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Gina Rinehart’s Roy Hill mine not relying on China – by David Stringer (Sydney Morning Herald – April 9, 2015)

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

Asia-Pacific’s richest woman is gearing up to start shipments from her $10 billion iron ore project in Australia. Even with prices at 10-year lows, she’s displaying no lack of confidence in the mine’s success.

Billionaire Gina Rinehart’s ace? Her mine isn’t relying solely on sales to China, the biggest iron ore buyer. This limits the project’s exposure to a market where steel demand is judged to be peaking. Instead, she’s locked in supply contracts with three of the largest iron ore consuming Asian nations outside of China.

“They feel very confident. Roy Hill has a massive advantage in that it has diversified its markets,” Philip Kirchlechner, Perth-based director of Iron Ore Research Pty. said by phone. “They have buyers from three of the other major iron ore importing markets.”

Roy Hill, Australia’s largest single iron ore mine, is on track to commence exports from September, adding 55 million tons a year of output to a market already saturated by a growing surplus. It’s even accelerating the mine’s schedule, seeking to hit its planned capacity at the fastest pace of any project built in Western Australia’s iron-rich Pilbara region.

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Quebec announces $1.3-billion Plan Nord revival – by Bertrand Marotte (Globe and Mail – April 8, 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.

Montreal — Quebec Premier Philippe Couillard unveiled a scaled-down version of the Plan Nord to tap into the mineral bounty in the remote northern reaches of the province.

Despite a deep slump in global metal prices, the plan calls for the province to invest about $1.3-billion in infrastructure and other projects over the next 5 years in hopes of attracting $22-billion in private-sector investment.

By 2035, the Liberal government anticipates a total of $50-billion in private and public investments, of which at least $2.5-billion will be public money.

The previous Plan Nord, announced by then-premier Jean Charest in 2011, projected $80-billion in investments over a 25-year period.

That ambitious project was shelved by the Parti Québécois government in 2012, but revived by the Couillard government when it returned to power last year.

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What the end of the commodity supercycle means for Canada – by Glen Hodgson (Globe and Mail – April 8, 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.

Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada.

It appears more and more likely that the global commodity supercycle has come to an end. While the recent collapse in oil prices has attracted much of the focus, prices for many commodities across the board have softened. These commodities include energy, metals and agricultural products, all of which are important to Canada. No one has a crystal ball but if the commodity supercycle is indeed winding down, Canada will surely be affected.

As The Economist magazine has regularly reminded us, aggregate commodity prices fell in real terms (with the impact of inflation removed) for most of the 20th century. Prices then took off in 2002-03 with China’s growing integration into the global economy. Robust Chinese economic growth and infrastructure development essentially added a one-time boost to demand for resources of all types, and prices responded accordingly.

Between 2003 and 2008, many commodity prices effectively doubled or more in real terms. Turbulence and instability in commodity prices also grew during that period; financial markets increasingly saw commodities as an instrument for speculative investment, not just a product to be bought and sold to meet end demand.

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Global supply glut threatens British Columbia’s LNG projects – by Brent Jang (Globe and Mail – April 8, 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.

Most liquefied natural gas export projects are at risk of being cancelled in North America as a result of a looming global glut of LNG, putting a damper on British Columbia’s energy dreams.

Moody’s Investors Service Inc. issued a stark outlook for the fledgling North American LNG industry, arguing it doesn’t make economic sense to invest billions of dollars on each venture especially as Asian buyers slow down their LNG orders for new LNG supplies.

Moody’s said the “vast majority” of North American proposals face outright cancellation. “Many sponsors – including those in the U.S., Canada and Mozambique that have missed that window of opportunity as oil prices have declined – will face a harder time inking the final contracts, most likely resulting in a delay or a cancellation of their projects.”,” the credit rating agency said.

There are 19 B.C. LNG projects vying to export to Asia. They include 10 export licences that have been approved by the National Energy Board

In the global LNG industry, most contracts have maintained their historic link to crude oil prices, and that has meant declining revenue for LNG suppliers amid the slump in oil markets.

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Cliffs to put mines, rails, ports up for sale in Quebec, N.L. (CBC News Business – April 7, 2015)

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

Mine company under bankruptcy court protection as it completes its exit from Eastern Canada

The Canadian Press – Idled Quebec iron ore mines, railways and port facilities, are about to be put up for sale as part of a court-supervised exit from eastern Canada by Cliffs Natural Resources.

The Cleveland-based mining company’s subsidiaries, which filed for creditor protection in January, are seeking a Quebec court’s permission to solicit interest next month in the Bloom Lake mine, the Wabush Mine, and related port and rail assets in Quebec and Labrador, according to a motion filed by monitor FTI Consulting Canada.

Bloom Lake General Partner Ltd. and affiliates such as Cliffs Quebec Iron Mining filed for protection under the Companies’ Creditors Arrangement Act amid falling iron ore prices.

Excluded from the sale process are Cliffs’ chromite assets in Ontario’s Ring of Fire that are in the process of being sold to Noront Resources for $20 million US.

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Norilsk Sees Africa Cutting Platinum Output on Spending – by Yuliya Fedorinova (Bloomberg News – April 7, 2015)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel sees South African output of platinum-group metals declining in the next several years as the Russian mining company leads investors in creating a $2 billion palladium fund.

“Investments in a vast amount of projects in South Africa were delayed and it’s hard to expect an increase in output in the region,” Anton Berlin, head of strategic marketing at Norilsk, said in an interview on Monday. “Most likely, it will even fall.”

This year, South African output will recover to match its 2013 level of 4.4 million ounces of platinum and 2.4 million ounces of palladium following a sharp decline caused by five months of strikes in 2014, he said.

Production of platinum and palladium, which are mined from the same deposits and used in automobile catalytic converters, has been lower than demand since at least 2012. Opaque stockpiles held by hedge funds have contributed to price volatility, according to Norilsk.

More than 1 million ounces of potential output were lost during strikes in South Africa that ended in June, according to research by Johnson Matthey Plc. The platinum market had a deficit of almost 1 million ounces last year, which should narrow to 500,000 ounces this year, according to Norilsk’s estimates.

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Hollinger open pit taking shape – by Len Gillis (Timmins Daily Press – April 4, 2015)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Goldcorp has asked for, and has received permission, from Timmins city hall to extend the deadline for the Subsequent Land Use Plan — that’s the land reclamation plan on what will be created to replace the Hollinger open pit, once the mining has ended. City council recently approved the request, to allow Goldcorp Porcupine Gold Mines (PGM) push the deadline back from March 31, 2015 to Dec. 31, 2015.

This also means that the deadline for the final plan is being pushed back to the end of 2017. This is the second time the company has asked for an extension. Originally, the plan was to have been submitted by Nov. 11, 2014. Last fall, Goldcorp requested the first deadline extension to have a plan submitted March 31, 2015.

PGM was back at the council table just a couple of weeks ago to explain that things were not going along as quickly as anticipated. PGM general mines manager Brendan Zuidema told council the company has faced some delays and challenges.

“We have experienced several unexpected delays since signing the original agreement on Nov. 12, 2012, along with many other operational challenges caused by the worst weather we have experienced in many years,” said Zuidema. “Last year and this year, it has been pretty tough in the pit.

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Steel ‘dumping’ blamed for Iron Range layoffs – Jon Collins (Minnesota Public Radio – April 1, 2015)

http://www.mprnews.org/

Politicians and mining company officials are blaming unfair foreign competition for more than a thousand recent layoffs in the state’s iron ore industry.

U.S. Steel announced Tuesday that it would idle part of its taconite plant in Mountain Iron, Minn., starting on June 1. Earlier last month U.S. Steel announced plans to idle a plant in Keewatin, which will result in more than 400 layoffs. Magnetation also recently announced that it was closing an Iron Range plant and laying off more than 40 people.

The closing of plants and mills comes from a glut of steel supplies and the steady decline of prices over the last few months.

Following news of the most recent plant closing, Rep. Jason Metsa, DFL-Virginia, blamed the low prices on “foreign countries for dumping state-sibsidized steel on American shores.” U.S. Steel officials have also pointed to illegal trade practices by Chinese companies.

Dumping is a frowned upon international trade practice, said Tony Barrett, a professor of economics at the College of St. Scholastica. It’s when a company sells steel abroad for cheaper than the cost to produce it because they don’t need to make the same level of profits as American steel companies.

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Mining firms in Sudbury benefit from energy program – by Carol Mulligan (Sudbury Star – April 8, 2015)

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

Making the Northern Industrial Electricity Rate Program permanent will help Sudbury’s two largest mining companies lower their costs and remain competitive globally, say their executives.

Sudbury Liberal MPP Glenn Thibeault announced Tuesday that the Government of Ontario will keep funding the program, which was to conclude in 2016, to the tune of about $120 million a year.

Twenty-three companies in Northern Ontario — including forestry companies and stainless steel producers — will benefit from the program.

Vale Ltd. will receive about $20 million annually to offset the cost of energy and Glencore’s Sudbury Integrated Nickel Operations will receive about $13 million.

Marc Boissonneault, Glencore vice-president of Sudbury Integrated Nickel Operations, said the program is one of the pieces of a puzzle that will allow his company to continue to mine beyond 2020.

Glencore has said its resources will run out in five years unless it develops two new mines, the Onaping Depth at its Levack complex and an extension of Nickel Rim Mine called the Nickel Rim Depth.

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Barrick open to sell-offs and joint ventures in debt drive – by James Wilson (Financial Times – April 5, 2015)

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

Barrick Gold is open to a wide range of asset sales and joint ventures as it tries to cut debt by $3bn and rebuild its reputation with investors, its chairman has told the Financial Times.

In his first interview since taking over as chairman almost 12 months ago, John Thornton, pictured below, said he could imagine Barrick ceding operational control of some assets — for example to Mick Davis, the former Xstrata chief executive who plans to re-enter the mining sector at the head of a private equity vehicle.

Barrick would also bring long-term investors into a group of its mines as minority partners, Mr Thornton said.

“There is a lot of incoming inquiries . . . of all kinds of stripes and sizes. We feel confident about hitting the $3bn number,” he said.

Mr Thornton’s comments show the range of options being considered to turn round Barrick, still the world’s largest gold miner by volume but one of the worst-performing large miners of the past two years. Barrick, which has a $13bn market capitalisation, has been hit by steep falls in the price of the precious metal and has suffered billions of dollars of writedowns since 2012 on poor acquisitions and stalled projects.

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Harte Gold has eyes on 2016 production – by Ian Ross (Northern Ontario Business – April 7, 2015)

Stephen Roman, president-CEO of Harte Gold, could bring the first new gold mine in Hemlo into production in 30 years.(Photo by Stan Sudol)
Stephen Roman, president-CEO of Harte Gold, could bring the first new gold mine in Hemlo into production in 30 years. (Photo by Stan Sudol)

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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

If all goes according to plan, Harte Gold could soon be commissioning the first new mine in the Hemlo gold belt in 30 years. President and CEO Stephen Roman said the high-grade deposit at the company’s Sugar Zone property has open-ended potential that could lead to a new gold camp in northeastern Ontario.

“The project’s really ready to go now,” said Roman, whose Toronto-based junior has a permit in hand to take a massive 70,000-tonne bulk sample by the middle of this year.

The Sugar Zone Property is 60 kilometres east of the Hemlo area gold mines and about 25 km north of White River off the Trans-Canada Highway. Roman comes from good mining stock. His father, Stephen B. Roman, a Canadian Mining Hall of Famer, steered Denison Mines in Elliot Lake for 35 years. But the younger Stephen G. Roman is already a well-established name in Northern Ontario mining circles.

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Ontario gives northern industry permanent relief from energy costs (CBC News Thunder Bay – April 7, 2015)

http://www.cbc.ca/news/canada/thunder-bay

The Northern Industrial Electricity Rate Program will carry on indefinitely, province says

A program that reduces energy costs for northern industries — like mining and forestry — will carry on indefinitely, the Ontario government says.

Speaking at a news conference at Resolute Forest Products’ Thunder Bay pulp mill on Tuesday, Northern Development and Mines Minister Michael Gravelle told reporters that Ontario would commit up to $120 million a year permanently to the Northern Industrial Electricity Rate Program, which was to expire in March of 2016.

First introduced in 2010, the program is a benefit to companies such as Resolute, Goldcorp, AV Terrace Bay, and North American Palladium, Gravelle said.

“It positions them to certainly be able to maintain operations but also potentially expand and create more jobs,” he added. The program can help cut up to 25 per cent from energy costs incurred by qualifying businesses. “It reduces our costs significantly on our site,” said Goldcorp’s Musselwhite mine general manager Bill Gascon.

“Our second highest cost on our site in production is energy — behind labour — so it’s huge for us. We’re a very energy intensive industry.”

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Tax office pursues BHP Billiton and Rio Tinto over Singapore tax shelter – by Neil Chenoweth (Australian Financial Review – April 6, 2015)

http://www.afr.com/

Mining giants BHP Billiton and Rio Tinto are being pursued by the Australian Taxation Office for channelling billions of dollars in profits from iron ore sales through companies that pay almost no tax in Singapore.

While BHP Billiton and Rio TInto are Australia’s largest taxpayers, The Australian Financial Review has obtained documents that show the two mining companies report $2.6 billion a year in profits in their Singapore marketing hubs where they pay tax rates as low as 2.5 per cent.

The arrangements save the two companies more than $750 million a year in Australian tax and the ATO regards it as tax avoidance under the transfer pricing rules. The ATO is pursuing multibillion-dollar claims against each company, says a source with direct knowledge of the disputes.

The exact amounts of the potential tax bills are unclear and both companies have fought the ATO for years and argue their Singapore operations were not set up to reduce tax.

With scores of Australian companies rushing to open their own Singapore operations, the BHP Billiton and Rio Tinto cases shape as key precedents for the ATO, which has been warning of compliance problems with marketing hubs since 2010.

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As iron ore slides, China buyers inflict more pain on small miners – by Manolo Serapio Jr (Reuters U.S. – April 7, 2015)

http://www.reuters.com/

SINGAPORE, April 7 (Reuters) – Chinese steelmakers are unwittingly helping the world’s biggest iron ore miners tighten their grip on global production by demanding to pay for shipments of the raw material based closely on depressed spot prices.

The three largest and most profitable iron ore producers – Australia’s Rio Tinto and BHP Billiton, along with Brazil’s Vale – have been happy to sell at or near spot despite plunging iron ore prices, while their smaller rivals struggle to make money.

Smaller producers, including some higher cost Australian miners, want to continue with deals based on longer-term averages of prices, looking to hedge against further falls in the market.

But buyers in the world’s largest consumer of iron ore are having none of it, with many Chinese mills demanding cargoes priced as close as possible to their delivery date.

“Pricing moves around with the steel mills. It used to be all based on a monthly average. Now you find the steel mills and traders perhaps trying to anticipate low points and suggesting quotation periods of maybe two weeks,” said Morgan Ball, chief executive of Australian iron ore miner BC Iron Ltd.

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As beneficiation debate rages, experts insist focus must be on niche sectors, upstream manufacturing – by Jade Davenport (MiningWeekly.com – April 2, 2015)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – The contentious debate surrounding South Africa’s beneficiation strategy and how best it should be undertaken has been placed under the glare of the spotlight again and has served to intensify tensions between government and the mining industry over continuing mineral policy uncertainty.

The debate flared up again in February follow- ing Mineral Resources Minister Ngoako Ramathlhodi’s announcement at the Mining Indaba that government intended to investigate the possibility of imposing developmental pricing on key strategic minerals and compelling producers of precious metals to sell at reduced prices.

Developmental pricing would be lower than the already-agreed-to “mine gate price”, essentially an export parity price less transport, which was a hard-won concession on the part of mining companies during discussions on the drafting of the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill in 2013.

Government intends to use developmental pricing to enforce the beneficiation of the country’s still extensive mineral resource endowment, a mechanism it believes will stimulate the South African economy by diversifying sectors, enhancing the quantity and quality of exports, and creating decent employment.

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