Republic of Mining

Africa’s Deadwood: The Gold Rush Is On in Uganda (Associated Press/New York Times – September 2, 2015)

September 2, 2015

http://www.nytimes.com/

MUBENDE, Uganda — The hunt for gold takes the men 100 meters (yards) underground, past contraptions of wood and rope rigged to function like pulleys, past hard rock that they attack day and night with demolition hammers. When they emerge at the end of a shift, the miners carry stone samples that will be examined for the dark veins that suggest presence of gold.

The gold rush is on in a big way in this central Ugandan district of Mubende. So big that tens of thousands of people make their livelihood from it. Makeshift tents of blue tarps dot the green hills that are pockmarked by pools of muddy water where ore is washed, separating the gold. Four mining camps have sprung up in recent years, featuring brothels and restaurants.

Now, Ugandan government officials are considering evicting the miners, saying they are not licensed. The government would evict them under eminent domain, compensate them and then open the area to bidders with development plans.

“These people are scratching across the surface, like rats,” Edwards Kagimba, the director of geological surveys and mines at Uganda’s Ministry of Energy, said in a phone interview with The Associated Press.

Risk-adverse investment dollar shy of African mining – by Tess Ingram (Sydney Morning Herald – September 2, 2015)

September 2, 2015

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

African countries are at risk of being some of the worst hit by the mining downturn as the shrinking pool of increasingly risk-adverse capital is invested elsewhere, industry experts warn.

Plummeting commodity prices coupled with rapid political and economic changes in many African countries have made it increasingly challenging for many African jurisdictions to attract miners, explorers and the prospective financiers that help drive their economies.

At the Africa Down Under mining conference in Perth on Tuesday, industry experts urged African delegates and government ministers to better partner with mining companies during the downturn and offer innovative solutions to help operators generate profits and attract investment.

Gilbert + Tobin lawyer Michael Blakiston told the conference African countries risked deterring investment as investors “who do have capital, have choices of where to take it”.

Collapsing Fanya Metal Exchange in China raises concerns about minor metals – by Peter Koven (National Post – September 2, 2015)

September 2, 2015

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

The potential collapse of a Chinese commodity exchange could put more pressure on prices for rare earths and other minor metals in which investors have already suffered tremendous losses over the past several years.

Last week, furious investors kidnapped Shan Jiulang, head of the Fanya Metal Exchange, at a Shanghai hotel and turned him over to police, according to the Financial Times. It capped a debacle in which the Fanya exchange ran into liquidity problems and stopped paying out money on its investment products. Roughly US$6.4 billion of investor funds were frozen, according to estimates.

Now the risk is that Fanya will liquidate its vast holdings of minor metals, a move that could crush the highly illiquid markets for these products and harm Canadian companies in the space.

Of course, that assumes Fanya’s reported holdings are accurate. Investors treat everything this exchange says with skepticism after its rapid flameout.

REFILE-Illegal mines a slavery hotspot in Colombia, Peru-experts – by Anastasia Moloney (Reuters U.S. – September 1, 2015)

September 2, 2015

http://www.reuters.com/

BOGOTA, Sept 1 (Thomson Reuters Foundation) – A boom in illegal gold mining in Colombia and Peru is fuelling human trafficking and forced labor in and around mines but there have been few convictions for the crime, researchers say.

In Peru, the world’s fifth biggest gold producer and exporter, sexual exploitation and forced labour in some mining areas is a growing concern, the International Organisation for Migration (IOM) says.

“Human trafficking in both illegal mining areas and small-scale mining is an increasing problem in Peru,” said Jeremy MacGillivray, IOM’s project development officer in Peru.

Poor, uneducated and unemployed women and girls are vulnerable to recruiters’ false promises of work as cooks, cleaners and waitresses in mining towns but are often forced into commercial sex work.

“Around mines, small towns sprout up providing services for miners, including restaurants, bars and brothels, where many of the victims of sexual exploitation are.

Canada in recession a field day for opposition – by David Olive (Toronto Star – September 2, 2015)

September 2, 2015

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

In the middle of an election campaign, the opposition parties will try to have a field day with the news that Canada is officially in recession.

Wise stewardship of the economy being Stephen Harper’s high card in the Oct. 19th election, the opposition parties will try to have a field day with the Sept. 1 confirmation by Statscan that Canada is officially in recession.

In fact, Canada is the only G7 country in recession.

Obviously, the bad news will be hammered away at for the duration of the campaign by Tom Mulcair, Justin Trudeau and their 674 fellow NDP and Liberal candidates for Parliament.

It could get worse for the governing Tories. Worrisome jobless figures will be released later this week. And Harper’s ballyhooed federal budgetary surplus for the current fiscal year is looking more like magical thinking with each passing week.

Fresh wave of layoffs hits oilpatch, as Penn West, ConocoPhillips cut 900 jobs: ‘Good luck to all of us’ – by Claudia Cattaneo (National Post – September 2, 2015)

September 2, 2015

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

As Canada’s oil industry resizes itself to fit a sub-US$50 oil world, Penn West Petroleum Ltd. and ConocoPhillips’ Canadian unit announced 900 combined layoffs Tuesday, kicking off what is expected to be another wave of belt-tightening.

Also Tuesday, Pengrowth Energy Corp. joined Penn West in cutting its dividend.

In the early days of the oil price collapse last winter, the downsizing came reluctantly after years of labour shortages and largely did away with excesses.

As hopes for a quick price recovery evolved to consensus that OPEC’s price war to recapture market share from North American producers could mean low oil prices for years, the axe kept swinging and aimed at more targets — dividends, non-core assets, office space, perks.

Nine months into the oil price collapse, after a summer of still-worsening conditions, downsizing announcements have the feel of desperation. Canada’s oil and gas industry, powerless to influence global oil prices, is dismantling by a thousand cuts what took decades to build.

Investors ready wallets for Russia’s Norilsk Nickel – by Michael Turner (Reuters U.S. – September 1, 2015)

September 2, 2015

http://www.reuters.com/

LONDON, Sept 1 (IFR) – Norilsk Nickel is set to receive a warm reception from investors this month as it begins meetings ahead of potentially the first benchmark-sized deal from Russia in nearly a year.

The Russian mining company, rated BBB- by Standard & Poor’s and Fitch, is due to go on a roadshow in early September to update investors on its recent performance and strategy.

The company does not have any immediate funding needs, but “continues to see international capital markets as an important part of its funding mix and will remain opportunistic”, according to a statement released on Friday.

One source said last week that the firm could seek to raise about US$500m from a new deal, if interest is big and markets supportive. That would be the biggest deal from a Russian issuer since Gazprom sold a US$700m one-year bond last November.

While Norilsk Nickel has plenty of cash on its balance sheet, Sberbank analysts said the company has US$1.3bn in short term debt and expected high payments to equity holders. “It may look to refinance via capital markets,” said the Russian bank in the research note.

‘This market downturn is worse than ’08’ – Scotiabank – by Kip Keen (September 1, 2015)

September 2, 2015

http://www.mineweb.com/

Comparing this downturn with others in recent memory.

HALIFAX – The last major downturn in commodities – during the 2008/09 financial crisis – was the central focus of Scotiabank analyst Patricia Mohr’s latest missive on metals and energy commodities.

Mohr – Scotiabank’s commodities guru – noted that Scotiabank’s commodities index, comprising, energy, metals, and fertilizers, dropped below levels last seen during the relatively brief rout in commodities seven years ago.

“The All Items Index is now well below the bottom touched during the ‘Great Recession’,” Mohr pointed out in a recent report.

“While many commodity prices remain above 2008/09 recessionary lows, current weakness is broader based and reflects a prolonged period of sub-par global growth.”

In particular, she highlights the latest weakness in oil prices amid declining metal prices. “An ongoing battle for market share in oil — recently exacerbated by heightened concern over a further slowing in the Chinese economy — combined with consternation over possible Fed monetary policy tightening in September have largely accounted for commodity price weakness.”

Three-way Canada gold junior merger falls short – by Frik Els (Mining.com – September 1, 2015)

September 2, 2015

http://www.mining.com/

Shares in Gold Canyon Resources (CVE:GCU) and PC Gold (CVE:PKL) shot up on Tuesday massive trading volumes, after announcing that First Mining Finance Corp. (CVE:FF) will be acquiring all the shares of both explorers.

Vancouver-based Gold Canyon was last trading at $0.175, up 52.2%, drifting lower as the day wore on after the counter doubled at the start of trade on the TSX Venture Exchange. Gold Canyon, which owns gold projects in Canada and a rare earth prospecting licence in Tanzania is now worth $29 million in Toronto. More than 7.7 million shares changed hands (some 30 times usual volumes) making it the most active stock on the venture board.

PC Gold, based in Toronto, jumped 66% by the close affording the Ontario old mine explorer a $5.4 million market valuation after roughly 2 million shares were traded. Both counters ended well below the implied premium offered by First Mining over their 30-day average price which was 204% for Gold Canyon and 255% above PC Gold’s share price.

First Mining Finance shareholders were on the losing end of the deal – the Vancouver company which calls itself a mineral bank gave up a fifth of its value on the TSX-V by the close for a $28.2 million market cap.

Clive Palmer launches $10 billion lawsuit against estranged Chinese partner – by Amy Remeikis and Peter Ker (Sydney Morning Post – August 31, 2015)

September 2, 2015

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

The legal war between Fairfax MP Clive Palmer and his estranged business partner Citic Limited has gone to another level, with Mr Palmer’s company Mineralogy seeking $10 billion in damages from the Chinese giant.

In the latest of many lawsuits between the two companies over the past three years, Mineralogy is suing Citic over what it claims to be a lack of royalty payments from Citic’s Sino Iron magnetite project in WA, which was built on Mr Palmer’s leases.

The two companies have previously argued over the royalty issue, which has been complicated by the agreement signed between the two companies in May 2006 which relies on the annual benchmark iron ore prices struck by BHP Billiton and Brazilian miner Vale to calculate one of the royalties owing to Mineralogy, known as “Royalty B”.

With iron ore now traded on daily market terms rather than on annual contracts, there is no way to calculate Royalty B. The two companies have since fought over numerous things, including access to the port used by the loss-making Sino Iron project and the shifting of millions of dollars out of certain accounts, but they now appear set to return to the original issue of royalties.

COLUMN – Weak China PMIs won’t automatically lower commodity imports – by Clyde Russell (Reuters India – September 1, 2015)

September 1, 2015

http://in.reuters.com/

China’s various purchasing managers’ indexes gather significant attention as indicators of the health of the world’s second-biggest economy, but they are less useful as a predictor of commodity imports.

The official Purchasing Managers’ Index (PMI) fell to a 3-year low of 49.7 in August, in line with market expectations and down from a reading of 50 in July.

The drop below the 50-level that separates expansion from contraction will be viewed as another sign that China is struggling for growth momentum, and raises further questions over whether 2015’s official target of a 7-percent increase in gross domestic product can be realised.

The Caixin/Markit PMI dropped to 47.3 in August, the weakest since 2009 and down from 47.8 in July.

The official PMI focuses on large, state-controlled companies, while the Caixin/Markit measure encompasses more small- and medium-sized enterprises.

Glencore sinks on equity issuance fears – by Bryce Elder (Financial Times – September 1, 2015)

September 1, 2015

http://www.ft.com/

Glencore hit another record low on Tuesday on growing concerns that it may be forced into an equity issue.

Miners slumped on data showing China’s factory activity contracted at its fastest pace in three years, which put further pressure on copper and coal prices.

Glencore closed down 10 per cent to 133.5p, which took its loss since flotation in 2011 to 75 per cent. With the major miners needing to raise as much as $60bn to recapitalise their balance sheets, companies should act quickly, argued Merrill Lynch.

“Early recappers could be rewarded with less dilution, premium market ratings and possibly a licence to undertake M&A,” it told clients.

Merrill estimated that, if current spot commodity prices stretch into perpetuity, Glencore has a $9.3bn capital shortfall against the debt target needed to safeguard its credit rating and would need to raise more than $16bn to cut net debt to 2 times earnings before interest, tax, depreciation and amortisation.

Why the Resource-Rich Canadian Government Is Always Poor – by Gabriel Yiu (Huffington Post – August 31, 2015)

September 1, 2015

http://www.huffingtonpost.ca/

Canada is the second-largest country in the world by total area. It has plentiful natural resources and a relatively small population of 35 million. Yet our government always claims it is short of money. Education funding has to be cut, healthcare resources are said to be insufficient, eligibility for Old Age Security is postponed from 65 to 67 and even Canada Post cannot afford to deliver mail to our homes.

Canada might be the first major western country that cannot afford to deliver mail to the homes of its people.

If you tell your friends overseas our situation, they might think that you’re joking.

Many Canadians accept the situation as normal, something that can’t be changed. Yet they do not question the absurdity of this reality.

Here are the world rankings of Canada’s natural resources:

Potash, #1
Uranium, #2
Oil, deposit #3 (production #6)
Nickel, #4
Diamond, #5

Indonesia to keep ban on nickel ore exports -govt officials – by Gayatri Suroyo and Bernadette Christina (Reuters U.K./Yahoo – September 1, 2015)

September 1, 2015

https://uk.finance.yahoo.com/

JAKARTA, Sept 1 (Reuters) – Indonesia will keep its export ban on nickel ore, contrary to recent media reports suggesting the country may relax curbs to prop up its slowing economy, senior government officials said.

Indonesia banned exports of unprocessed metal ores in early 2014 to force firms to develop smelters that would add value to the country’s resources and create jobs. But the curbs cost the country billions of dollars in lost revenue last year.

While there are signs the government is trying to bring more money back into resources, the Chief Economics Minister Darmin Nasution warned against speculation that the country would relax its nickel ore export ban.

Indonesia will seek consistency in its mining policies, he said on Tuesday, a view echoed by Mining Minister Sudirman Said.

“What we’re doing is looking for incentive to boost economic activities in nickel and bauxite business.

Mining’s new deal: A platinum solution? – by Rebecca Davis (Daily Maverick – September 1, 2015)

September 1, 2015

http://www.dailymaverick.co.za/

South Africa’s beleaguered mining industry is in danger of losing almost 12,000 jobs: an employment vacuum the country can ill afford. As of Monday, a new plan signed by the industry, government and the unions won’t guarantee that the jobs will be saved. If further retrenchments are inevitable, however, the plan may ensure that life is a little easier for laid-off mineworkers. But is it enough to solve the problems of an industry in crisis?

The mineral resources minister, the Chamber of Mines and union representatives all appeared to be in sunny spirits following Monday’s signing of an agreement aimed at halting the haemorrhaging of jobs from the mining industry.

Mineral Resources Minister Ngoako Ramatlhodi said there was every reason to be hopeful that the plan, titled “Leaders’ Declaration – Mining Industry Commitment to Save Jobs and Ameliorate the Impact of Job Losses”, would be implemented with the cooperation of all parties. Trade union Solidarity’s general secretary, Gideon du Plessis, told eNCA he had a “good feeling” about a plan he described as “revolutionary”. The Chamber of Mines put out a statement affirming that its members were “fully committed” to the process.

Absent was the Association of Mineworkers and Construction Union (Amcu), which had participated in weeks of negotiations but did not sign Monday morning’s agreement.