Republic of Mining

UPDATE 2-Glencore disappoints with weak first-quarter metals output – by Silvia Antonioli (Reuters U.K. – May 5, 2015)

May 5, 2015

http://uk.reuters.com/

LONDON, May 5 (Reuters) – Miner and commodity trader Glencore reported weaker than expected first quarter output at some of its mining assets, with production of its top earner, copper, down 9 percent due to lower grades at two South American mines.

Glencore has a bigger exposure to base metals than iron ore compared with its large rivals. The company has a large commodity trading division, in addition to its mining and oil assets.

Bernstein analyst Paul Gait called the production figures “disappointing”, with base metals and coal lagging expectations.

Copper output was 350,700 tonnes in the first quarter, below most analysts forecasts. The fall was due to lower grades at the Alumbrera mine in Argentina and the Antamina mine in Peru, and to a maintenance shutdown at Collahuasi, in Chile.

Coal production rose 4 percent in the first quarter to 35.6 million tonnes, thanks to the commissioning of two new thermal coal projects in South Africa.

NEWS RELEASE: BC mining industry financial results continue to be under pressure in 2014: PwC survey

May 5, 2015

Lower metallurgical coal and copper prices adversely impacting outlook

VANCOUVER, May 5, 2015 /CNW/ – Lower commodity prices again impacted the profitability of the BC mining industry in 2014. According to the annual PwC BC Mining Industry Survey for 2014, the continued drop in the price of key metals and minerals, particularly metallurgical coal and copper, led to reduced revenues and margins.

The PwC survey found aggregate gross mining revenues fell to $8.2 billion in 2014, compared to $8.5 billion in 2013. Net income before taxes came in at $288 million, down considerably from $1.4 billion in 2013, amid a drop in prices for key metals produced in the province, particularly coal. Spending also fell as companies continued to hunker down and weather the ongoing market volatility. Capital expenditures, for example, fell to $1.5 billion, compared to $1.8 billion in 2013.

“In 2014 we saw investment in BC’s mining industry remain depressed as prices for its key commodities, metallurgical coal and copper, remained soft,” said Mark Platt, Partner and Leader of PwC’s BC mining practice. “Producers and developers continue to take measures to contain costs but at least producers felt some relief from the impact of the significant weakening of the Canadian dollar compared to the US dollar.”

Why the rush into Canadian gold mines may continue – by Steve Todoruk (Mining.com – May 4, 2015)

May 5, 2015

http://www.mining.com/

Sprott’s Thoughts – In the mining sector, mergers and acquisitions can deliver rapid returns to shareholders. Investors in Cayden Resources saw their shares swell by 300% in price late last year, when Cayden received a takeover offer from Agnico Eagle Mines.

Steve Todoruk, a broker at Sprott Global Resource Investments Ltd., has been eyeing the next possible takeover. He believes he’s narrowed down the most likely targets.

In a recent note, he explains why it comes down to safety for the company making the acquisition:

I’m seeing two trends in mergers and acquisitions right now, as I look around the space for the next Cayden or the next Osisko Mining (which received a generous takeover early last year).

First off, in the last bull market, many big mining companies went after mines in higher-risk jurisdictions around the world. Today, investors are retrenching towards areas that are perceived as ‘safe’ – where governments aren’t likely to change the rules or confiscate assets. Investors are increasingly risk-averse and want exposure to mines in countries like Canada, the US, and Australia.

Manitoba Hudbay workers go on strike in Flin Flon and Snow Lake – by Staff (Canadian Press/Global News – May 4, 2015)

May 5, 2015

http://globalnews.ca/

FLIN FLON, Man. — Hudbay workers in Flin Flon and Snow Lake, Man., went on strike Saturday.

The union representing the workers announced Friday negotiations with the mining company had failed and they would go on strike Saturday at noon.

Hudbay Minerals Inc. (TSX:HBM) confirmed in a news release that 180 members of the International Association of Machinists and Aerospace Workers Local No. 1848 began a strike at noon Saturday.

The striking workers represent about 12 per cent of Hudbay’s 1,460 person workforce in Manitoba, the company said.

The union has said members want changes in wages and pensions. It said 96 per cent of its members voted against an offer from the company last month. Hudbay said it has a contingency plan in place and expects its operations to continue.

B.C. government buys coal licences to stop mining dispute – by Justine Hunter and Ian Bailey (Globe and Mail – May 5, 2015)

May 5, 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.

VICTORIA and VANCOUVER — The B.C. government has devised a unique solution to head off conflict between a First Nations community and the developers of a proposed a coal mine, using its Crown corporation BC Rail to buy and hold coal licences during talks with the Tahltan Nation on managing the resource.

The province is paying $18.3-million to buy 61 licences from Fortune Minerals Ltd. and POSCO Canada Ltd. in a region dubbed the Sacred Headwaters in northwest British Columbia. The area is important to the Tahltan Nation because the headwaters of three important salmon rivers – the Stikine, Skeena and Nass – are there.

The companies will be able to buy back the assets at their original price if they reach an agreement with the Tahltan in the next 10 years.

Anthracite coal deposits that the companies want to mine are in an area within the Sacred Headwaters called the Klappan, which has been identified as having significant cultural significance to the First Nations community.

BHP Wins as Modi Fails to Get India Coal Trains Running on Time – by Rajesh Kumar SinghDebjit Chakraborty (Bloomberg News – May 3, 2015)

May 5, 2015

http://www.bloomberg.com/

Prime Minster Narendra Modi’s plans to shift India’s economy toward manufacturing and away from agriculture and services are being held up by a coal shortage.

Actually, there’s plenty of coal, just not enough trains to get it to the power plants. While about 200 railway convoys arrive every day at Coal India Ltd.’s depots, Technical Director Nagendra Kumar said the company needs 230 of them. The state-run company supplies more than 80 percent of the nation’s coal.

India will need to upgrade its railway network for Coal India to open more mines and deliver its product, said Deven Choksey, managing director at KR Choksey Shares & Securities Pvt., a Mumbai-based brokerage.

“The infrastructure bottlenecks are stopping Coal India from rising to its full potential,” Choksey said. Coal generates about 60 percent of India’s electricity.

With output climbing at Coal India, the fuel is piling up at the mines. At the same time, slumping global prices mean customers are turning to imports from the likes of Glencore Plc, BHP Billiton Ltd. and Indonesia’s PT Bumi Resources.

India a year after Modi’s election: The bullish case – by Vaishali Gauba (CNBC.com – May 5, 2015)

May 5, 2015

http://www.cnbc.com/

Almost a year after the world’s biggest democracy sent a reform-minded, pro-business candidate to its top political office, the bulls still have a case to make in favor of India—at least in the longer term.

Narendra Modi’s election whipped up an optimism that soon played out in India’s markets. The BSE Sensex, India’s chief stock index, shot up roughly 40 percent after his election last year. But things have cooled a lot in 2015, with the Sensex lower by 1.8 percent year-to-date.

But in the longer term, the bulls are still making a case for India. The nation is likely to become an increasingly important source of labor for global corporations. It has the best demographics among the big emerging-market countries, said Jim O’Neill, the former Goldman Sachs Asset Management chairman who famously coined the term “BRIC”—a catch-all for Brazil, Russia, India and China. A strong domestic market and a credible legal system are factors that make India slightly more balanced than China, he said.

“India has fantastic demographics. With urbanization in its early stages, size of the working population and productivity, India has great growth potential,” said O’Neill, now a visiting research fellow at leading European think tank Bruegel.

Social licence: easy to grant, hard to revoke – by Nelson Bennett (Business Vancouver – May 5, 2015)

May 5, 2015

https://www.biv.com/

What happens to community social licence when resource projects get shelved?

When a new pipeline or mine is proposed, promises are often made to communities and First Nations to win community approval.

The social-licence agreements often go above and beyond what regulators require and can include increased environmental protection measures and deals to provide First Nations with job training and employment.

They can also include community amenities, such as the pledge by Kinder Morgan Inc. (NYSE:KMI) to fund a $500,000 upgrade to a community recreation park in Hope as part of its Trans Mountain pipeline expansion program.

But as Yukon taxpayers and mine workers are learning, it’s hard to force companies to live up to their promises and obligations when they go bankrupt.

Two mine operations in the Yukon shut down recently because the B.C. companies that own them are facing bankruptcy, leaving Yukon taxpayers on the hook for cleanup costs and workers chasing the wages owed to them.

Quebec prepared to buy rail to help rescue iron-ore mine – by Sonja Elmquist and Frederic Tomesco (Bloomberg News/Montreal Gazette – May 5, 2015)

May 5, 2015

http://montrealgazette.com/

Quebec is prepared to buy a rail line and port facilities that service a shuttered Cliffs Natural Resources Inc. iron-ore mine to pave the way for the operation to reopen under new owners.

The government also is open to buying 20 percent of the Bloom Lake mine to facilitate a deal, Economy Minister Jacques Daoust said. Purchasing the rail and port facilities could lower the mine’s operating costs by as much as $20 a ton, he said.

“We’re trying to ensure the survival of the mine,” Daoust said Friday in an interview at Bloomberg headquarters in New York. “If the last 20 percent is a problem, I will fix it.”

Cliffs suspended production at Bloom Lake in January and sought creditor protection for the operation. That put pressure on the Quebec government, which wants to boost economic activity in Cote-Nord, a region with 10.7 percent unemployment. Bloom Lake employed about 600 people when it was operational, according to Investissement Quebec, a government agency.

As recently as 2013, Bloom Lake was considered a critical part of Cleveland-based Cliffs’ strategy to build its export business to mitigate its dependence on U.S. customers.

The Environmental Disaster That is the Gold Industry (Smithsonian Magazine – February 14, 2014)

May 5, 2015

http://www.smithsonianmag.com/

The mining industry has had a devastating impact on ecosystems worldwide. Is there any hope in sight?

A global campaign to boycott what activists are calling “dirty gold” gained its 100th official follower three days before Valentine’s Day.

The pledge was launched in 2004 by the environmental group Earthworks, which has asked retail companies not to carry gold that was produced through environmentally and socially destructive mining practices. Eight of the ten largest jewelry retailers in the United States have now made the pledge, including Tiffany & Co., Target and Helzberg Diamonds. The No Dirty Gold campaign is anchored in its “golden rules,” a set of criteria encouraging the metal mining industry to respect human rights and the natural environment.

While the list of retailers aligned in their opposition to dirty gold continues to grow longer, most gold remains quite filthy. The majority of the world’s gold is extracted from open pit mines, where huge volumes of earth are scoured away and processed for trace elements. Earthworks estimates that, to produce enough raw gold to make a single ring, 20 tons of rock and soil are dislodged and discarded.

Much of this waste carries with it mercury and cyanide, which are used to extract the gold from the rock. The resulting erosion clogs streams and rivers and can eventually taint marine ecosystems far downstream of the mine site.

BHP’s South32 Has a Big Plus: China’s Not Its Chief Customer – by David Stringer (Bloomberg News – May 4, 2015)

May 5, 2015

http://www.bloomberg.com/

The mining industry’s biggest spinoff in almost a decade will offer investors a once unthinkable big plus. China’s not its biggest customer.

The world’s biggest buyer of metals will account for about 11 percent of sales for South32 Ltd., while parent BHP Billiton Ltd. and its biggest competitor Rio Tinto Group rely on China to generate more than a third of their revenue.

With less dependence on China and no iron ore mines, the new Perth-based company offers a different proposition to producers that have focused on feeding the Asian nation’s hunger for steelmaking, according to Aberdeen Asset Management Ltd.

The China story has changed since the start of the decade. Growth slowed last year to the weakest pace since 1990, while steel consumption will probably decline this year, according to the China Iron and Steel Association.

“If you’ve got a softening of growth in China, or a move to a more sustainable path, do you want all your eggs in that one basket?” said Andrew Preston, a Melbourne-based senior investment manager at Aberdeen, which oversees about $12 billion in Australia, including BHP shares.

NEWS RELEASE: High costs and lack of infrastructure inhibiting exploration and mining development in Canada’s North: Study

May 5, 2015

May 05, 2015

Capital costs for northern mines often more than double that of southern mines

A new study entitled Levelling the Playing Field reveals the cost to explore and build new mines is as much as 2.5 times higher in northern Canada, largely as a result of a lack of critical infrastructure. This is creating major obstacles to exploring and operating in Canada’s remote and northern regions.

The study was produced by the Mining Association of Canada (MAC), the Prospectors & Developers Association of Canada (PDAC), the Association of Consulting Engineering Companies – Canada, the NWT & Nunavut Chamber of Mines, and the Yukon Chamber of Mines. The report defines “north” or “northern” to include Canada’s territories, as well as remote and northern regions of the provinces.

The study’s main findings were two-fold. First, the costs of mineral exploration and building and operating mines are significantly higher in remote and northern regions of Canada’s provinces and territories. Second, this cost premium is directly linked to the lack of infrastructure in these areas.

INCO’s Roots: How Far Back? – by Marty McAllister (Inco Triangle – January 1990)

May 5, 2015

For Inco Triangle Archives, click here: http://www.sudburymuseums.ca/triangle/?home

This article came from the January 1990 issue of the Inco Triangle: http://www.sudburymuseums.ca/triangle/data/INCOTriangle-19900101.pdf

It has taken more than a century — actually, quite a lot more — to build the Inco Limited of today. There have been good times and bad times — and successes and failures, you bet. Throughout, we’ve demonstrated a capacity to learn from the things we’ve done, to grow, as our current motto says, “Stronger For Our Experience.

I think that’s a pretty good motto, don’t you? It doesn’t say anything about being perfect, but it implies a process of continuous improvement. In order to learn from our collective experience, we have to study it. As we face the changes and challenges of the future, we’ll want to know how we’ve coped with such things in the past. History is more than just nostalgic fun, although that’s what carries us past the boring parts. Confucius said: “Study the past if you would divine the future.”

To start 1990 off on the right foot, I want to back up to square one and give you a clearer picture of the many pieces that came together to form the company as we know it, and to maybe change a few pre-conceived notions in the bargain.

Battle between Canadian mining magnates for Coastal Gold Corp heats up – by Peter Koven (National Post – May 5, 2015)

May 5, 2015

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

Two Canadian mining magnates are fighting an increasingly heated battle for a tiny junior company, with one accusing the other of “incestuous behavior” within his empire.

Keith Neumeyer’s First Mining Finance Corp. has offered six cents a share (or about $10.2 million) for Coastal Gold Corp., which has a project in Newfoundland. The rival offer for Coastal, from Stan Bharti’s Sulliden Mining Capital Inc., is worth about 2.3 cents.

Given that First Mining’s offer is more than double Sulliden’s offer, one might assume that Neumeyer is convinced he will win. But that isn’t the case. Coastal’s board is currently endorsing the Sulliden bid, and Neumeyer would be surprised if that changes.

“It’s a joke,” he said in an interview. “They are obviously not acting in the best interests of shareholders and exercising their fiduciary duties properly.”

Neumeyer, who previously founded First Quantum Minerals Ltd. and First Majestic Silver Corp., thinks the problem here is inter-relationships between Bharti’s companies. Both Sulliden and Coastal are under the umbrella of Forbes & Manhattan (F&M), Bharti’s conglomerate of resource companies.

Phelps Dodge Corporation History (1885-1999)

May 5, 2015

For a large selection of corporate histories click: International Directory of Company Histories

One of the largest copper miners in the world, Phelps Dodge Corporation produces 30 percent of the copper in the United States and operates several manufacturing businesses to insulate the company from the cyclicality of copper prices. Phelps Dodge’s copper business is conducted through the company’s Phelps Dodge Mining Company subsidiary, which also produces silver, gold, and other minerals as a byproduct of its copper operations. The manufacturing side of the company’s business operates through a division called Phelps Dodge Industries, which has expanded aggressively during the 1990s.

The manufacturing businesses include a ten percent interest in Accuride Corporation, a truck wheel and rim manufacturer; Columbian Chemicals Company, one of the world’s largest producers of carbon black (used in inks and tires); Phelps Dodge Magnet Wire Co., the world’s largest producer of magnet wire; and Phelps Dodge High Performance Conductors, which manufactures specialty conductors used by the automotive, computer, and aerospace industries.

19th-Century Origins

In 1834 founder Anson Phelps, a New York entrepreneur thoroughly experienced in the import-export trade and well-connected in his targeted British market, formed Phelps, Dodge & Co. Along with his junior partners, sons-in-law William Dodge and Daniel James, Phelps supplied his English customers with cotton, replacing it on the homeward journey with tin, tin plate, iron, and copper, for sale to government, trade, and individual consumers in the United States.