Republic of Mining

Metals feel China pain as rout spreads to other commodities – by Rachelle Younglai (Globe and Mail – August 25, 2015)

August 25, 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.

Copper, aluminum, nickel and other commodities plunged to new lows on fears that China’s faltering economy will exacerbate a market awash in metal.

The latest event to spook investors was the steep decline in Chinese stocks earlier on Monday. Copper and aluminum hit six-year lows. Nickel plunged 10 per cent. Zinc and lead dropped to five-year lows. Gold, usually a safe haven in times of turmoil, barely rose.

“All bad news is bad news and good news is no news. That’s the environment we are in,” said Jessica Fung, commodity strategist with BMO Nesbitt Burns. Once the engine behind the bull market in commodities, China’s slowdown is wreaking havoc across the mining complex.

There is less and less confidence that the world’s second-largest economy will reach its 7.5-per-cent growth rate target. Recent data showed a decline in China’s manufacturing sector, a top consumer of metals such as aluminum and steel.

Global commodity slump could hit parts of Canada hard – by Ian Bickis (Canadian Press/Toronto Star – August 25, 2015)

August 25, 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.

Petro-provinces like Alberta, Saskatchewan and Newfoundland will be especially hard hit as oil prices keep sliding amid fears about China’s economy.

Global commodity prices are tanking and they’re bringing Canadian markets down with them, though experts say certain provinces are going to feel the pinch more than others.

“It’ll feel like a recession, depending on where you live in the country,” said John Stephenson, chief executive of Toronto hedge fund Stephenson & Co. Capital Management.

He said everything from oil to metals to lean hog prices are dropping as weaker growth globally weighs on demand — a downward trend that took its toll on the world’s stock markets Monday.

“Virtually everything is down in price — and significantly down, not just a little bit,” said Stephenson.

Madagascar faces uphill struggle to revive bruised mining sector – by Drazen Jorgic and Lovasoa Rabary (Reuters U.S. – August 25, 2015)

August 25, 2015

http://www.reuters.com/

ANTANANARIVO, Aug 25 (Reuters) – When foreign mining firms and Western donors were pulling funds out of Madagascar following a coup in 2009, Austral Resources chief executive Scott Reid did the opposite and poured money in to the Indian Ocean island.

Yet far from being rewarded, the company’s $3.5 million investment in drilling and exploration of a high-grade mine has turned sour. Austral’s permit to extract zircon, used in ceramics, has expired and the project is far from production.

Sliding global commodities prices have hindered the Australian firm but to Reid the main frustration has been bureaucracy and government failure to renew its permit which languishes in the mining ministry with about 4,000 others.

With woeful air links hobbling tourism and power outages holding back its textiles industry, the former French colony’s economic recovery after years of political turmoil hinges on the revival of its mining sector.

But without permits, most miners are unable to raise cash on stock markets or get loans to keep their projects alive.

China’s fever, everyone’s disease – by Doug Saunders (Globe and Mail – August 25, 2015)

August 25, 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.

What happened on Monday upended the conventional logic of the world economy. Suddenly, the way China finances its enterprises – previously considered a rather opaque mystery but one that was best left to China’s self-contained economy – became the whole world’s business.

A sudden loss in confidence in Beijing’s ability to rescue its collapsing stock market and restore confidence in its currency became, overnight, a worldwide event. It wasn’t just that Western stock markets plummeted as a result of a Chinese policy decision; worse, it triggered a truly global crash: throughout Monday, markets cratered in India, Saudi Arabia, Vietnam, Poland, the Philippines, Brazil, not to mention New York, London and Toronto. It may not have been the biggest or longest-lasting downturn, but it was a truly worldwide one, born in Beijing.

The stock markets are not an all-consuming force in China. Traded equities represent only a slice of finance in a Chinese economy still largely dependent on bank finance and wealth funds; the Shanghai and Shenzhen exchanges don’t have much relationship to the actual Chinese economy. Chinese stocks are largely closed to foreign traders. And, significantly, the pensions and retirement savings of Chinese are not invested in stocks – in fact, a move to allow pension funds to buy shares this weekend was one of the events that triggered the sell-off.

Coal industry will be big loser from Paris climate deal – by Geoff Winestock (Australian Financial Review – August 24, 2015)

August 24, 2015

http://www.afr.com/business/mining/

A global agreement at the Paris climate change negotiations at the end of 2015 will cut the value of Australian coal exports by 8 per cent over the next 15 years and contract the economy by 1.6 per cent if governments around the world implement the policies they have proposed.

A study by economist and former Reserve Bank of Australia board member Warwick McKibbin shows that the coal industry, one of Australia’s biggest exporters, is shaping up as one of the big losers from pledges by China, Japan, the United States and Europe to curb carbon emissions.

Without any change there will be a 13 per cent increase in global coal production, Professor McKibbin estimates.

The value of Australia’s coal exports will be 8 per cent lower and global coal production will be 5 per cent lower by 2030 as a result of climate change policies to be proposed at Paris, the forecast shows.

While debate in Australia has focused on how ambitious to make this country’s emission reduction targets after 2020, the modelling underlines how choices by the rest of the world will be almost as important for the Australian economy.

Commodity rout unlike 2008 recession, no China to the rescue – by Clyde Russell (Reuters U.S. – August 24, 2015)

August 24, 2015

http://www.reuters.com/

LAUNCESTON, AUSTRALIA – With the prices of many major commodities currently plumbing depths last seen six years ago, what are the chances of a repeat of the China-led boom that lifted resources out of the 2008 recession funk?

To answer the question it’s worth looking at what is the same and what is different about the weakness in commodity prices between 2008-09 and now, and the answer is not much is the same.

The main similarity is simply that prices are weak and have fallen precipitously in a relatively short period of time. Brent crude fell by about 75 percent between the all-time high in July 2008 and the low in December that year.

So far it has dropped about 52 percent from the last year’s peak in June to the close of $45.46 a barrel on Aug. 21.

Benchmark London copper futures dropped about 67 percent between July and December in 2008, and they have slumped 22 percent since July this year to the close of $5,055 a tonne on Aug. 21.

Iron Billionaire Mauls ‘Market Vandalism’ as Rio Tinto Hits Back – by Jasmine Ng and David Stringer (Bloomberg News – August 23, 2015)

August 24, 2015

http://www.bloomberg.com/

Iron ore prices collapsed this year as the biggest miners committed market vandalism by overproducing, according to Fortescue Metals Group Ltd. Rio Tinto Group fired a salvo in response, saying the analysis is overblown.

“The logic that you keep expanding just because you can squeeze an extra ton out of your machines, applies well to mining juniors,” Chairman Andrew Forrest said in a commentary on Monday as the company reported a slump in full-year profit. But it “is market vandalism and self-harm when industry leaders do it,” he said, without identifying any companies.

Iron ore sank last month to the lowest in at least six years as Rio Tinto and BHP Billiton Ltd. in Australia and Brazil’s Vale SA boosted cheap supply, betting higher volumes would offset lower prices. Fortescue will hold volumes steady this year, although it was ready to expand if demand revived, according to Forrest. Rio said Monday that Forrest’s remarks about the market were inconsistent, while BHP declined to comment.

“Iron ore is inelastic in demand,” Forrest said using a term that suggests consumption doesn’t change with price.
Once users’ demand has been met, “any further product offering will see the price collapse. We have seen that this year.”

Stalin and the Atomic Gulag – by Zhores A. Medvedev

August 24, 2015

The birth of the uranium gulag

The main raw material of the atomic industry, uranium ore, was mined nowhere in the Soviet Union until 1942. It is therefore possible to date the beginning of the atomic era in the USSR to 27th November 1942, to the State Committee for Defence (GKO) top secret decision no.2542 ‘On mining uranium’.

The location of uranium ore in the Tabosharsky region of Tadjikistan had been known since the beginning of the century. It was thus decided to build the first uranium mine there. The work was allocated to the State Commissariat of Non-ferrous Metals which already had enterprises in Central Asia.

As a result, one of these factories was reequipped and, already by May 1943, was producing at the rate of four tonnes of 40 per cent uranium concentrate a year. By the end of 1943, this level was expected to triple.1 On 30th July 1943, having noticed the lack of real progress in mining and enriching uranium ore, GKO order no.3834ss enrolled several more commissariats and departments to help solve the problem.

They included the committee on geological affairs and the commissariats of ferrous metals, machine construction, coal, ammunition, and others, to ensure that the uranium mine in Taboshar received the necessary equipment and cadres.

Anglo American sells two Chilean mines to Audley for $300 million (Reuters U.K. – August 24, 2015)

August 24, 2015

http://uk.reuters.com/

Anglo American (AAL.L) is to sell two Chilean copper mines to investment firm Audley Capital for $300 million (£191.5 million), the company said on Monday, as it delivers its balance sheet to help combat a global slump in commodity prices.

Orion Mine Finance Group is principal co-investor with Audley for the open-pit Mantos Blancos and Mantoverde mines. The deal includes conditional future payments which could boost the eventual price tag by $200 million (£128 million), Anglo American said.

Following a review last year Anglo American said it would divest assets that did not meet its return criteria. The investment by Audley Capital was led by John Mackenzie, a former chief executive of Anglo’s copper business.

The potential follow-up payments are contingent on the copper price and also on whether the new investors decide to extend the sulphide life of the Mantoverde mine.

Banking sources had initially touted the mines as having a price tag of up to $1 billion.

[Sudbury, Canada] From barren rock to lush forests – by Norm Tollinsky (Sudbury Mining Solutions Journal – September 2015)

August 24, 2015

This article was originally published in the September 2015 issue of Sudbury Mining Solutions Journal.

Restoring the Sudbury Basin to its original state

Delegates to the 6th Mining and Environment International Conference in Sudbury June 20 to 25 received an update on the Sudbury Regreening Program and were able to see for themselves the steady progress the city has made in reversing the devastating effects of early mining activity in the region.

For the first few decades of the program, regreening activity focused on the liming of barren lands, seeding them with a grass and legume mixture and planting a limited variety of trees.

However, a major rethink and broadening of the program was triggered by the release of the Sudbury Soil Study’s ecological risk assessment in 2009, noted Stephen Monet, manager of environmental planning initiatives for the City of Greater Sudbury.

“The ecological risk assessment basically told us that we still had a lot of work to do and that there were still a lot of biologically impoverished areas. That led Vale, Sudbury Integrated Nickel Operations and the City to move forward with a Biodiversity Action Plan.”

Commodity Gauge Slumps to Lowest Since ’99 as China Roils Market – by Ranjeetha Pakiam (Bloomberg News – August 24, 2015)

August 24, 2015

http://www.bloomberg.com/

A measure of returns from commodities sank to its lowest since 1999 and shares in resource companies joined a global equity slump on concern that a slowing Chinese economy will exacerbate supply gluts.

The Bloomberg Commodity Index of 22 raw materials from oil to metals lost as much 2.2 percent to 85.8339 points, the lowest level since August 1999. Shares in miners and explorers from Glencore Plc to BHP Billiton Ltd. and Cnooc Ltd. tumbled while Brent crude fell below $45 a barrel for the first time since 2009.

“Sentiment is extremely negative across the commodity complex,” Mark Keenan, head of commodities research for Asia at Societe Generale SA in Singapore, said in an e-mail. “Markets are plagued by concerns of oversupply.”

Raw materials are in retreat as supplies outstrip demand amid forecasts for the slowest Chinese growth since 1990. The largest user of energy, grains and metals was much weaker than anyone expected in the first half of the year, according to Ivan Glasenberg, head of Glencore Plc, the world’s leading commodity trader.

In Minnesota, fight between mining and environment gets personal – by by Stephanie Pearson (Al Jazeera America – August 23, 2015)

August 24, 2015

http://america.aljazeera.com/

Projects that would bring much-needed jobs could also ruin irreplaceable freshwater resources

ELY, Minn. — It’s the kind of July day that Minnesotans fantasize about in the dead of winter. Puffball clouds float in a blue sky and daisies sprout under stately pines lining Spruce Road, the main artery of an old logging network deep in the Superior National Forest about 15 miles southeast of Ely.

Paul Schurke is bumping down a dirt road in a Dodge Ram pickup truck. He owns Wintergreen Dogsled Lodge with his wife, Susan, and is famous in these parts as the explorer who co-led the first dogsled expedition to the North Pole without re-supply in 1986.

The dirt track ends before it reaches the Boundary Waters Canoe Area Wilderness, the roadless, motorless, cellphone-towerless 1.1-million-acre ecosystem where nearly 250,000 visitors from around the globe annually pilgrimage to paddle a connected chain of more than 1,000 pristine lakes.

Every night they break camp on a forested shoreline to hear the cool northern breeze whisper through the pines and loons project their mournful calls over vast stretches of open water. Occasionally an emerald display of Northern Lights flickers in a sky entirely free of light pollution.

Junior miners jump into medical marijuana, food service amid slump – by Euan Rocha, Nicole Mordant and Jim Regan (Reuters U.S. – August 23, 2015)

August 24, 2015

http://www.reuters.com/

TORONTO/VANCOUVER/SYDNEY – Many of the world’s junior miners are laying down their picks and shovels to start new ventures ranging from egg exporting to medical marijuana farming, as they as try to survive a crash in metals prices by shifting away from exploration.

Prices for copper, gold, iron ore, coal and almost every other metal have collapsed, stalling exploration work and hitting early stage miners particularly hard. These firms typically find the deposits that larger miners often then go on to acquire and develop into mines. But there’s scant demand for new sources of metal now.

Pivoting into other businesses has happened during mining funks in the past, including a spate of defections into the tech sector during the dotcom boom in the late 1990s. But now the concern is that when prices eventually do rebound, there will be fewer junior miners, and a reduced pool of new mine prospects.

“No one has any interest in a grassroots exploration project right now,” said Yari Nieken, chief executive of Chlormet Technologies, which has bought an e-cigarette company and has a license to grow medical marijuana pending.

Wales: Brecon Beacons is spectacular, but what sets this national park apart is its human history – by Amanda Ruggeri (Globe and Mail – August 13, 2015)

August 24, 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.

BRECON BEACONS, WALES – When our tour guide, a former miner, tells us that we’ll be descending 90 metres into the earth, no one in the group seems anxious. When we strap on headlamps – necessary accoutrements for navigating the lightless caverns far below – everyone takes it in stride.

But when he tells us we have to empty our pockets of anything with a battery, a few of us look surprised. “Sparks can come off watches or batteries because of the gases down there,” he explains. “You can’t bring anything like that down there.” Depositing my mobile phone in the bag he offers, I think to myself: Gases? What did I sign up for?

On the surface, much of this part of southern Wales is what you would expect, and hope, from a Welsh landscape: rolling hills and wild moors, market towns and crumbling castles. The area is dominated by Brecon Beacons, a 1,350-square-kilometre national park that twists with 225 km of rivers and peaks with mountains up to 886 metres tall. Sheep amble across bright-green hills, their coats splashed with blue and red.

B.C. mines minister hopes to soothe Alaskan fears after Mount Polley spill – by Tamsyn Burgmann (Canadian Press/CTV News – August 23, 2015)

August 24, 2015

http://www.ctvnews.ca/business/

VANCOUVER — British Columbia’s mines minister says he’s aiming to ease Alaska residents’ fears that their region could be harmed by a disaster similar to the Mount Polley accident in the province’s Interior.

Bill Bennett met with mining representatives in Alaska last November, four months after a tailings dam burst and spilled 24 million cubic metres of waste into area waterways, including salmon-bearing rivers.

However, Alaskans living downstream from northwestern B.C. mines said Bennett ignored their worries about the potential for mining pollution flowing their way in the event of another catastrophe.

A year after the August 2014 spill, Bennett said he’s taking the lead from state officials who have arranged dozens of meetings with conservation groups and tribal associations.