Teck Resources under pressure as commodity rout takes toll – by Jacquie McNish and Rachelle Younglai (Globe and Mail – January 23, 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.

Don Lindsay didn’t have much time to eat when he sat down for dinner last month with investors in a wood-panelled private dining room at Hy’s, the popular Bay Street steakhouse.

Oil prices were falling faster than the temperature on the December night and fund managers at the table wanted Mr. Lindsay, chief executive officer of Teck Resources Ltd., to explain why the company wasn’t changing course to adjust.

The Vancouver-based mining giant was already reeling from a jarring price collapse in the company’s core metallurgical coal and copper commodity markets. Why, some investors wanted to know, was Teck persisting with its $2.9-billion minority investment in the sprawling Fort Hills oil sands project after spot oil prices had fallen precipitously by more than 60 per cent.

“Can you afford this project at these prices?” one investor asked, according to people familiar with the session. Mr. Lindsay’s response was difficult for some investors to swallow.

“I love low oil prices,” Teck’s CEO enthused. Cheaper, he explained, meant lower construction costs for an oil mining complex that is still nearly two years away from production.

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Aboriginal revenue sharing is an idea whose time has come – by Gary Mason (Globe and Mail – January 23, 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.

Current unpredictability in world oil markets aside, Canada’s economic prosperity lies in the development of its natural resources. What’s equally evident is that aboriginal communities are going to demand, and receive, a greater share of that wealth.

It wasn’t long ago that the notion of apportioning a percentage of resource revenue to First Nations was considered lunacy. But a series of court decisions over the past couple of decades has imposed a change of thinking on the country’s political class. Consequently, governments have slowly begun coming around to the idea there might be more to be gained by making aboriginal groups legitimate economic partners in resource development than by continuing to shut them out of the action.

But the approaches taken by provincial entities and territorial governments have been ad hoc, creating a patchwork of revenue-sharing arrangements. Some governments, such as British Columbia, have aggressively pursued these agreements, while Saskatchewan and Alberta remain holdouts.

In a well-reasoned paper being released Friday by the Macdonald-Laurier Institute, author Ken Coates argues that it’s time for the country to more fully embrace resource revenue pacts as a means of improving the lives of First Nations people and creating a more stable resource development environment.

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Possible rail solution in Ring of Fire – by Len Gillis (Timmins Daily Press – January 23, 2015)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – The Mushkegowuk Tribal Council is considering the idea of teaming up with a Southern Ontario rail company to purchase the rail division of Ontario Northland with an eye to expanding rail service on the James Bay Coast and eventually to the Ring Of Fire mining development.

Mushkegowuk grand chief Lawrence Martin revealed Thursday afternoon that his organization has been approached by TGR Rail Canada Ltd, which is one of the companies bidding on the divestment of Ontario Northland Transportation Commission.

“They gave us a proposal to consider in which we would look at an MOU (Memorandum Of Understanding) to discuss the possibility of a partnership with them,” said grand chief Martin, speaking to the Aboriginal Energy Symposium.

He said TGR Rail Canada, based out of Toronto, is one of the companies approved by the province as eligible to purchase Ontario Northland rail operations provided they do it in a partnership with a Northern Ontario organization such as Mushkegowuk.

“At this point I can say it is a proposal. We are looking at it.

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Anglo American set to sell Australian coal mines to boost returns – by Arash Massoudi, James Wilson and Neil Hume (Financial Times – January 22, 2015)

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

Anglo American is eyeing the sale of a cluster of coal assets in eastern Australia as the miner struggles to boost shareholder returns during a slump in commodities prices, people familiar with the matter said on Thursday.

The UK-listed miner, one of the world’s largest coal producers, is preparing to sell five mines in Queensland and New South Wales as part of a $3bn-$4bn asset disposal programme ordered by Mark Cutifani, chief executive.

Large mining companies including Vale and BHP Billiton are looking to dispose of or spin off non-core assets as they battle falling commodity prices and declining share prices. They are also under pressure to boost returns to investors. For Anglo American, a sale of assets would help strengthen its balance sheet.

Mines including Dawson and Foxleigh would be primed for a possible sale, the people close to the situation said. One of these people added that Bank of America Merrill Lynch was working with Anglo.

The miner said in December that it was selling the Callide mine as well as Dartbrook. Anglo and Bank of America declined to comment. The mines earmarked for potential sale produce coal used for steel making or power generation.

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Taken alone, N.W.T. mining exploration figures fail to impress – by Guy Quenneville (CBC News North – January 22, 2015)

http://www.cbc.ca/news/canada/north

Companies spent more last year in Yukon and Nunavut trying to find new deposits

Combined spending on mineral exploration and deposit appraisal may have increased by 32 per cent in the Northwest Territories last year, according to estimates released by Natural Resources Canada.

But when considered alone, spending on mineral exploration — which is the type of work that leads to the discovery of new deposits — trailed the amounts seen in Yukon and Nunavut. Last year, companies spent $31.5 million trying to find new deposits in N.W.T. That’s 22 per cent more than what companies spent in 2013.

But it’s also much lower than what companies spent in the territory in the years leading to the global recession, and it also trails 2014 mineral exploration spending of $59.4 million and $86.9 million in the Yukon and Nunavut, respectively.

Worse, according to the NWT and Nunavut Chamber of Mines, is that the muted exploration scene lessens the chances of new mines opening in N.W.T.

“When you go to a bingo game, you don’t play one card to win. You play 15, 16 different cards, just to increase the odds,” says Tom Hoefer, the chamber’s executive director.

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Coal’s King Canute moment – by Cole Latimer (Australian Mining – January 22, 2015)

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

As the coal price continues to falter and major pro­ducers are hit drastic action is being taken to reverse the tide.

The commodity has faced a massive decline. It has fallen in price by more than a third in a year from December 2013 to December 2014, as Chinese demand waned and a projects came online, flooding the market and causing excessive supply problems.

The Bureau of Resources and Energy Economics (BREE) said Australia exported 181 million tonnes of metallurgical coal in 2013-14, with this expected to increase to 185 million tonnes in 2014-15, while thermal coal exports are tipped to top 196 million tonnes in 2014-15.

Queensland alone managed to export 216 million tonnes of both thermal and coking coal for 2014, setting new export records.

Making matters worse for miners in Australia is the supply coming online from other competitors such as Indonesia, Colombia and South Africa, further flooding the market, while Russia has plans to quadruple its coal output levels by 2030.

At the same time, rising natural gas production in the United States means thermal coal will be diverted from domestic American markets where it is used as an energy source, to export destinations – particularly Asia.

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Gold Comes To The Aid Of A Beleaguered Mining Industry – by Tim Treadgold (Forbes Magazine – January 21, 2015)

http://www.forbes.com/

Gold loves a crisis, which is why ongoing troubles in Europe helped push its price back through the $1300 an ounce level earlier today but, to see a gold rush magnified by a currency shift, take a look at what’s happening in Australia.

Down there a gold boom has broken out thanks to the effect of the falling Australian dollar on the gold price with the country’s gold miners also enjoying the benefits of cheaper fuel which is one of the biggest costs, especially in open pit mines.

The triple-whammy of a rising U.S. dollar gold price, falling Australian dollar and cheaper diesel fuel which is used in most mine-site equipment has boosted the Australian stock exchange gold index by 58% over the past 10 weeks.

Some of Australia’s leading gold mining companies have outperformed the index with Newcrest, the biggest ASX-listed gold stock, rising by 61% and the most successful explorer and deal-maker, Northern Star, rising by 137%.

The lift-off point for Australian gold was November 6 last year, the day after the U.S. dollar gold price bottomed at $1142/oz. On that day Newcrest shares were selling at A$8.51 on the ASX. Northern Star was at A91c. The exchange rate was US87.33c and Brent crude oil was at $83 a barrel.

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There is no green energy without mining copper: Kovacevic – by Tommy Humphreys (CEO.ca – January 14, 2015)

 

http://ceo.ca/

Electrician turned mining entrepreneur Gianni Kovacevic has two important reminders for investors bailing on the copper sector this morning.

The first is that no force in the world can prevent the ascent of man. Over the next decade, another 500 million people will be lifted from abject poverty, Kovacevic says, putting incredible demand on natural resources, especially copper.

“We in the West have wants, they in emerging markets have needs.” The entrepreneur says 100% of people in poor communities are willing to pay for electricity. His second message is for nature-lovers to wake up about renewable energy and join him as a self-proclaimed “Realistic Environmentalist.”

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Commentary: The Peel watershed decision’s broader implications – by Keith Bergner, John Olynyk and Toby Kruger (Northern Miner – January 21, 2015)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

This past December, the Yukon Supreme Court handed down an important aboriginal law ruling that has implications for future mining operations in the Yukon. In The First Nation of Nacho Nyak Dun v. Yukon (Government of), 2014 YKSC 69, Yukon Supreme Court Justice Ron Veale held that the Yukon government’s modifications to the Peel land use plan did not respect the land use planning process set out in the final agreements (modern treaties) with the Na-Cho Nyak Dun, Tr’ondek Hwech’in and Vuntut Gwichin First Nations, and struck down the land use plan as a result.

The case marks the first time that a court has been asked to consider the meaning of land use planning provisions contained in the Umbrella Final Agreement between Canada, Yukon and Yukon First Nations, which forms part of 11 final agreements across Yukon. Among other things, the final agreements provide First Nations with the right to participate in land and resource management decision-making for Crown lands, including land use planning processes, in exchange for the release of claims to aboriginal rights or title to those lands.

While the decision deals specifically with the Peel watershed in northeast Yukon, the case will have direct implications for land use planning throughout the Yukon, and could have indirect impacts on consultative requirements under modern treaties for other governmental land and resource use decision making.

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Can Harper’s Canada defy oil dependence’s ugly history? – by Brian Milner (Globe and Mail – January 22, 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.

History shows that political leaders who rely heavily on oil earnings to paper over economic cracks, balance budgets and spread largesse among the voting public can end up paying a heavy price for putting too many eggs in the energy basket.

We are about to find out if that holds true in Canada, where the Bank of Canada responded to the steep drop in oil prices with a surprise rate cut Wednesday.

Every major oil exporter is scrambling to deal with sudden economic reversals, tax shortfalls and greater demands on the public purse as capital investment is slashed, massive projects are shelved and layoffs mount in the wake of plunging oil prices.

It was a Saudi-orchestrated price collapse in 1986 – when oil bottomed at $10 (U.S.) a barrel after dropping by two-thirds in just four months – that set the stage for a stunning falloff in Russian production in the late 1980s and the breakup of the Soviet empire.

Another price crash in 1998 played a key part in the collapse of the ruble and a humiliating bond default that cleared the way for Vladimir Putin’s swift rise to the top of the Russian heap.

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Billions in oilpatch investment up in smoke as crude plunge reverberates across Canada – by Claudia Cattaneo (National Post – January 22, 2015)

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

There’s nothing like losing something to understand the value of what you had. With billions in investment going up in smoke, the Bank of Canada cutting its key interest rate and growth forecast, governments struggling with big budget gaps, the oil price collapse is highlighting the big shoes filled by the oil and gas sector in Canada’s economy.

As Tim McMillan, the president and CEO of the Canadian Association of Petroleum Producers, put it Wednesday: The industry has been growing so much, is active in so many parts of the country, works with so many suppliers, low oil prices “are having more of a national effect now than at any time in its history.”

In an interim report on investment plans, CAPP provided a glimpse Wednesday of how much the sector — the country’s biggest spender — plans to tighten its belt this year to cope with a 50% decline in oil prices since June, the result of excess world supplies and OPEC’s refusal to cut its own: Capital investment in Western Canada, including the oil sands, will decline 33%, to $46 billion, from $69 billion in 2014.

In the Alberta-based oil sands alone, capital investment will shrink to $25 billion, from $33 billion in 2014. Capital spending in the conventional oil and gas portion of the Western Canada Sedimentary Basin — which straddles Saskatchewan, Alberta and British Columbia — will decrease to $21 billion, from $36 billion in 2014. Drilling is expected to decline by 30%, to 7,350 wells.

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NEWS RELEASE: Sagamok Anishnawbek First Nations and Ionic Engineering Sign Cooperation Agreement

(Greater Sudbury, January 21, 2015) Ionic Engineering of Lively (SAMSSA Member) and the Sagamok Anishnawbek First Nation have signed an agreement that outlines how the two organizations will work together to pursue projects in the Sagamok traditional territories and beyond.

The mutually beneficial agreement will see Ionic Engineering provide training and employment opportunities for members of the Sagamok community. With a demographic of mostly young people, First Nations people represent a significant labour resource for the entire Canadian economy. “Finding the right people for the right job is one of our biggest challenges” says Steve Matusch, President of Ionic Engineering.

Sagamok Anishnawbek Chief, Paul Eshkakogan is excited about this partnership stating that “our young people want to work for companies that respect and appreciate their abilities. Working with a technology company on industrial projects is exactly the kind of focus that we are looking for”. Boasting a population of nearly 2000, and being in close proximity to Ionic’s Sudbury office, this partnership bodes well for both parties.

The two organizations hope to work together to secure projects in mining, forestry and power generation. With a number of projects currently taking place on Sagamok’s traditional territory, like Victoria Mine, Totten Mine, Kidd AER, Vermillion-Errington and many more, this partnership is sure to benefit both groups for years to come.

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Back to basics key message in Deloitte trend forecast – by Megan Van Wyngaardt (MiningWeekly.com – January 20, 2015)

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

HANNESBURG (miningweekly.com) – While the outlook of the global mining sector for the year ahead looks bleak, with mining companies having to contend with price volatility, geopolitical turmoil, rising costs, declining grades and a general lack of access to financing, advisory firm Deloitte believes all is not lost.

In its ‘Tracking the Trends 2015: The top 10 issues mining companies will face this year’ report, the company noted that miners had not seen many positive indicators in recent years, with productivity issues facing South African miners, uncertain growth prospects for countries such as China and India and weak prospects for many commodities, particularly iron-ore and coal.

However, it remained cautiously optimistic, stating that with any data, it was possible to see the glass as either half full or half empty. The US economy was rebounding, but areas of Europe continued to stage a slow, fitful recovery and both China and India had a long way to go on their paths towards urbanisation, industrialisation and electrification.

Further, the outlook for several commodities, including nickel, aluminium, zinc and lead, was improving. The mining sector also appeared to be coming back into favour with investors, with sector valuations, mining capitalisations and total returns showing signs of recovery.

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NEWS RELEASE: Turkey: new report highlights gold’s role in supporting the economy and modern society

http://www.gold.org/

22nd January 2015 – Turkey is a microcosm of the global gold market – a country which is home to the entire gold value chain from mining and refining, to jewellery design and investment. Its long tradition of gold demand, underpinned by a deep cultural heritage, strong fabrication capacity and a substantial coin market has resulted in households accumulating an estimated 3,500 tonnes (t) (US$145.3bn) of gold tucked “under-the-pillow”, a term used in Turkey to refer to physical gold stored by the general population.

Turkey: gold in action assesses the role that gold plays in consumers’ lives, examines the economic contribution of the entire supply chain and explores how the metal has been monetised to support the national economy. In 2012 alone, gold fabrication, consumption and recycling added at least US$3.8bn to Turkey’s economy. An innovative central bank policy introduced in 2011 incentivised commercial banks to create a range of gold-backed banking products to mobilise Turkey’s stock of gold. This improved the health of the banking sector by reducing costs and improving liquidity, as well as ensuring commercial banks boost their gold reserves. Policymakers have now successfully seen around 250t of gold (US$10.4bn) drawn into the financial system and put to work supporting Turkey’s economy.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council said: Amid a challenging global economic climate, Turkey faces ongoing political and social pressures to ensure that it steers a steady economic course. Gold represents many things in this society – from employment for over a quarter of a million people in the gold industry, to an investment protecting people’s wealth against the ravages of inflation and currency weakness. It is also a unique example to the rest of the world of how gold can successfully be put to work at the core of a nation’s financial architecture.

Some of the key findings from the research include the following:

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Canadian gold miners raising nearly $800 million as financing window opens – by Peter Koven (National Post – January 22, 2015)

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

The financing window is open for Canadian gold miners, and they are rushing through it at a frantic pace before it shuts.

Six companies have announced bought deal offerings since Tuesday evening: Romarco Minerals Inc., Detour Gold Corp., Osisko Gold Royalties Ltd., Primero Mining Corp., Asanko Gold Inc., and Richmont Mines Corp. Between them, they are raising a whopping $789.8 milllion. Last week, Yamana Gold Inc. unveiled a $260.2-million equity deal of its own, and Lydian International Ltd. tapped the market for $16.5 million.

The flood of financings coincides with a significant jump in the gold price that has reignited investor enthusiasm for the sector. Bullion is up almost 10% this month and topped US$1,300 an ounce on Wednesday for the first time since August.

Gold has been out of favour with investors for most of the past two years, so the opportunities for most miners to raise capital have been few and far between. Not surprisingly, they are keen to push these deals through quickly while sentiment remains positive and gold equities are performing very well.

“We see it over and over again. These windows open so quickly and might be so short,” said Jay Kellerman, managing partner at Stikeman Elliott LLP. “Who would have imagined this [financing wave] a week ago?”

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