Republic of Mining

Teck Resources delays Frontier oil sands project by five years – by Jeff Lewis (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.

CALGARY — Teck Resources Ltd. is delaying the planned startup of a multibillion-dollar oil sands mine by at least five years, becoming the latest company to push back development as shaky energy markets threaten profits in the high-cost sector.

Vancouver-based Teck told regulators that production from its proposed Frontier oil sands mine about 110 kilometres north of Fort McMurray, Alta., won’t start until 2026, instead of 2021 as originally planned. The company now says it will build the 260,000-barrel-a-day mine in two phases instead of four, with construction starting in 2019, according to an update filed with the Canadian Environmental Assessment Agency.

The moves are fresh evidence of a broader pullback under way in northern Alberta, as oil prices show no sign of recovering to triple-digit territory – a threshold analysts say is needed to justify new mining developments such as Frontier.

Teck, which has not committed to building the mega-mine, has pegged the cost of Frontier at roughly $20.6-billion, making it one of the most expensive oil sands projects contemplated to date.

China’s market crash signals crisis of faith in authoritarian system – by Nathan Vanderklippe (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.

BEIJING — The Chinese miracle of the past few decades lifted more people out of poverty, and faster, than anywhere else in history. But even the spectacle of poor farmers graduating to Chevrolets could not compare to the thrill ride of China’s stock markets in the past year, which left recent university graduates counting their weekly profits in the number of new Audis they could afford – and pinching themselves at their immense good fortune.

But when it all started to fall apart, China’s fast-swelling new investor class blamed not misfortune or their own poor choices in share-picking. They instead faulted a government that had been the stock market’s cheerleader-in-chief. It was Beijing’s insistence that helped prod retirees and students alike to pour savings into stocks that then nosedived, taking with them lifetimes of accumulated wealth.

For China, then, the market crash has created not just spiralling fortunes but a crisis of trust. And as the rout deepened, people who are denied a democratic voice in their governance instead cast ballots with sell orders – making undeniably clear their dissatisfaction with the way markets, and by extension their country, has been run.

Several rounds of layoffs expected at Lockerby Mine: union – by Jonathan Migneault (Northern Ontario Business – July 8, 2015)

July 9, 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.

First Nickel Inc.’s Lockerby Mine in Sudbury will see several rounds of layoffs in the coming months, says the union representing the workers.

Anne-Marie MacInnis, the president of Mine Mill Local 598/Unifor, said the company sent out layoff notices to around 26 workers last week, and is expected to reduce its workforce more in the next few months.

“They’re going to be on care and maintenance in November,” MacInnis said. Under care and maintenance, the company would only need a skeleton crew to maintain infrastructure at the mine site.

MacInnis said the company has agreed, as per the collective agreement, to set up a re-adjustment centre for employees who have received layoff notices. The centre would give them resources to find new jobs.

“They said they would provide a couple computers to allow people to do job searches,” she said.

Northern economy feeling the effects of Saskatchewan wildfires – by Doug Lett (Global News – July 8, 2015)

July 9, 2015

http://globalnews.ca/

SASKATOON – While a lot of attention has been focused on the battle against raging wildfires in northern Saskatchewan, it’s not the only challenge. The northern economy is also taking a hit.

Thousands of jobs in the north depend on mining or tourism.

“It’s disruptive at the very least,” said Neil McMillan, who is president of the Saskatchewan Mining Association.

“All of the mines and mills in the north are still operating, but it’s tenuous, for a number of reasons,” said McMillan, who for many years ran Claude Resources, which operates the Seabee gold mine in northern Saskatchewan.

He said the challenges include getting enough supplies to keep the mines and mills going.

“The transportation of necessary goods – diesel fuel, propane, and other things used in the mining and milling operations – there’s been lots of times they’ve been disrupted,” said McMillan. “I know they’ve done a couple of convoys of supplies to keep the operations running.”

BHP Billiton and Rio Tinto ready for iron ore’s ‘new normal’ – by Amanda Saunders and Tess Ingram (Australian Finacial Review – July 9, 2015)

July 9, 2015

http://www.afr.com/

Australia’s big two iron ore miners, Rio Tinto and BHP Billiton, believe the commodity will continue to be a “wealth generation machine for Australia” and expect volatility to recede, despite the heavy price falls in recent days.

Iron ore may be headed for $US40 a tonne after crashing through $US45 on Wednesday night, dropping more than 10 per cent in a single day. But Rio and BHP say they are well prepared for the possible new normal in prices.

Rio Tinto iron ore boss Andrew Harding told The Australian Financial Review that the iron ore price “is moving around its long-term average after coming off an unprecedented high that was never sustainable”. “We are seeing a pattern play out now that is entirely consistent with the history of all internationally traded commodities,” he said.

OPTIMISM LONG-TERM

The miner has cut costs, and prepared its iron ore division “to manage these fluctuations over the long term”. He maintains that the “long-term picture for iron ore remains sound”, and the commodity will “continue to be a wealth generation machine for Australia”.

Coal habits die hard as Australian miners boost exports – Peter Kerr (Sydney Morning Herald – July 8, 2015)

July 9, 2015

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

Australian miners are continuing to expand coal shipments despite weak demand in China and sliding prices, with three ports in Queensland setting new export records for the 2015 financial year.

Minerals Council analysis found Australian coal exports rose 5 per cent in the past year, with new records set at Dalrymple Bay, Hay Point and Abbott Point.

Those ports take the bulk of the coking coal coming from Queensland’s Bowen Basin, where BHP in particular has ramped up production in recent years from the mines it shares with Mitsubishi.

As the lowest-cost producer in the coking coal business, BHP and Mitsubishi have been happy to increase exports on the back of two new mines – Daunia and Caval Ridge – coming into operation during the past two years.

The rising production has coincided with fading demand for steel in China, creating an oversupply of coking coal that has had prices slump 21 per cent in the past year, according to RBC Capital Markets.

Mining companies sucked into Chinese stock market’s vortex – by James Wilson and Neil Hume (Financial Times – July 9, 2015)

July 9, 2015

http://www.ft.com/intl/companies/mining

London – Just when miners thought there was light at the end of the tunnel.

A month ago commodities were showing signs of stabilisation and investors in mining were cautious that a bottom might have been reached for the sector after four years of negative shareholder returns. Now China’s stock market rout has sucked the industry into its vortex, with mining shareholders taking fright at signs of increasing economic difficulties for its number one customer.

Shares in some of the largest miners have in the past two weeks fallen to levels last seen a decade ago, mirroring a downward lurch in commodity prices. The benchmark price of iron ore, key to steelmaking and one of the most important of traded mined commodities, fell 11 per cent in just one day this week.

The sector’s fall underscores how tightly its fortunes are bound up with events in China, which became by far the largest consumer of mined commodities in the first decade of this century amid rapid industrialisation, and supposedly set in train a natural resources supercycle.

China still absorbs about half of global iron ore, coal, and copper exports, but the country’s slowing economic growth since 2011 unleashed a severe downturn for miners by reducing demand for commodities.

Franco-Nevada Sees Mine Deals Affected by Canada Tax Move – by Danielle Bochove (Bloomberg News – July 8, 2015)

July 9, 2015

http://www.bloomberg.com/

Franco-Nevada Corp., a Canadian company that invests in mining, said a government review of how a competitor will be taxed on foreign earnings could in future lower the profitability of some financing projects.

“It just changes the level of where these deals would get bid,” Franco-Nevada Chief Executive Officer David Harquail said Wednesday in a telephone interview.

He was referring to so-called streaming arrangements in which companies such as Franco-Nevada help fund a mining company in exchange for a percentage of future revenue from the operation in the form of discounted metals.

Streaming company Silver Wheaton Corp. said Tuesday the Canada Revenue Agency wants to reassess as much as C$715 million ($562 million) in earnings from its foreign subsidiaries. This could result in more than $200 million in back taxes and penalties for the years 2005-2010, Andrew Kaip, a Toronto-based analyst at Bank of Montreal, said in a note Tuesday.

Harquail said he believes Silver Wheaton will have to factor the tax risk into future streaming bids.

Iron ore tumbles amid China contagion – by Neil Hume (Financial Times – July 8, 2015)

July 9, 2015

http://www.ft.com/intl/markets/commodities

Iron ore, the key ingredient in steelmaking, suffered its biggest one-day fall since records began, dropping by more than 11 per cent to a seven-year low as worries about the Chinese economy continued to mount.

Ore with 62 per cent iron content for immediate delivery to China dropped $5.60 to $44.10 a tonne, according to an assessment from The Steel Index.

That was the biggest one-day percentage drop since TSI begun compiling records for physical iron ore transactions in 2008. Iron is critical to the profitability of several major mining companies such as Anglo American, BHP Billiton, Rio Tinto and Vale.

They have spent billions of dollars expanding their operations to meet expected demand from China but, if the iron ore price were to stay at the current level sustained period of time, it would call into question the ability of miners to fulfil promises of higher return for shareholders.

Over the past year iron ore has dropped almost 55 per cent as a tsunami of new supply has overwhelmed demand.

Home Runs: Alaska’s leaders must walk their salmon talk [B.C. Mines] – by Malena Marvin (Juneau Empire – July 9, 2015)

July 9, 2015

http://juneauempire.com/

Malena Marvin is the Executive Director of Southeast Alaska Conservation Council.

Walk up to most houses in rural Southeast Alaska, including ours, and the first thing you see is an impossibly long row of battered XtraTuf rubber boots. There are boots for the family, the friends who stopped by to chat, extras for the summer folks who came to visit or work as crew, and probably a pair or two with mysterious origins. Together, they tell a story of a certain way of life, one lived by the tidelines and on the water, and one defined by adventure and hard work outdoors.

Wrangellite or Skagwegian, Republican or Democrat, Native or newcomer, our families are diverse. But our family values in this place do have a few common elements. Jars full of berries and fish are the obvious one. A commitment to taking care of friends and neighbors is another. I also look across the islands and fjords of our region and see that few of us are more than one degree of separation from a family whose livelihood depends on fishing or tourism dollars.

It’s in reverence to our unique way of life, to these things that unify us, that today I’m asking Gov. Bill Walker to work harder for clean water, and to walk his talk about putting Alaska’s fish first when it comes to policy.

Shedding light on deep mining – by Staff (Sudbury Star – July 9, 2015)

July 9, 2015

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Cambrian Innovates, the applied research arm at Cambrian College, will receive $190,000 to support applied research through a Voucher for Industry Association R&D Challenge grant from the Ontario Centres for Excellence and its partner, the Ultra-Deep Mining Network. These grants will allow students and faculty to develop commercially-viable new technologies that aim to enhance the safety of underground workers.

“Ultra-deep mining poses some unique challenges,” said Dr. Tom Corr, OCE’s president and CEO in a release. “We have had many successes working with Cambrian Innovates, and we welcome the opportunity to make advances in mining safety and productivity.”

Cambrian Innovates will collaborate on two projects with two industry partners.

The first, with Rock-Tech, a manufacturer of equipment engineered specifically for underground mining, aims to improve rock-breaking. During this process, ore is collected and passed through a steel screen, while a person operating a rock-breaker crushes the ore that is too large to pass through the screen.

High hydro rates hurting business: OCC – by Carol Mulligan (Sudbury Star – July 9, 2015)

July 9, 2015

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The Greater Sudbury Chamber of Commerce is calling on the Ontario government to address the impact of rising electricity rates on businesses by increasing transparency and reducing the complexity of understanding hydro rates in the province.

The Sudbury chamber, which represents about 1,000 businesses, has added its voice to a report released Wednesday by the Ontario Chamber of Commerce, an umbrella organization representing 60,000 members in Ontario.

The report, Empowering Ontario: Constraining costs and staying competitive in the electricity market, makes five recommendations for government and energy agencies to curb rising hydro costs and help businesses survive.

If those measures aren’t taken, the report shows one in 20 businesses in Ontario, or 5%, could be out of business within five years.

Geoff Jeffery, a lawyer with Weaver Simmons LLP, is immediate past chair of the Greater Sudbury chamber.

Fate of global rare earth miners rests on China smuggling crackdown – by David Stanway (Reuters U.S. – July 7, 2015)

July 9, 2015

http://www.reuters.com/

BEIJING – The fate of debt-ridden U.S. rare earth miner Molycorp rests on China’s efforts to crack down on networks that smuggled as much as 40,000 tonnes of the vital technology metals out of the country last year, driving down global prices.

Greenwood, Colorado-based Molycorp is the sole U.S. domestic supplier of rare earths used in everything from smartphones to military jet engines and hybrid vehicles. In 2011, it relaunched its huge Mountain Pass mine in California expecting prices to stay high after China, which dominates world supply, restricted exports. Last month it filed for bankruptcy protection as operating losses mounted.

Customs police in the eastern Chinese port of Qingdao last month arrested five traders following a nine-month investigation into a rare earth and ferromolybdenum smuggling ring worth nearly $18 million.

That was no one-off. Chinese authorities have been struggling since 2010 to smash an illegal supply chain in which rogue miners deliver ores to unauthorized separation facilities, with the finished products then disguised and shipped abroad.

“Traders go through all kinds of channels and make false product declarations at customs – marking it as alumina or even washing powder,” said Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry.

Mining’s $143 Billion Stock Rout Signals Escalating China Fears – by Jesse Riseborough (Bloomberg News – July 8, 2015)

July 8, 2015

http://www.bloomberg.com/

Fears of faltering Chinese growth ignited a $143 billion meltdown in global mining stocks as investors confront sputtering demand in the world’s biggest consumer of commodities.

The Bloomberg World Mining Index of 79 producers dropped 17 percent in the past 10 days as prices for industrial metals such as copper, nickel and aluminum sank to six-year lows. The price of iron ore, a key profit driver for top-ranked BHP Billiton Ltd. and Rio Tinto Group, slumped 10 percent Wednesday to its lowest since at least 2009 as new supply floods the market.

China is set to grow at its slowest pace in a quarter of a century, sapping the country’s demand for commodities and crimping mining companies’ profits. Chinese authorities are struggling to contain a $3.5 trillion stock rout with a slew of market-boosting measures, rattling investors.

“It’s pretty bleak at the moment, there’s no getting away from that,” James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2 billion Natural Resources Fund in London, said in an interview. “Overwhelmingly it’s technical factors that are driving the severity of the move. Amazing moves to happen, just whipsawing around like this.”

We’ll manage mining, thanks – Editorial (Thunder Bay Chronicle-Journal – July 8, 2015)

July 8, 2015

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

Southern Ontario environmental groups should lobby more extensively in their own backyard before briefly flying over and criticizing development in ours.

Last week, Toronto-based Wildlands League said that mining exploration in the Ring of Fire has already caused damage to the Far North’s ecosystem. It released aerial photos showing exploration activity — rudimentary mining camps and a runway.

Wildlands claims that the photos challenge the idea of mining exploration having little impact on the area. What would Wildlands have exploration companies do — drop their employees into the bush by helicopter to sleep on the ground and conduct staking operations without cutting a single tree? The “impact” is a minor intrusion on a massive area of the Far North.

Meanwhile, one has only to look at the constant expansion of urbanization north of Toronto to see what new housing and strip malls can do for the environment — destroy it. The steady advance of development has gobbled up thousands of acres of once productive farmland and wildlife habitat.