Republic of Mining

Mining heavyweights seek to build mid-tier gold producer in $190M Newmarket-Crocodile merger – by Peter Koven (National Post – May 12, 2015)

May 12, 2015

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

TORONTO – Several mining industry heavyweights have teamed up in a deal they hope will be the first of many as they seek to build a new mid-tier gold producer.

Newmarket Gold Inc. and Crocodile Gold Corp. announced a friendly $190 million merger on Monday that will give Newmarket control over most of the combined board and management team.

Crocodile is an established gold producer in Australia, while Newmarket is little more than a shell company at present. However, Newmarket boasts some very big names on its board, including entrepreneurs Lukas Lundin, Randall Oliphant (of New Gold Inc.) and Raymond Threlkeld (of Rainy River Resources Ltd.). The company’s plan is to use the Crocodile mines as a platform to buy more high-quality gold assets under the “Newmarket” name.

“There is lots of competition for assets, but that’s why we put this team together,” Newmarket chief executive Doug Forster said in an interview.

ONTARIO MINING ASSOCIATION NEWS RELEASE: Looking Beneath the Surface – How Mining Taxes Benefit Ontario

May 12, 2015

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

When assessing provincial revenues from mining, one must take into account that Ontario’s mining tax is really just the tip of the proverbial iceberg with regards to the sector’s economic contribution to the province. Mining tax is paid on top of all corporate taxes, payroll taxes, sales taxes, permitting fees and other business taxes. When added up, Ontario mining companies’ tax contributions to all levels of government are more than $1 billion annually, which pays for necessities such as roads, schools, hospitals, community centres, electrical grid access for remote communities, and other public good priorities. The value of mineral production in Ontario was $11 billion in 2014.

All jurisdictions must balance the need for capital investment to develop their mineral resources with the desire to increase revenue through higher taxation. There are many models for meeting this challenge – in Ontario, we don’t risk the taxpayer funding up front by paying for infrastructure and offering competitive hydro rates. Instead, we require mining companies to take on the risk, and subsequently offer tax breaks when the project is up and running, employing and spending.

Benchmarking the cost to mine in Ontario, therefore, requires “apples to apples” comparisons. Jurisdictions with higher mining tax rates have lower electricity prices and government cost-sharing on infrastructure. A recent report indicates that exploration and mining costs are particularly inflated in the North, where companies need to invest in lacking, but essential infrastructure such as ports, power plants, winter and permanent roads, and accommodation facilities.

How CBC found the secret diamond royalty – by Rita Celli (CBC News Business – May 12, 2015)

November 3, 2015May 12, 2015

http://www.cbc.ca/news/business

For Rita Celli’s Ontario Today program on diamond mining, click here: http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150512_18140.mp3

Ontario government breaches its own confidentiality rules to explain royalties for salt and diamonds

For stones prized for their brilliance and clarity, the true value of Ontario’s only diamond mine was murky — until the CBC investigation.

The Michener-Deacon Fellowship for Investigative Journalism allowed me the time to dive into Ontario’s opaque accounting.

For months, no one in the Ontario government or De Beers Canada would answer whether if, when, or how much of the legislated royalty was paid.

Both the current and a former provincial mines minister told CBC that the diamond royalty must be kept confidential. Preserving secrecy is spelled out in the Ontario Mining Act. Here’s how this mystery started to unravel.

I studied a variety of corporate and public accounts searching for an answer. At some point along the way, I figured out that three Ontario ministries collect a version of mining profits tax or royalties.

From a number of sources, I determined that the Ministry of Northern Development and Mines (MNDM) collects a royalty on salt.

Diamond royalties a closely guarded secret in Ontario – by Rita Celli (CBC News Business – May 12, 2015)

November 3, 2015May 12, 2015

http://www.cbc.ca/news/business

For Rita Celli’s Ontario Today program on diamond mining, click here:http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150512_18140.mp3

CBC News investigation reveals government royalties from diamonds totalled $226 last year

Ontario’s only diamond mine is known for its exceptional quality stones, but according to official documents, the provincial government made more money on salt royalties in 2013-14 than diamonds.

De Beers Canada, which owns the only diamond mine in the province, paid $226 in royalties while salt netted the province $3.89 million in royalties.

The diamond royalty stirred a huge debate when the Ontario government suddenly introduced it in 2007. Then-premier Dalton McGuinty promised it would enrich all Ontarians. He promised the money would be used to hire more nurses and keep class sizes small in schools.

The real value has been a closely guarded secret, by government and the company, until the CBC-Michener-Deacon investigation. That secrecy has baffled many experts consulted by the CBC, including accountants, and auditors.

“It’s hard to believe that in a jurisdiction like Ontario there would be this lack of transparency,” says Paul Zimnisky, an independent diamond analyst, based in New York.

Commentary: Made in America Depends on Being Mined in America – by Hal Quinn (The National Mining Association – May 11, 2015)

May 12, 2015

http://www.nma.org/index.php

Hal Quinn is the president and CEO of The National Mining Association.

As global demand for minerals increases — driven by rising population, urbanization and more modern-day gadgets and electronics — to be “Made in America” will increasingly require more minerals be mined in America.

Yet the U.S. has one of the longest permitting processes in the world for mining projects.

An inefficient and duplicative permitting system for mines that produce the essential minerals for basic industries, technology, national defense and other products made in the U.S.A. threatens American manufacturing. The Senate Energy and Natural Resources Committee meets Tuesday to open debate on a bill sponsored by Republican Sen. Lisa Murkowski of Alaska to fix that, and to ensure America’s domestic mining policy doesn’t hinder the nation’s progress and future promise.

There have been many executive orders and legislative policies directed at providing a more efficient and accountable regulatory framework for manufacturing, infrastructure and energy. However, they often omit the mining sector which supplies the resources necessary for these industries to succeed.

Relax. Alberta’s NDP isn’t the energy deal killer – the market is – by Tim Kiladze (Globe and Mail – May 12, 2015)

May 12, 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.

My dear friends in the wild rose province: Deep breaths.

Instead of offering Alberta’s premier-designate time to absorb her party’s shocking majority win, some provincial big wigs – including energy executives, who should know better – have pounced on Rachel Notley, suggesting her victory will spell the end of Canadian energy. The morning after the New Democrats won the election, there were already suggestions the incoming leader must reassure the public that she won’t nationalize the oil and gas industry.

I’m assuming most Albertans aren’t in such a panic – the NDP wouldn’t have won in a landslide otherwise. But there seems to be an underlying fear that the provincial NDP government and its pending royalty review will demolish any hopes of developing energy assets – and by extension, will destroy future deal flow.

What a knee-jerk reaction. Across the country, the NDP may not be cozy with producers of energy from conventional sources, but political parties almost always move to the centre once they are elected. And their reputation for killing deals can just as easily be slapped on their rivals. On this front, let’s not forget that Conservative governments are no pushovers, either.

ALBERTA: Rachel Notley’s victory shows the system does work – by Margaret Wente (Globe and Mail – May 12, 2015)

May 12, 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.

Back in 1990, in a fit of pique, I cast my vote in Ontario for Bob Rae and the NDP. I never expected him to win. I was just mad at the other guys. Imagine my surprise when I woke up the next morning and discovered he was premier. The entire province was aghast. I thought it would be a train wreck, and it was.

Will Rachel Notley be a train wreck? I don’t think so. Unlike Mr. Rae, she doesn’t feel like the leader of a left-wing horde of crazies who got in by mistake. She feels like a gust of fresh air blowing the cobwebs out of all those stale backrooms where old boys lurked.

When Albertans woke up the day after the election, a lot of them were smiling. Ms. Notley is by all accounts level-headed, smart and down-to-earth, like her dad. Even though most of them didn’t vote for her, she’s riding an upswell of goodwill.

Mr. Rae’s crew were red-diaper socialists who really did think that capitalism and big business were the root of all evil. They despised the private sector so much that the poor saps who happened to work on Bay Street couldn’t even get an audience with the government. Ms. Notley has set a different tone. She has been courteous to the oil and gas people, some of whom have practically gone into cardiac arrest.

Germany Divided Over Future of Coal – by Rachel Knaebel (Equal Times.org – May 11, 2015)

May 11, 2015

http://www.equaltimes.org/

On 25 April, 6000 people formed a human chain stretching over seven kilometres in the Rhineland mining area in western Germany to protest against the role of coal in the country.

At the same time, in Berlin, 15,000 people were taking part in a demonstration called by the mining sector union IG BCE.

They were protesting against the proposal of the German Minister for Economic Affairs, Sigmar Gabriel, to introduce an extra tax on the country’s oldest coal power plants.

The objective: to reduce Germany’s greenhouse gas emissions. Berlin has committed to reducing CO2 emissions by 40 per cent by 2020, compared with 1990 levels. To achieve this, Germany’s coal power plants need to do their bit, according to the ministry.

Environmental associations agree, and they see the proposal as a first step towards a coal phase-out, following on from the nuclear phase-out to be completed by 2022.

Transparency act could muddy things with FNs, assoc. warns – by Jonathan Migneault (Sudbury Northern Life – May 11, 2015)

May 11, 2015

http://www.northernlife.ca/

Aimed at corruption, Mining Assoc. prez says act could be used against First Nations

A new transparency act for the mining industry may go too far when it comes to First Nations, says the Mining Association of Canada.

The Extractive Sector Transparency Measures Act (ESTMA), which received royal assent in December 2014, and is expected to come into effect in June, requires mining companies to publicly disclose payments greater than $100,000 they make to foreign and domestic governments.

“It’s an anti-corruption measure,” said Pierre Gratton, the president and CEO of the Mining Association of Canada. “By having companies disclose what they pay, then citizens of those countries can ask questions about what their governments might be doing with that money.”

The act’s purpose, as it appears in the document itself, is to “implement Canada’s international commitments to participate in the fight against corruption through the implementation of measures applicable to the extractive sector, including measures that enhance transparency and measures that impose reporting obligations with respect to payments made by entities.”

Mining companies to face more transparency – by Rita Celli (CBC News Business – May 11, 2015)

May 11, 2015

http://www.cbc.ca/news/business

For Rita Celli’s Ontario Today program on mining, click here: http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150511_48892.mp3

When federal law requires reporting of all payments to government, it will shine light on royalties

Canadian-owned oil, gas and mining companies must begin reporting next year all payments of more than $100,000 for government services, including port fees and royalties, beginning a new era of transparency in the mining sector.

The federal government’s new Extractive Measures Transparency Act will give Canada similar legislation to what exists in the U.K. and the U.S. “There is opacity,” says Pierre Gratton, president and CEO of the Mining Association of Canada.

Details are still being finalized, but the legislation is designed largely as a way to cut down on corruption in Third World countries. The industry likes the new disclosure rules because it puts all companies on the same playing field, Gratton says.

“Our view was that more disclosure is better. We’re going in with eyes wide open,” says Gratton, acknowledging that the revelation of new financial details will likely spark a different kind of debate in Canada, about whether mining companies pay enough taxes.

COLUMN-China stimulus, jobs worry may boost some commodity exports – by Clyde Russell (Reuters India – May 11, 2015)

May 11, 2015

http://in.reuters.com/

LAUNCESTON, Australia, May 11 (Reuters) – China’s efforts to re-energise its economy through interest rate cuts are probably not enough to give much of a boost to commodity import demand, but oddly enough may act to boost some commodity exports.

The People’s Bank of China cut interest rates for the third time in six months on May 10 in the wake of weaker-than-expected trade and inflation numbers.

Analysts are divided on whether the rate cut will have much of an impact, with a seeming consensus that at best it will act to halt the slowing of economic growth, rather than increasing the pace.

For natural resource producers, already pressured by prices close to multi-year lows for several major commodities such as iron ore and coal, even a stabilisation of economic growth around Beijing’s 7 percent annual target would be good news.

However, for China’s commodity demand to rise in any meaningful way, it’s likely that fiscal stimulus in the form of increased spending on infrastructure and social housing will have to be put in place.

Fortescue founder asks Australians to fight Rio, BHP iron ore plans – by James Regan (Reuters U.S. – May 11, 2015)

May 11, 2015

http://www.reuters.com/

SYDNEY – May 11 Fortescue Metals Group Chairman Andrew “Twiggy” Forrest on Monday called on Australians to urge the government to stop expansion plans by iron ore miners Rio Tinto and BHP Billiton, saying they were jeopardizing the economy.

The plea by the billionaire philanthropist and founder of the world’s fourth-biggest iron ore miner was condemned by the national mining lobby, the Minerals Council of Australia, for threatening to set the country on an “interventionist path.”

Forrest has accused Rio and BHP of over-producing to drive out competitors from the $60 billion-a-year Chinese import market despite Fortescue quadrupling its own production in the last seven years.

“These big companies say they must flood the market next year and the year after and the year after even though it will crash the price further,” Forrest said in an editorial in Sydney’s Daily Telegraph. “Every time they say this the price falls again.”

Iron ore prices .IO62-CNI=SI are trading off their lows at $60.50, but still 55-percent under last year’s peak. For every $1 price fall, the Australian economy lost A$800 million ($632 million) in foreign income, according to Forrest.

Mining for more: How much is mining really worth to Ontario? – by Rita Celli (CBC News Business – May 11, 2015)

May 11, 2015May 11, 2015

http://www.cbc.ca/news/business

For Rita Celli’s Ontario Today program on mining, click here: http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150511_48892.mp3

Are low royalty rates making the province a tax haven for mining or building a viable industry

Ontario has collected about 1.5 per cent in royalties on the billions of dollars worth of ore extracted in the province over the past decade, but critics say that’s not enough for the loss of non-renewable resources, a CBC News investigation supported by Michener-Deacon shows.

“One and a half per cent! That’s like 10 times less than a tip at a restaurant. Can’t we require that they tip us 15 per cent for using and extracting our resources?” says Ugo Lapointe of Mining Watch Canada.

In Ontario, companies pay a mining profits tax on precious and base metals. When the company makes money, it’s supposed to pay this so-called royalty.

Critics say precious and base metals are Crown assets and that the province should get the best deal possible as compensation for the loss of non-renewable natural resources. But the mining industry and government officials argue that mining is a uniquely expensive enterprise and that focusing on royalties distorts the big picture.

Vale to divide and conquer by lifting high-grade iron ore output – by James Wilson (Financial Times – May 10, 2015)

May 11, 2015

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

Vale is keen to build up its supply of higher-quality iron ore in a move that could increase pressure on some rival producers in the global market for the steelmaking commodity.

The Brazilian miner is one of a quartet of companies that dominate the global market in iron ore, where prices have plummeted over the past year as a glut of supply — mainly from Australian producers — has encountered weakening Chinese demand.

Vale’s recent indications that it would be prepared to hold back some supply have helped to arrest the slide in the iron ore price, while underpinning a rally in the company’s shares in the past month.

In an interview Luciano Siani, chief financial officer, did not rule out Vale cutting its growth plans for next year. The miner expects to produce 340m tonnes of iron ore this year and has previously estimated that 2016 output will be 376m tonnes.

However, Mr Siani said Vale would be likely to “push to the fullest” its production of the highest grade of iron ore, which commands a premium price from steelmakers. By contrast Vale would be more likely to “manage” its more “standard” iron ore supplies, he said.

Waterloo Region reaps dividends by being conduit to Baffin Island – by Greg Mercer (Waterloo Region Record – May 9, 2015)

May 11, 2015

http://www.therecord.com/waterlooregion/

BRESLAU — The sun is just starting to peek above the horizon as a handful of men in work boots suck on their last cigarettes outside the airport terminal, getting ready for the long commute.

In a few minutes, they’ll join dozens of others boarding the Boeing 737 for the five-and-a-half hour charter flight to Mary River, Baffin Island — where a small army of pipe fitters, machinists, cooks, engineers and other tradespeople are helping build and supply one of the world’s largest and most ambitious iron ore mining projects.

For hundreds of workers passing through the Region of Waterloo International Airport three times a week, Waterloo Region is a southern hub for the buried riches of the Far North. And that connection is pumping millions into the local economy.

The Mary River Project, run by an Oakville-based company called Baffinland, aims to move its first shipment of iron ore — the main raw material used to make steel — this summer.

The ore deposits in that part of Baffin Island, first discovered by a prospector in 1962, are so rich and pure they’re the stuff of legend. Pilots used to report the minerals would scramble their compasses as they flew over.