asia, and with mining output remaining stubbornly high.

Europe’s Amsterdam-Rotterdam-Antwerp, Australia’s Newcastle and South Africa’s Richards Bay benchmarks have dropped to between $51 and $58 per tonne, or about 60 percent off their last peak in 2011 and 75 percent below all-time highs hit in 2008.

The unprecedented slump has been a contributing factor to miners such as BHP Billiton and Rio Tinto losing around half their share value since 2011.

The diversified firms are leading thermal, coking coal and iron ore producers and their shares have underperformed energy firms like oil-giant Exxon Mobil, whose stock has also been hit by tumbling crude prices.

Women pay the price for Zambia mining expansion – by Magdalena Mis (Reuters U.S. – September 14, 2015)

September 15, 2015

http://www.reuters.com/

SHINENGENE, Zambia (Thomson Reuters Foundation) – The women sat quietly in a village church in northwest Zambia, the sun slanting down on their colorful Sunday outfits as they told how life had changed since their chief sold a tract of land to a foreign firm for a new copper mine, displacing hundreds of families.

“We had a vast land and we could do anything,” Seke Mwansakombe, one of the displaced women, told the Thomson Reuters Foundation.

“Here we are confined to 40 by 40 meter plots and our movements have been restricted because certain areas are now no-go areas.”

Kalumbila Minerals Ltd, a subsidiary of Canada-based First Quantum Minerals Ltd, signed a deal with Senior Chief Musele in 2011 to buy 518 square kms of surface rights for its mining activities, called the Trident Project.

As a result almost 1,000 families, most of them subsistence farmers, were relocated to Shinengene, or Southern Settlement, and to Northern Township, some 18 kms (11 miles) from their original village. Other villages are due for relocation soon.

Gold bulls brace for more woes as U.S. Federal Reserve set to meet – by Joe Deaux (Bloomberg/Globe and Mail – September 15, 2015)

September 15, 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.

NEW YORK — Gold bulls can’t shake the spectre of higher U.S. interest rates as Federal Reserve policy makers gather this week.

Prices are trading near a one-month low, investors are dumping holdings through exchange-traded products (ETPs), and the metal’s volatility is rebounding. A resilient U.S. job market and dollar strength are adding to gold’s woes, spurring money managers to cut their bets on a rally by more than a third.

More than $2.6-billion (U.S.) was wiped from the value of gold ETPs in the past three weeks as investors awaited the central bank meeting. While Fed-fund futures show lowered expectations for monetary tightening this week, traders are still pricing in more than a 50 per cent chance for a rate increase by the end of the year. Higher borrowing costs reduce bullion’s allure because it doesn’t pay interest, unlike competing assets such as bonds.

“The likelihood is the Fed moves this year, and for now a tighter Fed and stronger dollar are both keeping a lid on gold,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $127-billion. “When I look at the gold market, that’s the biggest overriding factor.”

Ex-Centerra CEO remains in Bulgarian limbo as extradition hearing delayed – by Jeff Gray (Globe and Mail – September 15, 2015)

September 15, 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.

Former Centerra Gold Inc. chief executive officer Len Homeniuk, who was arrested by Bulgarian border police in July at the request of Kyrgyzstani authorities, is now expected to remain in limbo under house arrest in Bulgaria with his wife until at least Oct. 7.

Toronto-based Centerra operates the massive Kumtor gold mine in Kyrgyzstan and is locked in contentious talks with the government there over the country’s stake in the mine, which the former Soviet republic has in the past threatened to nationalize.

The 68-year-old Mr. Homeniuk, a Canadian-U.S. dual citizen who lives in California, retired as CEO in 2008. He was picked up in late July while on holiday with his family on a boat cruise on the Danube after Kyrgyzstan last year put him on Interpol’s wanted list, alleging he was involved in “corruption” while at the helm of Centerra. Mr. Homeniuk and Centerra dismiss the allegations as baseless, and Mr. Homeniuk says the allegations are nothing more than an attempt to pressure Centerra in the current talks.

In a phone interview, Mr. Homeniuk said on Monday a Bulgarian extradition hearing that had been scheduled for Wednesday has now been put off until Oct. 7.

Batista Miner Counting on Trafigura to Emerge From Debt Woes – by Juan Pablo Spinetto (Bloomberg News – September 15, 2015)

September 15, 2015

http://www.bloomberg.com/

A year ago, former billionaire Eike Batista’s iron-ore unit was halting output and battling creditors as prices plunged. Now it’s planning to reemerge with the help of commodities trader Trafigura Beheer BV.

MMX Sudeste Mineracao SA is selling its mining assets to Amsterdam-based Trafigura as part of a restructuring plan approved by creditors representing about 800 million reais ($207 million) in debt, Ricardo Werneck, who heads the parent company MMX Mineracao e Metalicos SA, said in an interview.

The unit also expects to obtain about 70 million reais from the sale of logistics assets and farmlands, allowing creditors to recover about 30 percent of the value of their claims, he said.

“There is no better option; the alternative is the failure of the company,” Werneck, 44, said. “Trafigura is a big part,” of the recovery plan, he said. MMX, which Batista listed in 2006 when the commodities super-cycle was in full swing, stopped operations at its only producing unit in August 2014 as the value of the steelmaking ingredient plunged and debt mounted.

Nickel, aluminium expected to trade higher in mid-September – by Anne Lu (International Business Times – September 15, 2015)

September 15, 2015

http://www.ibtimes.com.au/

Markets research firm Angel Commodities said base metals nickel and aluminium would experience a price hike by the middle of this month due to various positive global cues. Nickel, for instance, would be highly affected by Indonesia’s decision to continue its ban on unprocessed metals.

“ We expect nickel prices to trade higher in September 15 as Indonesia decided to retain its export ban on nickel ore, contrary to media reports suggesting the country may relax curbs to prop up its slowing economy,” a representative from Angel told Commodity Online .

Aluminium, on the other hand, will get a price boost on production upgrade from a giant Russian bauxite producer.

“ We [also] expect aluminium prices to trade higher in September 15 as supply glut concerns will likely get a breather as Russia’s Rusal, the world’s top aluminium producer, is considering capacity cuts of 200,000 tonnes a year this year,” the firm added.

Earlier this year, Rusal executive said that bauxite producers across the globe are forced to either cut production or completely shut operations down due to the losses obtained from weak global prices.

Teck Resources Ltd cut to junk by Moody’s rating agency amid ‘prolonged commodity price weakness’ – by Peter Koven (National Post – September 15, 2015)

September 15, 2015

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

Moody’s Investors Service has slashed Teck Resources Ltd.’s credit rating to junk status as the miner struggles with low coal prices and huge capital spending requirements.

Moody’s announced on Monday that it cut its rating on Teck to Ba1 from Baa3, which is the lowest investment-grade level. It cited the Vancouver-based company’s “significant” financial leverage and “material” free cash flow consumption. Teck had US$8.65 billion of debt at the end of June.

“We expect prolonged commodity price weakness and sizable investment spending will cause Teck’s financial leverage to remain well in excess of typical investment grade thresholds through at least 2017,” Moody’s senior credit officer Darren Kirk said in a statement.

The downgrade could have a significant impact on the company’s future borrowing costs, especially if the other rating agencies follow suit. Fortunately for Teck, it has strong liquidity and no immediate need to borrow more money.

Canadian oilpatch may be out ‘of the game’ if new pipelines not built: CAPP – by Yadullah Hussain (National Post – September 15, 2015)

September 15, 2015

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

TORONTO – The party that takes over the reins of the federal government after Oct. 19 must make pushing ahead pipelines projects as a top priority, the head of the Canadian oil industry association says, adding the lack of progress is hurting the Canadian economy’s competitiveness.

“After the election [pipelines] will continue to be one of the biggest impediments to the Canadian economy — and affect our ability to access markets,” said Tim McMillan, president of the Canadian Association of Petroleum Producers.

“These are fundamental, big pieces and if we can get those in line, we can be far more competitive — we have to be. If we are not, we are out of the game,” McMillan said during an National Post editorial board meeting in Toronto.

Lack of pipelines has seen Canadian producers fetch crude prices that are on average of US$13 per barrel lower than U.S. crude this year, further eroding already razor-thin margins in a depressed oil price environment.