Republic of Mining

Co-ordinated market intervention is the way out of this ‘currency war’ – by David Parkinson (Globe and Mail – August 13, 2015)

August 13, 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.

Until now, most experts have been reluctant to use the term “currency war” to describe this year’s global arms race in foreign exchange markets. But China certainly fired a big shot over the bow this week.

By formally cutting the government-managed value of the yuan, China raised the trend of increasingly competitive currency devaluations to a new level. In a world where struggling economies have been adopting policies that have driven their currencies lower in not particularly transparent attempts to stimulate export growth (30 central banks have cut interest rates this year), the world’s biggest exporter went to a new extreme to defend its turf.

Other export countries – including Canada, which has cut rates twice since January and is banking on an export recovery to revive its flagging economy – will surely feel the heat. So will the global financial markets, which look more fragile with every new volley in the currency battle.

There’s no reason to think all this will end well. About the best we can hope for is that it will all prove pointless.

K+S says will look at higher Potash bid, profit jumps – by Andreas Cremer (Reuters Canada – August 13, 2015)

August 13, 2015

http://ca.reuters.com/

BERLIN (Reuters) – Germany’s K+S AG SDFGn.DE said it would consider any improved offer from Canada’s Potash Corp of Saskatchewan POT.TO after its position was boosted by stronger than expected quarterly earnings.

The company affirmed its rejection of a 7.9 billion euro ($8.8 billion) takeover proposal by Potash, but left the door open on Thursday to an improved bid.

“K+S will deliver strong results as a stand-alone company,” finance chief Burkhard Lohr said during an earnings call. “K+S has a great future as an independent company.”

The Canadian firm’s takeover proposal of 41 euros per share does not even remotely reflect K+S’s underlying value, the CFO said, questioning again reassurances the Canadian firm has given on jobs and sites.

K+S’s management and supervisory boards “are extremely concerned that Potash appears to have no sustained interest in continuing the strategically, technically and financially linked fertilizer and salt activities in the current form,” it said.

B.C. Must Heed Mount Polley Disaster’s Lessons – by David Suzuki (Huffington Post – August 12, 2015)

August 13, 2015

http://www.huffingtonpost.ca/

It was a dramatic image: millions of cubic metres of waste cascading from the Mount Polley mine breach into the Quesnel watershed in B.C.’s Interior. Besides destroying a nine-kilometre creek and endangering salmon and the neighbouring community of Likely, the catastrophe damaged the mining industry’s reputation.

In the months following, fingers pointed, independent panels weighed in and committees were struck. One year later, the Mount Polley mine is operating again, this time with a conditional permit and no long-term plan to deal with excess tailings.

In British Columbia, after metals are extracted from large mines, the finely ground rock that remains is stored under water behind earth-and-rock dams, which can prevent acid mine drainage. (Acid mine drainage occurs when water flows through exposed acidic minerals and becomes contaminated.) But storing massive quantities of water in large open pits near towns and waterways is risky.

First Nations, scientists and the independent review panel investigating the breach point to dry stacking as a safer, proven alternative to century-old wet tailings technology.

Moody’s downgrades Barrick credit to lowest investment grade rating – by Rachele Younglai (Globe and Mail – August 13, 2015)

August 13, 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.

Moody’s Investors Service downgraded Barrick Gold Corp.’s credit to the lowest investment grade rating, a blow to the company that is on track to reduce its debt by $3-billion (U.S.) this year.

Barrick is rapidly selling mines to reduce its $13-billion debt load. But Moody’s said Barrick’s debt is still too high given the weak gold price.

“Material organic debt reduction is unlikely and production will start declining in the next several years,” Darren Kirk, Moody’s senior credit officer, said in a statement announcing the downgrade.

Moody’s changed the miner’s outlook to “stable” from “negative” and downgraded Barrick’s debt to one notch above junk status, a risky rating that would increase the company’s borrowing costs.

South Africa Job-Cuts Backlash Pits Mining CEOs Against Zuma – by Andre Janse Van Vuuren and Michael Cohen (Bloomberg News – August 12, 2015)

August 13, 2015

http://www.bloomberg.com/

Relations between South Africa’s government and the mining industry are unraveling as a commodity-price rout derails plans by President Jacob Zuma’s administration to create millions of jobs and pare a 25 percent jobless rate.

Mining companies in South Africa, the world’s largest platinum and manganese producer, plan to fire as many as 10,000 workers at a time when the economy is struggling to rebound from the slowest expansion since a 2009 recession.

A public slanging match has ensued between senior politicians opposed to the layoffs and executives who say their stance, together with prolonged uncertainty over mining laws and an unreliable power supply, threatens their companies’ survival. Gwede Mantashe, secretary general of the ruling African National Congress, last month branded companies as “lazy” for firing staff rather than considering alternatives.

“I don’t think the government understands the gravity of the challenges in the industry,” Mzukisi Qobo, a politics lecturer at the University of Pretoria, said by phone on Wednesday.

Op-Ed The Animas River spill and the myth of mine safety – by Joel R. Reynolds (Los Angeles Times – August 13, 2015)

August 13, 2015

http://www.latimes.com/

Joel R. Reynolds is Western director and senior attorney for the Natural Resources Defense Council.

The definition of a mine, said Mark Twain, is a hole in the ground owned by liars. And this month the industry’s biggest lie — that it can be trusted with our water — is once again on display as another mining disaster has spilled millions of gallons of toxic mining waste and chemicals into our streams, rivers and lakes.

On Aug. 5, at the abandoned Gold King mine in southwest Colorado, a U.S. Environmental Protection Agency cleanup team inadvertently unleashed into a tributary of the Animas River a 3-million-gallon soup of toxic mining wastewater. The accident has closed the Animas indefinitely and threatens drinking water supplies, the economy and wildlife in the region, into New Mexico and potentially all the way to Lake Powell.

This latest tragedy followed by one year almost to the day a pair of mine containment failures in Canada and Mexico. On Aug. 4, 2014, at the Mount Polley copper and gold mine in central British Columbia, an earthen dam built 17 years ago to hold mining waste laced with mercury, lead, copper and other heavy metals — called tailings — failed, inundating the Fraser River watershed.

U.S. Steel may have interested buyer in India-based steel maker: Report- by Jeff Green (CBC News Hamilton – August 12, 2015)

August 13, 2015

http://www.cbc.ca/news/canada/hamilton/news

Essar Steel interested in bidding for both Hamilton and Nanticoke plants, according to a report

A foreign steel maker that has previously purchased a Sault Ste. Marie steel plant is interested in U.S. Steel’s Canadian operations, according to a report in the Hamilton Spectator.

Essar Steel Holdings, an India-based steel company, purchased Algoma Steel in 2007 for $1.85 billion. The company’s name curiously appeared in bankruptcy court documents a month earlier as a party to be notified about the progress and proceedings.

But the news should be met with “cautious optimism” as a formal bid has yet to be announced, said Ward 4 Coun. and steel sub-committee member, Sam Merulla.

“That would be a dream come true for our city,” Merulla added. “At this point it’s speculative.”

Glencore and BHP Fall to Lowest in Years as Miners Shunned – by Jesse Riseborough and Thomas Biesheuvel (Bloomberg News – August 12, 2015)

August 12, 2015

http://www.bloomberg.com/

Glencore Plc and BHP Billiton Ltd. shares fell to the lowest in at least four years as investors continued to shun mining companies on concern Chinese demand for commodities is waning.

The FTSE 350 Mining Index of 14 producers fell for a second day to the lowest since March 2009. BHP, the world’s biggest miner, dropped to a six-year low while Glencore slid as much as 7 percent to the lowest since it started trading in 2011.

Commodity prices are near a 13-year low and this year’s 18 percent plunge in the Bloomberg World Mining Index wiped almost $200 billion off the value of the biggest producers. China, the biggest raw-materials user, this week devalued its currency in a move that supports exports and makes imports more expensive. That further spooked investors already concerned that consumption is falling as the country’s economy expands at the slowest pace in a quarter of a century.

“This is coming at a time when the market is capitulating anyway,” Marc Elliott, an analyst at Investec Plc in London, said by phone, referring to the weakening yuan.

IN DEPTH: Nunavut hunters want feds to stay out of uranium mine decision – by Sima Sahar Zerehi (CBC News North – August 11, 2015)

August 12, 2015

http://www.cbc.ca/news/canada/north/

‘This would be a political disaster for Nunavut, and for Canada,’ Kivalliq Wildlife Board

Hunters in Nunavut say if the federal government overrides a recent uranium mining decision from the Nunavut Impact Review Board if will seriously erode the confidence of the Inuit in the regulatory system.

“This would be a political disaster for Nunavut, and for Canada,” states the Kivalliq Wildlife Board in a letter they sent to the minister of Aboriginal Affairs and Northern Development yesterday.

“Residents and institutions of Nunavut have spent considerable time and resources participating in the NIRB screening and review of Areva’s proposal,” states the letter, “If you reject the NIRB report and recommendation, residents of Nunavut will question what the point of their participation in this process was.”

This spring, the Nunavut Impact Review Board issued its final report on a proposed uranium mine near Baker Lake. The report rejected Areva’s proposed Kiggavik mine on the grounds that it lacks a definite start date and a development schedule. The review board concluded that without this information it was impossible to assess the environmental and social impacts of the uranium mine.

METALS-Copper, aluminium tumble to six-year lows after China devalues yuan – by Eric Onstad (Reuters U.S. – August 11, 2015)

August 12, 2015

http://www.reuters.com/

LONDON, Aug 11 (Reuters) – Copper and aluminium hit six-year lows on Tuesday after China devalued its currency, fuelling worries about a glut of aluminium and boosting the cost of commodities for the world’s top metals consumer.

Zinc spiralled to the weakest in nearly three years as the currency move unleashed a wave of speculative selling across the metals complex on the London Metal Exchange, which has shed about 16 percent so far this year.

It reversed a rally in the previous session as bears got the upper hand again. “It really suggests that these markets are incredibly weak,” said Justin Lennon at Mitsui Bussan Commodities USA in New York.

Three month LME copper closed down 3.5 percent at $5,125 a tonne after sliding to $5,109, the weakest since July 2009.

It more than wiped out the 2.6 percent gains from the previous session. “The devaluation will make commodities more expensive for China to import, so I would imagine that is the main reason for the negative reaction,” said Caroline Bain, senior commodities economist at Capital Economics in London.

It’s a double-dose of uncertainty for Labrador’s iron ore industry – by Terry Roberts (CBC News Newfoundland – August 11, 2015)

August 12, 2015

http://www.cbc.ca/news/canada/newfoundland-labrador/

Canadian analyst says IOC in danger of closing, while hope fades for Alderon’s Kami Project

here’s more unsettling news for the iron ore industry in Labrador West after a Canadian investment firm suggested IOC is in danger of closing, while hope continues to fade for Alderon’s much-hyped Kami Project.

A report by Raymond James Ltd., suggested that mining giant Rio Tinto, majority owner of the Iron Ore Company of Canada, is losing money at its Labrador City operation, which employs an estimated 2,000 workers.

“Iron ore prices continue to weaken and by our estimates are below the operating cost at the mine,” the firm wrote in an investment overview published in late April.

Analysts at Raymond James estimate IOC will receive an average price of US$62.50 per tonne this year while costs are estimated at $US68.50.

One analyst said the operation is a “drain” on Rio Tinto and “we believe there is a risk IOC may close if its costs and productivity do not improve.”

Ontario and Quebec communities banding together to counter Greenpeace’s messaging – by Alan S. Hale (Timmins Daily Press – August 12, 2015)

August 12, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

Mayors from the member communities of the Federation of Northern Ontario Municipalities (FONOM) met with representatives of communities in Northern Quebec, as well as the forestry industry and First Nations in Timmins on Tuesday afternoon.

The diverse group came together to discuss ways to counter the messaging of environmentalist groups about forest industry practices. Much of the discussion revolved around one group in particular: Greenpeace, which the Ontario mayors have already gone so far as to accuse of “eco-terrorism.”

“We decided as communities, industry stakeholders, and First Nations to talk about what the current issues are that affect us in Northern Ontario where we are under attack by environmental groups,” said FONOM president Al Spacek. “We feel strongly that it is a campaign of misinformation about how we conduct forestry in Northern Ontario. We know we adhere to the highest Canadian and provincial standards.

“We want to develop a strategy to get that message out, so we can defend our culture and the lifestyle we’ve been practising up here for generations very sustainably.”

The Trick That’s Going to Keep America’s Coal Alive – by Mario Parker (Bloomberg News – August 11, 2015)

August 11, 2015

http://www.bloomberg.com/

A 30-year-old mining technique is becoming all that’s keeping a group of U.S. coal producers from joining their competitors in bankruptcy.

Coal, already locked in a battle with cheap natural gas, now faces federal environmental rules that threaten to reduce its share of power generation to the lowest in 66 years. Companies from Illinois to Northern Appalachia are responding by leaning more heavily than ever on longwall-mining, a technology that’ll be used to produce a quarter of America’s coal this year, up from 19 percent in 2013.

Investors are backing the miners who rely on the efficient approach. Think of a giant deli slicer with multiple revolving blades that cuts coal from a seam into slices. Eighty percent of analysts covering Foresight Energy LP and CNX Coal Resources LP, both known for longwall operations, recommend buying their shares, compared with less than a third for producers who use it less, data compiled by Bloomberg show.

“People ask me all the time, ‘What’s the new mining technology that saves coal?’” Jim Stevenson, director of North American coal for consultant IHS Inc. in Houston, said by phone July 31. “It’s the longwall. It’s the proliferation of this 30-year-old technology that’s keeping coal coming out of these basins.”

How recent currency moves have been an absolute gift to miners outside the U.S. – by Peter Koven (National Post – August 11, 2015)

August 11, 2015

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

It is no secret that mining companies are struggling through tough times. Commodity prices are down sharply in the past few months, and investor interest in the space has plummeted.

However, recent earnings reports show that many companies are adapting well to the lower-price environment. And one of the main reasons involves absolutely no work on their part.

It comes down to exchange rates. The sharp rise of the U.S. dollar against most foreign currencies is an absolute gift to anyone mining outside the United States. Since commodities are priced and sold in U.S. dollars and most of a company’s operating costs are in the local currency, they receive significant cost reductions just by doing what they always do.

Of course, a rising U.S. dollar is almost always negative for commodities, since they are viewed as a currency hedge. That has certainly been the case in recent weeks. But the exchange rate movements have offset much of the pain from tumbling metal prices.

Baffinland ships first load of iron ore to Germany from Nunavut mine (Nunatsiaq News – August 11, 2015)

August 11, 2015

http://www.nunatsiaqonline.ca/

Mary River ore heads off to Germany

The first load of iron ore from the Mary River iron mine on northern Baffin Island is now on its way to Germany, Baffinland Iron Mines Corp. said Aug. 10.

A bulk ore vessel, the Federal Tiber, departed from the mine’s Milne Inlet port Aug. 8 carrying 53,624 tonnes of iron ore.

The ship is bound for the North Sea port of Nordenham, Germany where its cargo will be offloaded and eventually used to make high quality steel, Baffinland said.

“This is a great moment for Baffinland, its investors, and its employees, who have worked hard to reach this goal. In just two years, the men and women who work at the site, both Inuit or southern, have collaborated to build the mine and its infrastructure and have now moved the new port into full operation — this is their achievement and they can be proud of what they have accomplished,È Tom Paddon, Baffinland’s president and CEO said in a company statement on the first ore shipment.