Republic of Mining

SPEECH: Experience proves garlands are not distributed for pessimism – by Sam Walsh, chief executive (Melbourne Mining Club – 1 July 2015, London, U.K.)

July 2, 2015

Sam Walsh is the Chief Executive Officer of London-based Rio Tinto Group, the second largest mining company in the world.

**Check against delivery**

Ladies and gentlemen it’s great to be with you tonight. I think I am the first Melbourne-born boy to address the Melbourne Mining Club here at the historic Lord’s cricket ground.

It’s customary at Rio Tinto to acknowledge Traditional Owners and I would like to pay my respects to the first Australians to play cricket in the United Kingdom in 1868. They were from the Wimmera district of my home state of Victoria.

That match was ten years before a colonial eleven took on WG Grace here at Lord’s in a match completed in just under five hours – which you will be pleased to hear is nowhere near the length of my speech tonight.

It’s been quite a fascinating year so far. A lot of commentary, free expert advice, and even some sledging has come our industry’s way.

With a history stretching back to around the time of those early matches, Rio Tinto people know what it takes to play a long and quality innings. As do many of you in this room.

Tanzania: Alert to End Uranium Mining, Nuclear Weapons – by Deus Ngowi (All Africa.com – July 2, 2015)

July 2, 2015

http://allafrica.com/

Moshi — PEACE and environmental activists from around the world are gathering here in a quest to persuade African governments to slap a ban on uranium mining and nuclear weapons as they are twin threats.

Under the K-Project for Peace, the activists, having gone through scientific studies, have formed an opinion that it is in everybody’s best interest that uranium should remain in the ground, as its extraction is in every way hazardous.

K-Project for Peace started as an appeal by Ms Racheal Chagonja, an environmental and peace activist from Tanzania, when she saw the devastating effects of uranium mining (U-Mining) to the environment, health, and rights of indigenous people in Niger and Mali.

She did not want to see this happen to her country Tanzania, a potential future U-Mining country, and sensed the urgency to halt U-Mining in active sites and stop potential future UMining sites in other African countries Ms Chagonja reached out to like-minded civil society organisations in Africa to join her and the project has since grown from an appeal to an international campaign led by young African activists.

We should face up to history and make sure Canada Day is for all: Editorial (Toronto Star – July 1, 2015)

July 2, 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.

Two years before Canada’s marks a century and a half as a united nation, we need a deep reflection on the place of the country’s First Nations.

Canada Day – even one that falls awkwardly in the middle of the working week – is a great time for waving flags. And for very good reason. We have so much to celebrate: we’re among the freest, healthiest and wealthiest people in the world.

We also have a rising generation of young people who will ensure that Canada’s best days lie ahead. On the opposite page, Carol Goar introduces us to three of the most impressive.

Yet Canada’s 148th birthday should also be a time for reflection on how we can do better. As Ken Dryden writes on our opinion page, Canada Day should be not just a commemoration of what we are, but “an expression of what we can be.”

And this year, two years before we mark a century and a half as a united nation, that should mean first and foremost a deep reflection on the place of the country’s First Nations. In the wake of the report of the Truth and Reconciliation Commission, it’s finally time to face up to that broken relationship.

Miners, mugs, Mr Asia – and bat droppings – by Trevor Sykes (Australian Financial Review – July 2, 2015)

July 2, 2015

http://www.afr.com/

Pierpont’s favourite drinking companions are geologists. Their first qualification is that they’re always thirsty, having spent their formative years chipping at rocks in the arid outback of Australia, where the nearest pub is usually 100 miles or more away.

Their second qualification is that they’re literally a down-to-earth bunch. They are quite skilled scientists, but the science of geology inevitably entails plodding around a lot of harsh landscape, so they rarely become academically out of touch with the real world.

Finally – and best of all – any geologist who’s been in the profession for a few decades has an excellent knowledge of which ore deposits are likely to be profitable and which aren’t: a characteristic which has saved your correspondent from many an investment disaster.

So Pierpont was overjoyed when he heard that John Gaskell had written his memoirs, because John is a boy who has been around. He started life in Wigan but now lives in Australia after a career that has taken him through Malawi, Malaysia, Tennessee and a few other places. As there are rocks all around our planet, most geologists have worked in the backblocks of more than one country, which gives them a good perspective on the world.

UNESCO to send group to Wood Buffalo National Park, says First Nations delegate – by Jodie Sinnema (Edmonton Journal – July 1, 2015)

July 2, 2015

http://www.edmontonjournal.com/index.html

Party will look at environment impact of oilsands development

UNESCO has agreed to send a monitoring committee to Wood Buffalo National Park to look at cumulative effects of oil, gas and hydro development on the environment, says a northern Alberta First Nation representative.

During a convention in Bonn, Germany this week, UNESCO — the United Nations Educational, Scientific and Cultural Organization — reviewed concerns raised by the Mikisew Cree Nation about the sprawling national park that straddles the Alberta-Northwest Territories border.

The Mikisew Cree had petitioned to have Wood Buffalo — a World Heritage Site since 1983 — deemed “in danger” because of the Site C hydroelectric dam on the Peace River approved by the British Columbia and federal governments, as well as oilsands development and proposed open-pit mining near the northern Alberta park.

“The Mikisew have reported that First Nations have expressed significant concern about (the hydroelectric dam’s) impacts on their hunting, fishing and agricultural areas,” reads a document posted on UNESCO’s website.

Brace yourselves for more job losses in Alberta’s oil and gas sector, economist says – by David Howell (Edmonton Journal – July 2, 2015)

July 2, 2015

http://www.edmontonjournal.com/index.html

EDMONTON – A torrent of layoffs in Alberta’s energy sector appears to have slowed as 2015 hits the halfway mark but more job losses may be around the corner, an economist warns.

“I think we are probably over the hump of the majority of layoffs but I don’t think it’s quite over yet,” Todd Hirsch, chief economist at ATB Financial, said this week.

“Over the summer months we will see, I think, a few more probably big announcements and some more layoffs in that oil and gas sector.”

Thousands of Albertans lost their jobs in the first six months of 2015. The cuts were deepest in the energy sector, as oil producers, drilling contractors and service companies reacted to the sharp decline in oil prices that started last fall.

Prices for benchmark West Texas Intermediate crude oil fell from $107 US per barrel in June 2014 to less than $50 in January, and dipped below $50 a second time in March. Workforce reductions — sometimes called “organization rightsizing” — have been widespread.

Vale Tumbles With Iron Ore Below $60 as Brazilian Stocks Advance – by Denyse Godoy (Bloomberg News – June 30, 2015)

July 2, 2015

http://www.bloomberg.com/

Vale SA, the world’s largest iron-ore miner, sank to a two-month low on concern that global supplies of the steelmaking ingredient are too high. The Ibovespa posted the best first half of any year since 2009.

Shares of Vale extended their 2015 plunge to 19 percent as Australia cut its price estimates for the commodity, saying the nation’s exports will surge. The raw material dropped below $60 a ton, paring this quarter’s gain to 16 percent.

The slump in iron ore sent a gauge of commodity shares in the MSCI Brazil to the only decline among 10 groups Tuesday. While the industry’s stock swings have abated this month, they reached the highest level since 2011 at the end of May amid a roller-coaster ride in the raw material.

“It’s hard to forecast now where the commodity is going,” Pedro Paulo Silveira, the chief economist at brokerage TOV Corretora, said in a phone interview from Sao Paulo. “Vale has fallen a lot because of prospects for iron ore.”

The stock led losses in the Ibovespa, which added 0.1 percent to 53,080.88 at the close of trading in Sao Paulo. Commodity companies account for about a quarter of the stock gauge.

Rio Tinto chief Sam Walsh tells rivals to stop sledging – by by James Chessell (Australian Financial Review – July 2, 2015)

July 2, 2015

http://www.afr.com/

Rio Tinto chief executive Sam Walsh may not have mentioned Fortescue Metals Group or Glencore by name.

But the rival mining companies were clearly on his mind as he delivered the speech at the Melbourne Mining Club’s annual gathering in London on Wednesday.

Addressing a 560-strong crowd packed into a marquee next to Lord’s Cricket Ground, Mr Walsh said 2015 had been characterised by “a lot of commentary, free expert advice, and even some sledging”.

Mr Walsh, who has held the top job at Rio since January 2013, said it was in Australia’s national interest to stick to the principles of open markets at a “challenging” time for many commodities, including iron ore, coal and aluminium.

“Some have called it a crisis of confidence and talked themselves and others into a gloom,” he said.

“It’s been suggested to me there’s a direct correlation between your position on the cost curve and the volume of your opinion. The higher on the curve, the louder you get.”

Platinum: Time for a cartel? – by Adrian Saville (Mineweb.com – July 1, 2015)

July 2, 2015

http://www.mineweb.com/

The chances are slim, and a stabilisation fund might be a better alternative.

An op-ed by Dr Adrian Saville, Professor of Economics at the Gordon Institute of Business Science, and Chief Strategist at Citadel.

In spite of the beleaguered platinum sector effectively being an oligopoly, with three suppliers controlling the bulk of new mine supply, the industry is a price taker, vulnerable to wild swings in the prices of platinum group metals (PGMs).

There are several reasons for this, including an increasingly efficient use of metals – meaning that demand doesn’t grow at the same pace as industrial activity – and a rising contribution from recycled platinum. As a consequence, supply consistently exceeds demand, translating into platinum being a “surplus industry”. Producers are thus weaker than consumers, making them price takers.

To add evidence to the above, new mine supply of platinum has slipped steadily to 5.1 million ounces (Moz) in 2014 from a peak of 6.8Moz in 2006.

K+S Said to Reject $8.6 Billion Takeover Bid by Potash Corp. – by Aaron Kirchfeld, Andrew Marc Noel and Sheenagh Matthews (Bloomberg News – July 2, 2015)

July 2, 2015

http://www.bloomberg.com/

K+S AG, the German potash supplier, plans to reject an $8.6 billion-plus takeover offer from Canadian fertilizer producer Potash Corp. of Saskatchewan Inc. because it deems the bid to be too low, according to people familiar with the matter.

The German company is preparing to announce its opposition to the bid as early as today, said the people, who asked not to be identified because the matter is private. A representative for K+S declined to comment.

Potash Corp. plans to analyze K+S’s response and reasoning before deciding on its next move, according to two people familiar with the matter. The Canadian firm still sees the industrial logic for the deal and an opportunity to reach an agreement, they said.

Saskatoon, Saskatchewan-based Potash Corp. said on June 25 that it made a “friendly” takeover bid. The proposed price was more than 40 euros a share, people familiar with the matter said at the time, prompting shares of Kassel-based K+S AG to gain as much as 39 percent. Today, the stock dropped as much as 2.3 percent.

World’s best gold forecaster is solidly bearish on bullion – by Debarati Roy and Eddie Van Der Walt (Bloomberg News/Globe and Mail – July 1, 2015)

July 2, 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.

There will be no relief any time soon from gold’s worst losing streak in almost two decades, according to the most accurate forecaster for precious metals.

After sliding about 1 per cent since December, prices will drop an additional 10 per cent by the end of 2015, reaching $1,050 (U.S.) an ounce – a five-year low – predicts Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore.

Mr. Gan topped 19 of his peers from banks including Standard Chartered PLC and ABN Amro Bank NV to become the most accurate analyst over the past two years, Bloomberg Rankings show.

Gold has fallen for four straight quarters, the longest stretch since 1997. It has been more than two years of disappointment for bulls who had been piling into exchange-traded products (ETPs) backed by the metal, accumulating a record hoard by the end of 2012. Since then, more than $81.8-billion has been wiped from the value of the ETPs backed by bullion.

[Mine workers as slaves] Japan’s UNESCO heritage bid draws ire over past labour abuse – by Elaine Kurtenach (Associated Press/Metro News – June 30, 2015)

July 2, 2015

http://metronews.ca/

GUNKANJIMA, Japan – Of countless ghostly abandoned factories and mines in Japan, this fortress island near Nagasaki is among the most notorious. It is also a source of national pride.

Gunkanjima, or Battleship Island, is one of 23 old industrial facilities seeking UNESCO’s recognition as world heritage “Sites of Japan’s Meiji Industrial Revolution” meant to illustrate Japan’s rapid transformation from a feudal farming society into an industrial power at the end of the 19th century.

UNESCO’s World Heritage Committee is expected to approve the proposal during a meeting being held in Bonn, Germany, through July 9 after Japan and South Korea informally agreed on a promise to acknowledge, though it is unclear how, that Koreans were among the people who toiled at Gunkanjima and some other sites. The compromise also includes an agreement by Japan to support South Korean proposals for some world heritage site listings.

Japan’s bid for UNESCO recognition is confined to the 1868-1912 era of the Meiji Emperor, who presided over the country’s rush to industrialize and catch up with Western colonial powers. It excludes the years that followed, when Japan annexed Korea and eventually invaded China and other parts of Asia before and during World War II.

South Africa’s platinum sector faces crunch time as prices slide – by Ed Stoddard, Jan Harvey and Silvia Antonioli (Reuters Africa – July 1, 2015)

July 2, 2015

http://af.reuters.com/

JOHANNESBURG/LONDON, July 1 (Reuters) – South Africa’s platinum sector is at a crucial juncture as the metal’s price, near six-year lows, maintains a steady decline, with analysts now contemplating a move below $1,000 an ounce.

Platinum has fallen nearly 10 percent so far this year, and at current prices of less than $1,100 an ounce, many shafts in the world’s top producing country are losing money.

“(Platinum is) still firmly in a bear market, with little evidence of a bottom as yet,” independent technical analyst Cliff Green said last week. Its break through recent technical levels is “likely to trigger acceleration closer to $1,000, then $950,” he said.

The outlook could hardly be bleaker for an industry that was hit by a five-month strike last year that resulted in big wage increases it can ill afford in the face of soaring costs.

“Half of the industry, including major producers such as Lonmin, is cash-flow negative and if platinum slides below $1,000/oz nearly two thirds of the industry could be underwater,” said Cape Town-based Investec fund manager Hanré Rossouw.

Ottawa reverses stand on health risks of asbestos in ‘landmark shift’ – by Tavia Grant (Globe and Mail – July 2, 2015)

July 2, 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.

Health Canada has strikingly revised its position on the health risks of asbestos exposure, bringing the federal government more in line with other developed countries. The recent changes to the department’s website are significant, with the page about asbestos replacing information that was dated from 2012.

Among the shifts, the site no longer says one form of asbestos – chrysotile, the type that Canada mined and exported for years that is still most commonly used – is “less potent” and does less damage than other types. The World Health Organization and other medical bodies have long said all forms of asbestos are carcinogenic.

In addition, Health Canada no longer says the danger comes when asbestos is inhaled in “significant quantities” (the WHO says there is no safe threshold); and it now clearly says that “breathing in asbestos fibres can cause cancer and other diseases.”

The last line represents “a landmark shift” by the government, “an important fact that was not previously acknowledged on the website,” said Linda Reinstein, an asbestos widow and president of the Washington, D.C.-based Asbestos Disease Awareness Organization.

Coal bid sets up clash of mining heavyweights – by Neil Hume (Financial Times – July 1, 2015)

July 2, 2015

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

Ivan Glasenberg and Sir Mick Davies set to go head-to-head over the Hunter Valley

It is a tantalising prospect for deal junkies: Sir Mick Davis going head-to-head with his arch rival Ivan Glasenberg in a takeover fight.

And one that has become a possibility with news that X2 Resources, the private equity vehicle set up by Sir Mick, is in discussions with Rio Tinto about a possible bid for its Hunter Valley coal business in Australia.

There is no love lost between Sir Mick and Mr Glasenberg, two of the biggest names in the mining world. Their relationship soured three years ago when Glencore reworked its friendly merger with Xstrata into a full-blown takeover that ousted Sir Mick as chief executive.

Since then Sir Mick has come back leaner and, arguably, hungrier. He’s raised $5.6bn from investors to buy mining assets for X2, with additional debt backing from at least one leading bank. His notoriously large frame, which inspired part of his nickname, has slimmed down. But standing between Sir Mick and his first deal is the hyper-competitive man who removed him from his last job.