Republic of Mining

Miners’ focus shifts from investor returns to survival – by Silvia Antonioli (Reuters U.S. – July 10, 2015)

July 13, 2015

http://www.reuters.com/

LONDON, July 10 (Reuters) – Hit hard by the accelerated downturn in metal prices in recent months, global mining companies preparing to report results are likely to announce another round of austerity measures to cut costs and convince investors to remain committed to the sector.

With investors looking for evidence of continued capital discipline while credit ratings and dividends are pressured by a rout in prices for anything from iron ore to platinum, reductions in capital expenditure, operational costs and jobs could all be on the cards.

It comes as little surprise, therefore, that miners have been among the worst performers on London’s FTSE 100 index of blue-chip companies so far this year. The FTSE 350 mining index has fallen by about 15 percent since the start of the year.

“The picture has shifted to survival. With prices where they are, you wouldn’t expect any of the majors to think about big buybacks,” said Nik Stanojevic at British wealth manager Brewin Dolphin.

The weekend read: This is how the bottom looks – by Brent Cook (Mineweb.com – July 10, 2015)

July 13, 2015

http://www.mineweb.com/

Brent Cook’s take on how scary it looks out there, and why it might eventually and slowly get better.

The Rant. But then metal prices began to decline, economies slow, and profits slip away. What went wrong this time Dad? Will mining boom again? Don’t hold your breath kid. It’s bleak out there and we have a 10-year super commodity bull to work off this time.

I think what ultimately killed the recent boom was the slow realization by investors that most mining companies really couldn’t make money. Those savvy investors got the commodity boom and gold price right, and bought into the thesis that mining company profits would soar with the rising metal prices. The share prices did soar, for a while, but…

Instead of profits they got production costs rising in tandem with metal prices; capex blowouts; companies issuing equity and taking on debt whenever they could to cover the multitude of thoughtless acquisitions (supported by dubious, but 43-101 sanctioned, technical reports and financial projections) all piled on top of an eat-what-you-kill banking/brokerage community fronted by inexperienced or compromised analysts faced with the tall task of feeding the global frenzy of very short-term hedge fund gamblers with no skin in the game, trading stocks based on microsecond blips up until the shine wore off and, well, here we are today — busted again.

Confusion reigns on aboriginal rights when court rulings meet reality – by Jeffrey Simpson (Globe and Mail – July 11, 2015)

July 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.

VANCOUVER — A year and a bit later, people with good intentions and big brains in British Columbia are still trying to figure out the impact of the latest Supreme Court aboriginal-rights decision.

Learned law articles have been penned. Certain aboriginal spokesmen have told the provincial government, as a consequence of the decision, to recognize aboriginal title everywhere and get on with it. Resource companies and other private-sector enterprises don’t quite know what to make of the Tsilhqot’in decision.

Tsilhqot’in essentially recognized aboriginal title over a swath of territory for a previously nomadic aboriginal group. In this territory, with a few restrictions, the group now has de jure sovereignty, a precedent that, if extended over time, would leave B.C. pockmarked with little self-governing, largely sovereign aboriginal territories over which the Crown’s writ would barely run.

What’s clear about the Tsilhqot’in decision – and the long trail of previous aboriginal-rights cases – is that it makes for steady and remunerative work for lawyers. Essentially, the courts, and especially the Supreme Court of Canada, are making laws in this field.

Going green: Does Ontario’s energy shift have the power to sustain itself? – by Richard Blackwell (Globe and Mail – July 11, 2015)

July 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.

TILLSONBURG, ONT – In a huge factory on the outskirts of Tillsonburg, the transformation of Ontario’s manufacturing economy is under way.

Here, in what was once a Magna International auto parts plant, German industrial conglomerate Siemens AG is building giant wind turbine blades, massive components formed from fibreglass, epoxy and balsa wood that are half the length of a football field. About 350 workers mould, bake and trim the huge blades, which are shipped to wind farms throughout Southern Ontario.

The plant’s car-parts past is both symbolic and significant. As the province’s traditional – largely automotive – manufacturing sector shrinks, the Liberal government has attempted to hasten a shift to green technology. The 2009 Green Energy Act (GEA), in particular, was designed to achieve this end – along with weaning the province off dirty, coal-fired electricity production.

By subsidizing wind, solar and other technologies, and forcing developers to buy components and services from local companies, a clean manufacturing sector would be kick-started. At least that was the theory. On the surface, the plan appears to have worked. The province is now sprinkled with green businesses that have – at least in part – replaced some of the collapsing manufacturing infrastructure.

K+S investors see Potash Corp deal within reach despite rebu – by Andreas Kröner and Ludwig Burger (Reuters Canada – July 9, 2015)

July 10, 2015

http://ca.reuters.com/

FRANKFURT (Reuters) – Shareholders in takeover target K+S say a deal could be done because suitor Potash Corp’s main aim is to get control over its German rival’s ambitious Canadian project and scale it back.

K+S’s “Legacy” mine in the prairies in western Canada would be the first built from scratch in the global potash industry in almost 40 years. It would add to an already oversupplied market where demand is suffering from weak emerging market currencies and low crop prices.

Potash Corp could more easily ration global supply by controlling K+S, but still commit to leaving its German operations largely intact. The potential threat to K+S’s domestic operations were seen as one reason why German regulators might block a deal.

K+S last week rebuffed Potash Corp’s 7.9 billion euro ($8.6 billion) proposed bid of 41 euros per share as too low and suggested the suitor was planning to shrink the company.

Potash is in demand as a mineral because it plays a vital role in plant growth and crop resistance to cold and drought.

CN pulls the plug on Algoma passenger train – by Ian Ross (Northern Ontario Business – July 10, 2015)

July 10, 2015

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

The search is on for a new operator to take over a Sault Ste. Marie-to-Heart passenger train service after Canadian National Railway (CN) announced it will cease operations on July 15.

The repeated inability of Railmark Canada and its president-CEO R. Allen Brown to obtain financing led CN, the track’s owner, to finally terminate the service.

The same issue cropped up in June, forcing CN to step in and take back a popular sister service on the same line, the Agawa Canyon Tour Train excursion, from the hands of Railmark after a satisfactory agreement couldn’t be reached.

For the Sault Ste. Marie Economic Development Corporation (EDC) and a regional stakeholders group, it’s back to the drawing board with a full-out scramble to find a replacement operator during the height of the summer tourism season.

Op-Ed: Why South Africa must do better – by Greg Mills and Jeffrey Herbst (SOUTH AFRICA Daily Maverick – July 8, 2015)

July 10, 2015

http://www.dailymaverick.co.za/page/home/#.VZ_0N_lViko

While the end of Apartheid in April 1994 brought about political rights for the excluded black majority, their economic enfranchisement over the subsequent two decades has proven to be exceptionally difficult. The fundamental claim of our new book is that the overwhelming challenge that South Africa faces, and has to date failed to address, is unemployment.

As is well known, the current unemployment statistics are appalling and fall especially on young African youths who were promised a better future in 1994. If the unemployment crisis is not addressed, it will be impossible to lift many millions of people out of poverty. Especially in light of the Arab Spring – fuelled in good part by youths who believed that they had no future – the stability of South Africa cannot be assured given compounding issues of insecurity, unemployment and lack of investment.

The prospects of the African National Congress (ANC) will also be challenged if it cannot deliver jobs to the ‘born-free’ generation. Equally, the ANC’s trade union partner, the Congress of South African Trade Unions (Cosatu), with an ageing cohort of members, requires economic and employment growth to refresh their membership.

Two decades and five ‘new’ strategic economic plans into its democratic transition, South Africa does not have the luxury of too many more chances.

U.K. to End 300 Years of Deep Coal Mining as Prices Slump – by Alessandro Vitelli (Bloomberg News – July 10, 2015)

July 10, 2015

http://www.bloomberg.com/

Britain plans to close its last deep coal mine in December, spelling the death of an industry that’s kept the nation’s economy humming since the Industrial Revolution.

The U.K.’s last deep underground mine, located at Kellingley in northern England, will shut around Dec. 15, U.K. Coal Holdings Ltd. said in a statement. The company’s Thoresby mine ceases production on Friday.

The closing of Kellingley will mark the nation’s exit from an industry that employed more than a million workers at 3,000 pits a century ago. Since 2000, U.K. power generators Electricite de France SA to RWE AG bought more of the fuel from abroad, where coal from Australia to Colombia is cheaper, according to the Federation of U.K. Coal Producers. European prices slumped to an eight-year low in April.

“The U.K. coal industry has been in structural decline for 40 years,” Paolo Coghe, an analyst in Paris at Societe Generale SA, said Friday by phone. “It’s no longer positioned to withstand an extended period of low prices such as the one we are experiencing now.”

Time to Tackle Rare Earth’s Toxic Underbelly – by Matthew J. Kiernan (Huffington Post – July 9, 2015)

July 10, 2015

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

Matthew J. Kiernan is the Founder and Chief Executive of Inflection Point Capital Management

On April 2, 2015, the BBC ran an investigative report that illustrated rare earth mining’s trail of destruction. Whilst it was not the first time that the toxicity of rare earth mining had been the subject of scrutiny, the graphic portrayal of a man-made toxic lake on the outskirts of Baotou in Mongolia, should be a wake-up call for consumers of digital TVs, computers and smart phones, which are the major users of rare earth elements.

BBC’s piece was written by Tim Maughan, who had received support from Unknown Fields Division, an NGO that has a track record of going to the farthest flung regions of the world to uncover hidden secrets. It is estimated that Baotou is the centre of production of half of China’s rare earth elements, with one tonne of rare earth elements producing 2,000 tonnes of toxic waste.

Baotou’s toxic lake raises the important question; how is that such important commodities continue to be mined with such low environmental standards? Rare earth mining has long been dominated by China, which up until recently produced over 90 percent of global production.

NEWS RELEASE: Boart Longyear Marks 125th Anniversary With Historic Display at The National Mining Hall of Fame and Museum

July 10, 2015

SALT LAKE CITY – June 3, 2015 – Boart Longyear (www.BoartLongyear.com), the world’s leading provider of integrated drilling services and drilling products, is proud to recognize its 125th anniversary today, marking the occasion by announcing a historic timeline and collection of Longyear and Boart Longyear artifacts dating back to the late 1800s will feature at the National Mining Hall of Fame and Museum in Leadville, Colorado, USA.

“We are very proud to celebrate Boart Longyear’s 125th anniversary this year,” said Kent Hoots, senior vice president of Boart Longyear. “The display and historic pieces are proof of the long and respected legacy of quality and innovation that Edmund J. Longyear started in 1890 and that we maintain today. “Our 125th anniversary is dedicated to the people who built – and continue to build – this fine company. That’s why we want to make sure our history is properly preserved and on display for people to enjoy.”

All but a few of the historic pieces on display have been permanently donated to the museum. Among those on loan for the summer is Longyear’s first-ever drilling services contract, dated May 19, 1891. The handwritten contract was with Mallmann Iron Mining Company and included sinking diamond drill holes in the Mesabi Iron Range of Minnesota.

Included in the permanent collection of donated pieces is an original San Francisco Chronicle newspaper story entitled “The World’s Greatest Span,” dated October 5, 1930.

Activists: Canada mine approvals threaten Alaska fishing communities – by Renee Lewis (Al Jazeera.com – July 10, 2015)

July 10, 2015

http://america.aljazeera.com/

Almost one year after an unprecedented spill from a mine tailings pond in Canada’s largely pristine province of British Columbia, its government has given the green light for the mine to reopen — worrying environmentalists who say a number of other northern B.C. copper and gold mines are in various phases of approval, and could threaten downstream fishing communities in southeastern Alaska.

The provincial government on Thursday approved a restart of Imperial Metal’s Mount Polley mine, which has been closed since its waste dam failed last August and released 6.6 billion gallons of toxic tailings including arsenic, lead and nickel into salmon-producing lakes and streams of the Fraser River watershed.

Residents of southeastern Alaska, many of whom depend on fishing and tourism for their livelihoods, expressed concern at the announcement.

“The British Columbia and Canadian governments seem to be glossing over the Mount Polley disaster by ignoring recommendations of mining experts who studied the dam failure and warned that the province should stop allowing the same risky tailings dam technology,” said an emailed statement from Heather Hardcastle, a commercial fisherman from Juneau, Alaska, and campaign coordinator for Salmon Beyond Borders.

UK Coal’s Thoresby Colliery to cease mining on Friday (Reuters U.K. – July 10, 2015)

July 10, 2015

http://uk.reuters.com/

LONDON – Coal mining at Thoresby Colliery, one of the last remaining underground coal mines in Britain, will cease on Friday and 360 employees will be made redundant, mine owner UK Coal said in a statement.

Mining at UK Coal’s Kellingley mine will also cease on or around December 15, the company said.

Underground coal mining has become unprofitable in Britain because of fierce competition from cheaper markets such as Colombia, Russia and the United States, falling domestic demand and a government drive away from carbon-intensive coal power generation.

UK Coal was placed into administration in 2013 after struggling with rising costs, hefty pension liabilities and strong competition from cheaper coal imports.

Ontario is no Greece, but its debt is more than a casual concern – by Konrad Yakabuski (Globe and Mail – July 10, 2015)

July 10, 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.

This was the week the debt merry-go-round jerked and lurched and the whole world got nauseous.

Greece, which hit its debt wall years ago, once again took Europe to a precipice. Whatever the outcome of Sunday’s “final deadline” for a deal with its creditors, Greece is a goner, sadly. How much damage it does to the rest of the world remains to be seen.

Greece’s fate could also await Puerto Rico, whose governor suddenly declared that the $72-billion (U.S.) debt the U.S. territory in the Caribbean has racked up is “not payable.” That somehow came as a shocker to bondholders who had been breezily plugging coins into the island’s debt merry-go-round.

Then there’s China, whose debt-induced stock market bubble continued to deflate despite the Communist regime’s best efforts to defy the capitalist laws of gravity. It may take another Chinese miracle to contain the fallout caused by amateur investors who bought stocks on margin.

Ontario’s job killer: Business sounds alarm over soaring electricity prices – by Ross McKitrick and Tom Adams (National Post – July 10, 2015)

July 10, 2015

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

The Ontario Chamber of Commerce this week released the findings of an unprecedented consultation with its members and the results are painfully clear: soaring electricity prices are killing business in Ontario. One in 20 Ontario businesses now expect to shut their doors in the next five years due to electricity costs, and nearly 40 per cent report that electricity costs have already forced them to delay or cancel investment decisions.

The Chamber acknowledges that the larger policy picture from Queen’s Park is grim, with plans for cap-and-trade, higher minimum wages, rising workplace safety premiums and a new government-run pension system. But their report, Empowering Ontario, focuses above all on soaring electricity costs, a problem unique to Ontario that is directly traceable to a decade of foolish policy decisions.

The Chamber is to be applauded for taking on this issue. Many Ontario businesses have tried to shield themselves by seeking beggar-thy-neighbour gimmicks that merely shift their costs onto others, resulting in a less efficient and transparent pricing system. For instance the Chamber slams the Class A/B rate split that benefits large consumers by redirecting some of their costs onto households and small businesses.

Perhaps Ontario business leaders are finally realizing that moving their deck chairs to the high side of a sinking ship is not a long-term solution.

Mount Polley to re-open after last year’s disaster – by Mary Catharine Martin (Juneau Empire – July 10, 2015)

July 10, 2015

http://juneauempire.com/

Two British Canadian ministries announced Thursday that they are allowing Imperial Metals Corporation to re-open Mount Polley mine after last August’s tailings dam failure, which released billions of gallons of toxic tailings and contaminated water into the Quesnel Lake watershed. Southeast Alaskans concerned about Canada’s mining boom decried the move, saying the authorization ignores detailed recommendations of an independent review panel whose report was released earlier this year.

This is the first of three steps Mount Polley will need to begin operating as it did this time last year, said Minister of Energy and Mines Bill Bennett and Minister of Environment Mary Polak in a press release. They’ve granted the company the ability to begin conditional operations; it will not be able to release water from the site.

“In the early fall, the company will need a second conditional permit to treat and discharge water in order for operations to continue. Lastly, the company must submit a long-term water treatment and discharge plan to government by June 30, 2016. The mine will not be authorized to continue to operate long-term if it fails to complete either of the last two steps,” Bennett said in the press release.