Republic of Mining

COLUMN-Technology may lower commodity prices, widen nation gaps – by Clyde Russell (Reuters U.K. – June 23, 2015)

June 23, 2015

http://uk.reuters.com/

LAUNCESTON, Australia, June 23 (Reuters) – The image of miners as mainly burly blokes in hard hats and high-vis vests is likely to change in the next decade to one of computer geeks controlling automated machines while sitting thousands of kilometres away from the pit.

That’s certainly the scenario outlined in a major report called “Australia’s future workforce?”, released last week by the Committee for Economic Development of Australia (CEDA), a think-tank encompassing businesses, community groups and academic institutions.

More than five million jobs, or about 40 percent of Australia’s current workforce, have a “moderate to high” likelihood of disappearing in the next 10 to 15 years, CEDA said in the report.

What is relevant for commodities in this scenario is that mining and agriculture are among the sectors likely to be affected the most because of technological advancements.

The report notes that technological changes, while disruptive, often lead to higher incomes and increased employment opportunities as more wealth is created and productivity boosted.

Approval sign of progress: Noront – by Carol Mulligan (Sudbury Star – June 23, 2015)

June 23, 2015

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

The approval with amendments of the terms of reference for Noront Resources’ Eagle’s Nest Mine is a sign of real progress in developing the Ring of Fire asset, says company president and chief executive officer Alan Coutts.

Noront now has “the clarity and the endorsement” it was seeking from the Government of Ontario to move ahead with work on the project, Coutts said Monday.

Environment and Climate Change Minister Glen Murray announced Friday his ministry was giving a qualified approval to Noront’s terms of reference, the first step in the environmental assessment for the nickel, copper and platinum group element mine.

Noront submitted the terms of reference to the ministry in 2012, revised them at the ministry’s request and resubmitted them in December 2013, and has been waiting for approval to move ahead since.

The new round of amendments wasn’t completely unexpected, especially the technical ones, said Coutts, who couldn’t say how long it would take Noront to do the work on those amendments.

Mining to face worker shortage: Report – by Carol Mulligan (Sudbury Star – June 23, 2015)

June 23, 2015

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

Few children say they want to be miners when they grow up, which is one of the reasons the mining industry will experience a serious shortage of workers in the next decade.

Weak commodity prices have resulted in a lull in mining, but the Mining Industry Human Resources Council (MiRH) is projecting the industry will be short more than 106,000 workers in 10 years unless the situation is turned around.

MiHR published its 2015 mining labour market report recently, an in-depth forecast for the next two, five and 10 years about the existing workforce, demographics and diversity, and other challenges.

The report is meant for companies, unions, post-secondary school institutions, government and other stakeholders, said MiHR executive director Ryan Montpellier.

Among the key findings in the report are:

VIA proposes replacing Budd Cars – by Jim Moodie (Sudbury Star – June 23, 2015)

June 23, 2015

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

A new plan for the Sudbury-White River VIA train puts the remote rail service in jeopardy, an industry analyst is warning.

Greg Gormick, a policy consultant, says VIA Rail president Yves Desjardins-Siciliano recently told a group of southwestern Ontario mayors that the self-powered Budd Cars that ply the Sudbury-White River line will be repurposed on routes in their area and replaced in the North by a locomotive-hauled passenger coach and freight car.

“I was shocked,” says Gormick, who sat in on the meeting. “I can’t conceive of this, knowing the costs behind it.” He says Desjardins-Siciliano described the plan twice last week, once to a private audience in St. Mary’s and then at a public meeting Sarnia.

“He’s promoting this fantasy shuttle service that would go back and forth between London and Sarnia and London and Windsor, using the Budd Cars,” Gormick says.

VIA rail is an arm’s-length Crown corporation, but Gormick says there is a political angle to the VIA president floating the idea at this time. “We’re talking about someone who works for the Conservatives and he’s out doing some pre-campaigning for them,” said Gormick. “This plan for southwestern Ontario conveniently wouldn’t kick in until after the election.”

China’s Zijin targets Australian gold miner in M&A spree – by James Regan (Reuters U.S. – June 22, 2015)

June 22, 2015

http://www.reuters.com/

SYDNEY – Zijin Mining Group launched a bid for Australian gold explorer Phoenix Gold on Monday, the Chinese company’s third planned acquisition of a foreign mining asset in less than a month.

Long-dormant M&A activity in Australia and other mining-intensive countries is showing signs of a rebirth, with Zijin the most acquisitive to date and with the deepest pockets.

“The company is open to opportunities around the world,” Zijin Executive Director and Vice President George Fang told Reuters. “It is a goal to find more gold or other assets.”

In May Zijin announced it was issuing shares to raise 10 billion yuan ($1.61 billion) for acquisitions. Before launching its A$47 million ($36.55 million) offer for Phoenix, it accumulated a 17.9 percent interest in the company.

Zijin, one of China’s largest gold mining companies, unveiled two acquisitions in May for more than $700 million, one in Papua New Guinea and one in Democratic Republic of Congo.

A missed opportunity for marginal iron ore producers – by Stephen Bartholomeusz (The Australian – June 22, 2015)

June 22, 2015

http://www.theaustralian.com.au/business

Has the slide in the iron ore price over the past week signalled the closing of a small window for the recapitalisation of marginal producers?

For a few weeks the price had been firming to hold around the $US64 a tonne level, well above the $US47 a tonne seen earlier this year when the collapse in the price was seen as the death-knell for smaller and higher-cost producers. It was that plunge that triggered the failed Fortescue Metals campaign to try to force/coerce Rio Tinto and BHP Billiton into winding back their production.

But over the past week, the price, which had seen some previously mothballed production brought back into the market, has slipped back towards $US60 a tonne. That raises the possibility, indeed probability, that the firming of the price was an aberration.

The most likely explanation for the bounce in the price is that supply disruptions in April and May caused by weather affecting output from the Pilbara and the timing of shipments from Brazil coincided with a low-point in the inventory cycle of China’s steel producers. If that were the case, it would be a temporary phenomenon.

If the edging down in the price over the past week does reflect a gradual return to settings that better reflect the underlying balance of supply and demand, the period that preceded it could represent a missed opportunity for some of the smaller players trying to survive and position themselves for a potentially very prolonged period of much lower prices.

Yellen Surprises Gold Bulls in Retreat by Reviving Rally – by Megan Durisin (Bloomberg News – June 21, 2015)

June 22, 2015

http://www.bloomberg.com/

Janet Yellen took the gold market by surprise. Bullion had its biggest rally in a month after Federal Reserve Chair Yellen and her fellow policy makers cut their long-term projections for U.S. interest rates. Money managers had anticipated officials would tighten monetary policy faster and reduced their net-long position in gold to a five-week low the day before the central bank’s statement.

The outlook for gradual rate increases sparked renewed investor interest, and more than $880 million was added last week to the value of assets in exchange-traded products backed by the metal. Higher rates curb bullion’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities. The Bloomberg Dollar Spot Index fell for two straight weeks.

“The Federal Reserve has signaled they will be moving in a glacial manner, which is causing the U.S. dollar to decrease,” Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey, which oversees about $170 billion, said by phone. “There’s an upward bias to gold, and we believe it’s being directly related to dollar weakness.”

Morganlander expects bullion prices to stabilize before being dragged lower by improving U.S. economic growth.

Why would we choose not to make money? Rio’s iron ore boss speaks out – by Vicky Validakis (Australian Mining – June 22, 2015)

June 22, 2015

http://www.miningaustralia.com.au/home

Rio Tinto’s iron ore boss Andrew Harding says long-term demand for the commodity is strong, but warned high-cost producers would not last long in the current market.

Speaking to Rio’s M2M magazine, Harding said while demand growth for iron ore isn’t as strong as it was, the long-term outlook was sound.

Pointing to the continued urbanisation of people in China, India, Africa, and South America, Harding said the need for steel would remain strong.

“As developing countries urbanise, and people move from rural to urban ways of life, infrastructure needs change. They build tall apartment blocks and link up the urban areas with roads, railway lines, airports and bridges – all using massive amounts of steel,” Harding said.

Harding also highlighted the importance of demand from the developed world in replacing ageing infrastructure.

“Even though Japan, for instance, has had no to very low growth for a considerable period, it’s still been importing around 130 million tonnes of iron ore every year,” Harding explained.

The People v. the Coal Baron – by David Segal (New York Times – June 20, 2015)

June 22, 2015

http://www.nytimes.com/

Don Blankenship always knew exactly what he wanted during the years he ran Massey Energy, once the sixth-largest coal company in the United States. He had specific and emphatic ideas about how to operate mines, how to treat employees and how to deal with regulators. When he issued instructions, he wanted them followed to the letter, and this wasn’t just true about his business.

It was also true about his breakfast.

His former maid, Deborah May, discovered this when she was dispatched one morning to McDonald’s to pick up an egg-and-cheese biscuit for her boss. What she returned with had bacon in it, and that was a problem. Mr. Blankenship flung the bacon, Ms. May recalled in a deposition, part of a lawsuit over unemployment benefits.

“He grabbed my wrist,” she said, and gave her a quick lecture: “Anytime I tell you to do anything, I want you to do exactly what I tell you to do and nothing more and nothing less.”

That was a well-known directive at Massey Energy. Middle managers would occasionally find cans of Dad’s Root Beer on their desks — a mnemonic for “Do as Don Says.”

Journalist burnt to death by mining mafia in Madhya Pradesh (India Today – June 21, 2015)

June 22, 2015

http://indiatoday.intoday.in/

A 40-year-old local journalist was burnt to death allegedly by three persons, suspected to be closely linked to sand mafia, who set him ablaze apparently over his refusal to withdraw a court case, police said on Sunday.

The burnt body of Sandeep Kothari, who was abducted from Katangi tehsil in Balaghat district two days back, was found lying near railway tracks at Sindi town in Wardha district of east Maharashtra on Saturday night, police said.

Additional Superintendent of Police Neeraj Soni said that Kothari was out of bail for the last two months in a rape case. “His (Kothari’s) body was identified by his brother,” it said.

BSP demanded a CBI probe into the murder, saying the scribe’s family was being “tormented” by the sand mafia in the past as he had “exposed” their activities. Former MLA from Balaghat, Kishore Samrite said Kothari was falsely implicated in more than 12 criminal cases.

“He was externed as he wrote against and also lodged complaints against manganese and sand mafias and other high and mighty people involved in organised crimes. His family too was tormented by mafias,” said Samrite.

Red Chris Mine gets green light from B.C. government (Canadian Press/CBC News BC – June 19, 2015)

June 22, 2015

http://www.cbc.ca/news

Mine is owned by same company that operates Mount Polley

A gold and copper mine in northwestern B.C. that still faces angry opposition from its neighbours in Alaska has received approval for a full operating permit from the provincial government.

B.C. Minister of Energy and Mines Bill Bennett announced Friday that the Red Chris Mine, owned by Imperial Metals, will soon be in full production, despite environmental concerns from First Nations, environmental groups and Alaskans, who are downstream from the mine site.

Those worries were magnified last summer, when a tailings pond collapsed at the Mount Polley mine, another Imperial Metals-owned mine in interior B.C.

Bennett said he’s confident the Red Chris Mine, located about 130 kilometres from the Alaska border, won’t experience a similar breach because the tailings storage facility has undergone three independent reviews.

He noted the mine has operated successfully for months on a temporary permit while officials monitored the facility.

Commentary: Govt needs to maximize benefits from Freeport – by Riyadi Suparno (Jakarta Post – June 22, 2015)

June 22, 2015

http://www.thejakartapost.com/

Timika, Papua – History is often forgotten when people discuss the fate of US-based Freeport McMoran’s copper, gold and silver mining operation in Papua. People tend to use the current situation to judge what happened in the late 1960s.

People critical of Freeport are quick to point out that the company has plundered Indonesia’s mining wealth in Papua since 1967 (or 1973, when its mines began production). They forget, however, to mention the situation at the time when Freeport entered Papua.

We need to consider at least three things about the situation when Freeport was given its mining contract of work (CoW) from the government of then newly-installed president Soeharto.

The first thing is that Indonesia was in a dire economic situation following the fall of strongman Sukarno, who brought Indonesia to its knees at the end of his two-decade-long rule.

In that context, Soeharto drafted a foreign-direct-investment law to attract badly needed investment. Freeport was the first foreign player to commit to large-scale investment in Indonesia, and the CoW it signed was the first of its kind.

Ontario Approves Terms of Reference for Noront Resources’ Eagle’s Nest Mine

June 22, 2015

http://norontresources.com/

Allows Provincial Permitting Process to Advance for First Mine in the Ring of Fire

TORONTO, ON–(Marketwired – June 22, 2015) – Noront Resources Ltd. (“Noront”) (TSX VENTURE: NOT) has received a Notice of Approval from the Ontario Ministry of Environment and Climate Change on the Terms of Reference for its Eagle’s Nest nickel-copper-platinum-palladium project. The Terms of Reference, approved with a number of amendments, allows the company to move forward on the environmental assessment process (EA) for what is expected to be the first mine in the Ring of Fire.

“This is an important step because it allows us to advance the provincial EA process for Eagle’s Nest and provides direction on how the province would like us to work with local communities,” stated Noront President and CEO, Alan Coutts. “We recognize the significant role First Nations will play in our mine development and we remain eager to sit down with the communities to discuss how we can work together in this important undertaking.”

Noront has been collecting baseline environmental data on its Eagle’s Nest mine, evaluating impacts and developing mitigation strategies for three years. A draft Environmental Impact Study/Environmental Assessment Report was completed and circulated for comment in December 2013. Going forward, the additional work defined by the Terms of Reference amendments will be integrated into our existing documentation to satisfy both the federal and provincial environmental assessment requirements.

Gold mine cost cutting not allaying margin falls – GMP – by Lawrence Williams (Mineweb.com – June 22, 2015)

June 22, 2015

http://www.mineweb.com/

An analyst’s report from GMP points to declining profit margins among the world’s top and mid-tier gold miners.

FUNCHAL – Some interesting research from analysts at Canadian headquartered GMP Securities builds on a theme we covered here in these pages around six weeks ago. This suggested that, if anything, the cost cutting programmes entered into by most major and mid-tier gold mining companies may have largely gone as far as they can go. (See: Has gold mine cost cutting run its course?)

Indeed in its latest mid-year report the Canadian brokerage and investment bank points out that despite some seemingly effective cost cutting, profit margins have been continuing to fall regardless. It bases its analysis on All In Sustaining Costs (AISC) and that these, despite being far more encompassing, and less open to company by company variations than cash costs, are still reckoned by many bank analysts not to go far enough to account for all corporate costs in running modern day gold mines.

The mining companies have been entering into cost reductions that may perhaps be considered as window dressing to keep individual and institutional holders happy in that the easy cuts are being made regardless of the longer-term implications these may have on a company’s future.

New South Africa mine union boss decries ‘apartheid’ wage system – by Ed Stoddard (Reuters U.S. – June 21, 2015)

June 22, 2015

http://www.reuters.com/

WESTONARIA, SOUTH AFRICA – The newly elected head of South Africa’s biggest mine union said on Sunday that his members were still being paid “apartheid” wages, signaling a hard line ahead of gold sector wage talks due to start on Monday.

David Sipunzi, formerly a regional leader from the gold-producing Free State province, was elected general secretary of the National Union of Mineworkers (NUM) earlier this month, replacing veteran Frans Baleni.

The leadership shake up has come just ahead of what are expected to be tough negotiations in South Africa’s ailing gold sector, which is grappling with depressed prices, falling production and rising costs.

Speaking to Reuters ahead of a rally in the mining town of Westonaria west of Johannesburg, Sipunzi defended NUM’s demand for wage hikes of around 80 percent for its lowest-paid members, who make between 5,000 rand ($410) and 6,000 rand monthly.

“We expect them to meet our demands. Eighty percent of just over 5,000 rand is not too much. The CEOs are raking in millions. But the indications are that they are going to plead poverty,” he said.