Republic of Mining

Bloodshed Seen If Strike Called at South African Gold Mines – by Paul Burkhardt (Blooomberg News – July 22, 2015)

July 23, 2015

http://www.bloomberg.com/

A pay strike at South African gold companies could result in more violence at the mines, said Andrew Levy, a labor-relations consultant.

The Chamber of Mines, a lobby group representing companies including world No. 3 producer AngloGold Ashanti Ltd., and the four unions representing workers are “far apart” in wage talks, it said July 16. The labor groups are seeking an increase of at least 80 percent in entry-level pay and producers are offering 13 percent at most.

“I think there will be a strike,” most likely led by the Association of Mineworkers and Construction Union, which speaks for about 30 percent of the employees, Levy said. If operations continue with AMCU on strike, “there will be bodies and there will be bloodshed,” he said.

South African gold producers are looking to avoid a repeat of a strike that crippled platinum companies in the country last year, halting most local mines of the world’s three-biggest operators for five months. They also want to avert violence that resulted in at least 44 deaths around Lonmin Plc’s Marikana platinum assets in 2012.

NEWS RELEASE: Fall in gold price renders10% of production uneconomic

July 23, 2015

http://www.woodmac.com/public/home

EDINBURGH/SINGAPORE/HOUSTON, 22nd July 2015 – Following the recent announcement by the Chinese central bank of a seemingly underwhelming 57% increase in gold reserves, the gold price plunged to below US$1100 per ounce ($/oz) amidst a broader commodities sell-off.

Wood Mackenzie data suggest these price levels put approximately 10% of gold miners in loss-making territory on a Total Cash Cost plus Sustaining Capex (TCPS) basis. However, this week’s price drop only exacerbates a trend which gold miners have been tackling for some time, as highlighted by Wood Mackenzie in a new analysis of the divergences observed across the relative valuations of gold and copper miners.

Wood Mackenzie’s report, titled ‘Value creation in the mining sector: a long term divergence between copper and gold producers’ reveals that in 2000, gold miners commanded a 50% market premium over copper miners. But following a decade of generally poor capital allocation, cumulative net losses and poor shareholder returns, by June this year the market priced the gold mining sector at just a fraction above its net tangible worth.

In contrast, at the same juncture, copper miners commanded a 25% premium over gold miners on a price to net worth basis, somewhat surprising given the broad sell-off in base metal mining equities from their peaks back in 2011.

B.C. not prepared to consider more LNG concessions – and it shouldn’t – by Claudia Cattaneo (National Post – July 23, 2015)

July 23, 2015

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

The British Columbia legislature passed late Tuesday evening the Liquefied Natural Gas Project Agreements Act, removing one of two final conditions to the start-up of the first LNG plant in the province.

The bill means that the Pacific NorthWest LNG project can now count on a 25-year fiscal deal that protects it from targeted tax increases.

In this age of energy-infrastructure bashing, aboriginal unrest, high environmental expectations, low oil and gas prices, the B.C. government’s ratification of the first LNG project agreement is historic.

“We believe we have arrived at a balanced approach that ensures we represent a competitive jurisdiction where proponents can invest and derive a fair rate of return, while at the same time ensuring that British Columbians who own the resource that lies at the heart of this industry receive a fair return for granting access to that resource,” B.C. Finance Minister Michael de Jong said in an interview.

“Today we are able to say with confidence that an international consortia of companies, including companies from Malaysia, China, Japan and India and others, agreed with us.”

In Congo, silence surrounds forgotten mine that fuelled first atom bombs – by Tom Zoellner (AlJazeera America – July 23,2015)

July 23, 2015

http://america.aljazeera.com/

The US sourced uranium for the weapons used on Japan from Shinkolobwe; though the site is closed, locals mine illegally

One of the manifest ironies of the nuclear age is just how primitive it all is. A complicated war was brought to an end within a week by a pair of indiscriminate hammer blows. The logic behind the next 45 years of Cold War military strategy — hit us and we both die — was as simplistic as it was problematic. And driving everything was a bomb fashioned out of dirt.

A particular kind of dirt, of course, and one that required a lavish industrial process before it could be made into a fissile device. That dirt is uranium, and it lies all around the world in abundant quantities. A place where it was concentrated to levels of freakish purity is now just a curious footnote of the nuclear age, but at one time, it was treated with intense secrecy.

Shinkolobwe was a small settlement in the Katanga province of what was then the Belgian Congo. Its name refers to a particular kind of boiled apple that would leave a burn if it was squeezed. In 1915 a prospector, Robert Rich Sharp, was looking for geological signs of copper and heard stories about people rubbing a particular kind of colorful mud on their skin. He thought it might be copper, but what he found on the top of a short hill was uranium, which can oxidize with other minerals in a variety of bright colors.

Canada’s Energy and Mines Ministers meet amid downturn (Northern Miner – July 21, 2015)

July 22, 2015

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

VANCOUVER — On July 20 Canadian federal, provincial and territorial energy and mines ministers gathered in Halifax, N.S., for the 72nd annual Energy and Mines Ministers’ Conference (EMMC). The event comes at a time when the mining industry is looking to government for heightened assistance in weathering what has become a prolonged recession marked by falling exploration expenditures, project investment and share prices.

If the pitfalls of a struggling global economy and ailing commodity prices were not enough for the ministers to mull over, however, there are also a bevy of socio-political issues across the country that include waste management safety, sustainable development and Aboriginal relations.

In fact, the Canadian Mineral Industry Federation (CMIF) released a brief — in partnership with The Mining Association of Canada (MAC) and Prospectors & Developers Association of Canada (PDAC) — aptly labeled Weathering the Storm, which focuses on three “priority issues” as articulated by members of the mineral industry across the country.

Quick gold mine closures not expected despite bullion’s fall – by Nicole Mordant (Reuters U.S. – July 21, 2015)

July 22, 2015

http://www.reuters.com/

Bullion’s slump to a five-year low this week is heaping new pressure on an already stressed gold mining industry but mine closures are not expected to happen quickly as operators instead try to reduce costs to keep operations going.

Exploration spending, capital to sustain operations, dividends and head office costs, including use of corporate jets, could face more cuts even after gold miners slashed costs by about a fifth since 2012 as bullion fell.

If gold was to stay around its current price of $1,100 per ounce, there could be some fairly significant mine closures over time, said Chuck Jeannes, the Chief Executive of Goldcorp Inc , the world’s biggest gold miner by market value.

“But I always warn people that they are not going to happen as fast as you think they might because mine general managers are really good at keeping their mines alive,” he said in an interview.

Mine managers could defer capital spending, crimping future growth, and raise the grade of ore that can be mined, to make mines more profitable.

Coal’s Fortunes Keep Getting Worse – by James Stafford (Huffington Post – July 21, 2015)

July 22, 2015

http://www.huffingtonpost.com/business/

James Stafford is the editor of Oilprice.com.

The coal industry is in uncharted territory. After decades of strong financial numbers and dominance in the electric power sector, coal producers are starting to fall apart faster than anyone could have anticipated. SNL Financial has produced some jaw dropping data on the quickly deteriorating coal industry, with a horrific performance in the second quarter.

The U.S. coal mining sector has exhibited an unprecedented wave of turmoil in just the last few weeks.

Walter Energy, an Alabama coal miner, announced on July 15 that it is filing for bankruptcy. Senior lenders will see their debt turned into equity, and if the company cannot turn the ship around, it will more or less sell off all of its assets. “In the face of ongoing depressed conditions in the market for met coal, we must do what is necessary to adapt to the new reality in our industry,” Walter Energy’s CEO Walt Scheller said in a press release.

Alpha Natural Resources, a top producer of metallurgical coal (used for steelmaking), was delisted from the New York Stock Exchange because its share price was “abnormally low.” The company is eyeing the possibility of declaring bankruptcy protection.

[Canada/Ontario] Mining needs better policy – Editorial (Thunder Bay Chronicle-Journal – July 22, 2015)

July 22, 2015

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Provincial and federal governments need to provide more support to the country’s mining sector. The industry is a wealth generator, employing hundreds of people in Northwestern Ontario and across the country, and providing millions of dollars in wages to workers and taxes to government.

Communities like Red Lake and Pickle Lake were created by gold mining booms that continue today. Thunder Bay and other communities in the region supply workers, equipment and expertise to the sector. Very few communities are not receiving some economic spin-offs from mining, a industry that still faces a number of challenges to growth.

As Canada’s energy and mines ministers meet for their 72nd annual conference this week, the country’s exploration and mining industry is asking governments to turn their attention to several areas that are challenging the sector during this period of economic downturn and uncertainty.

A report prepared by the Mining Association of Canada (MAC) and the Prospectors and Developers Association of Canada (PDAC) has detailed three policy priorities that will help the industry overcome current challenges and capitalize on the opportunities before it.

Ontario mineral exploration slows to a crawl (CBC News Sudbury – July 22, 2015)

July 22, 2015July 22, 2015

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

Low metal prices, government red tape, jittery investors conspire against exploration industry

Mineral exploration in northern Ontario has been on a steady decline for the past four years, and that’s causing some to worry.

The executive director of the Ontario Prospectors Association is used to the cyclical nature of the exploration industry, but he said he isn’t used to this.

“Exploration in northern Ontario is the lowest it’s been, probably since I’ve been in the business, and I’ve been in the business 30 years,” Garry Clark said.

He estimates the number of people employed in the industry is half of what it used to be, when metal prices were up.

Figures from the Ministry of Northern Development and Mines confirm the severity of the situation. The number of active claims in the province has dropped by more than 16,000 thousand in the last five years. And exploration spending in Ontario is down about $100 million, compared to last year.

Pictures from the atomic age: The AGO’s Camera Atomica exhibit is oddly poignant – by David Berry (National Post – July 21, 2015)

July 22, 2015

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

The first official image in Camera Atomica is an x-ray; the first x-ray, actually, taken by physicist Wilhelm Rontgen, of his wife’s hand (her wedding ring is still visible as a rather large lump).

The discovery of this miraculous technology — it “makes the invisible visible” curator John O’Brian proudly proclaims — was an accident. But it was also our first, fumbling step into the atomic age, our first grasp of a power that would come to (quite literally) rewrite the DNA of the human experience.

“When Rontgen’s wife saw it, she was shocked. She said, ‘I’ve seen my own death,’” O’Brian explains, pointing to the image and pausing for dramatic effect. “That sort of predicted some of the worst sides of it. But this shows you there’s really a fatal interdependence between the camera and nuclear fission.”

O’Brian’s exhibit gathers some of the most powerful photographic images of the last 120 years of nuclear power — not, he says, to get us to contemplate our own deaths, but to bring attention back to an issue that’s still humming in the background of our everyday life.

Lifton on asteroid mining rare earths and Molycorp’s Mountain Pass – by Jack Lifton (Investor Intel – July 20, 2015)

July 22, 2015

http://investorintel.com/

Some rules don’t change. But that doesn’t mean that our poorly educated journalists have to know of them or even have to understand them, when they are described or applied. One rule, frequently swept under the rug by junior mining promoters eager to take advantage of journalistic ignorance can be stated as:

“In order for any deposit to be developed into a profitable mine the infrastructure to access it must already exist, or, if not, then its costs must be included in the feasibility study.”

Trivially this means for example no commercial mining until I can get to the deposit and either process the material to a commercial form at the site or move it to a processing site without logistics’ costs destroying the project economics.

A corollary of the above “rule” is that the cost of infrastructure must be quantified and covered before the project enters development. Now, the above rules of economics having been stated let’s get to what I am talking about today.

Gold majors skating close to the precipice – by Lawrie Williams (Mineweb.com – July 22, 2015)

July 22, 2015

http://www.mineweb.com/

The latest gold price declines are putting even the majors close to loss-making territory, and the industry’s long-term future could be seriously damaged.

LONDON – Let’s face it, in the light of the latest gold price falls, the gold mining sector now desperately needs something that can set it back on a positive track. Gold stocks are sitting at multi-year lows and for even the gold mining majors their 2015 AISC predictions are now getting perilously close to the levels where gold is currently trading.

Here’s a list of the World’s top 5 gold miners and their announced Q1 AISCs and AISC guidance for the current year.

Rank Company Q1 2015 AISC 2015 AISC costs guidance

1. Barrick Gold $927 $860-895
2. Newmont Mining $849 $960-1020
3. AngloGold Ashanti $926 $1000 – $1050
4. Goldcorp $895 $875-950
5. Kinross Gold $964 $1000-1100

Source: Company reports.

Widespread Mine Closures To Follow The Commodity Price Collapse – by Tim Treadgold (Forbes Magazine – July 21, 2015)

July 22, 2015

http://www.forbes.com/

Write down today. Close down tomorrow.

That’s the outlook for the minerals and metals complex as a glut of virtually everything, from gold to oil, and from iron ore to aluminum, forces big asset value write downs and sets the scene for wholesale mine closures over the next six-to-12 months.

BHP Billiton , the world’s biggest mining company, kicked off the current round of asset-value write downs by last week wiping $2.8 billion off the value of its U.S. onshore oil and gas business. Anglo American followed suit yesterday, booking a $4 billion write-down of a Brazilian iron ore mine and a number of Australian coal assets.

There’s a lot more to come because those decisions were made before the latest plunge in commodity prices, including oil dipping back below $50 a barrel and gold dropping to a five-year low of less than $1100 an ounce.

Not So Super Cycle

By some measures the price of industrial commodities are back to where they were in 2002, the year which unofficially marked the start of a so-called “super cycle” resources boom that investors were told would keep prices “stronger for longer”.

BHP to open new coal mine in Borneo amid concern for orangutans – by Peter Ker (Sydney Morning Herald – July 22, 2015)

July 22, 2015

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

If you thought Shenhua and Adani had raised hackles with their plans to develop new coal mines in controversial parts of Australia, you ain’t seen nothing yet.

In a move likely to enrage environmental campaigners, BHP Billiton quietly flagged on Wednesday that it would soon start production of coal at the Haju mine in Indonesian Borneo. Haju will initially produce about 1 million tonnes of coal a year, which is pretty small compared to the coal mines BHP already operates in Queensland.

But Haju could be the start of a much larger coal project for BHP in Indonesian Borneo known as IndoMet, which is believed to have potential to produce around 5 million tonnes of coal per year, if it is ever fully developed.

That remains a big “if” given the depressed prices for coal, but Wednesday’s confirmation that first production will begin within 12 months will be a blow to environmental campaigners who have lobbied BHP and its joint venture partner Adaro Energy for the best part of a decade to abandon the project.

UPDATE 1-K+S rejects Potash Corp’s new attempt at takeover talks – by Patricia Weiss (Reuters U.S. – July 21, 2015)

July 22, 2015

http://www.reuters.com/

FRANKFURT, July 21 (Reuters) – Salt and fertilizer group K+S has rejected a new attempt by Canada’s Potash Corp to entice the German company into takeover talks, a K+S spokesman said on Tuesday.

K+S earlier this month rebuffed Potash Corp’s 7.9 billion euros ($8.65 billion) proposed bid of 41 euros per share as too low and suggested the suitor was planning to shrink the company.

A K+S spokesman said Potash Corp Chief Executive Jochen Tilk had met the state premier of the German regional state of Hesse – where K+S is headquartered – and had handed over documents about Potash Corp’s plans to preserve jobs after a takeover. K+S was also given the documents.

“We’ve looked into these statements and concluded that they contain nothing substantial beyond what we had already been given in writing. That’s why we still see no basis for talks,” the spokesman said.