Republic of Mining

Proposed Murray River mine to rely primarily on foreign workers – by Wendy Stueck (Globe and Mail – January 9, 2015)

January 9, 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.

VANCOUVER — If the proposed Murray River coal project goes ahead, more than half of its employees would be temporary foreign workers in 2018 – potentially the first year of operation – and it would take nearly a decade for all the hourly jobs at the project to be filled by Canadians.

HD Mining has previously discussed its plan to shift from a work force that is mostly foreign to one that is mostly domestic, saying in 2013 the mine would have a “full Canadian work force” after 10 years of production.

But documents recently filed as part of an environmental-assessment process provide more detail about that transition, and an updated estimate of the cost to build the mine of $554.9-million, compared with a previous estimate of $300-million.

According to an executive summary, the number of temporary foreign workers at the project, for which preparatory work began in 2014, would peak in 2018 at 494 – 382 hourly and 112 management employees – out of a total of 764, or nearly 65 per cent. By 2027, plans call for zero hourly foreign workers and 20 managers out of a total of 764. Those levels are projected to stay the same for the rest of the mine’s life.

The environmental assessment is taking place nearly two years after HD Mining sent more than a dozen Chinese miners home in January, 2013, over uncertainty related to a high-profile court battle.

Big Hydro’s big days are behind it – by Konrad Yakabuski (Globe and Mail – January 5, 2015)

January 9, 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.

To paraphrase what another politician said about another energy megaproject, British Columbia’s plan to build a new $8.8-billion hydro project on the Peace River is hardly a no-brainer.

Depending on your assumptions about future electricity demand, environmental regulations and market trends, you could make a credible case for the 1,100-megawatt Site C power project that Premier Christy Clark has just green-lighted. But Ms. Clark’s refusal to submit her plan to a review by the B.C. Utilities Commission suggests she’s not especially confident of winning the argument.

This raises a broader credibility problem facing all of Canada’s provincially owned electric utilities. They are run by political appointees who answer to politicians who live to cut ribbons. The utilities are fiercely jealous of their prerogatives as near-monopoly suppliers of electricity and fight incursions by the private sector. When they make the business case for a new publicly financed hydro megaproject, it’s hardly an objective exercise.

So, from Newfoundland to B.C., hydro megaprojects are back in fashion. From Muskrat Falls to Site C – with Quebec’s La Romaine and Manitoba’s Keeyask and Conawapa in between – governments are again betting billions on Big Hydro. But they are confusing economic development with sound energy policy.

Barrick Gold Corp comes under fire, cut to underperform in extensive analyst report – by Peter Koven (National Post – January 9, 2015)

January 9, 2015

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

Barrick Gold Corp. has received plenty of criticism from the investment community over the past few years, much of it deserved. But few have been as thorough and pointed as Macquarie Capital Markets analyst Ron Stewart.

Over the course of a 17-page report released Wednesday, he argued the battered stock should still be avoided, even though it has already dropped more than 70% over the past three years, and pointed to a lot of faults at Barrick: lack of growth, excess debt, poor strategic clarity, operating risk and a head office that appears to be in turmoil.

Nearly every sell-side analyst calls Toronto-based Barrick a buy or a hold. But Mr. Stewart downgraded it to underperform with a target of $11 a share, noting the company has “limited options” to repair its balance sheet and needs more time to regain investor confidence.

“Miners are known for their ability to dig holes; big miners dig big ones,” he said in the report. “Barrick, the biggest gold miner on the planet, however has dug itself into a huge financial hole that is going to be difficult to get out of any time soon unless metal prices improve.”

Of course, he noted the company’s two biggest errors of the last few years: the botched construction of the Pascua-Lama project in South America and the $7.3-billion purchase of the Lumwana mine, which is set to be shuttered because of a massive royalty hike in Zambia.

Harper-Wynne meeting a ‘good discussion,’ but not end of their cold war [Ring of Fire conflict] – by John Ivison (National Post – January 9, 2015)

January 9, 2015

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

The late unpleasantness between Kathleen Wynne and Stephen Harper may appear to have been resolved by their meeting last Monday in Toronto.

But, behind the scenes, all is not well and hostilities may be resumed when the Ontario Premier travels to Ottawa to speak on the state of the federation at a Canada 2020 conference on Jan. 20.

The suspicion at Queen’s Park is that the Prime Minister met Ms. Wynne simply to buy some peace and shut down a source of relentless criticism. The Premier had previously bemoaned the fact that Mr. Harper had refused to meet with her in 2014.

In her media availability following the pre-hockey game summit, she called the meeting a “positive step forward” and refrained from the kind of megaphone diplomacy that has characterized their relationship to this point.

But it is understood that the Premier expects to see some concrete results emerging from the conversation and that if those don’t materialize, she will go back on the offensive. The catalyst for a new cold war is likely to be the Ring of Fire in Northern Ontario.

Ms. Wynne said that she and Mr. Harper had a “good discussion” over the mineral deposit project and the provincial request for $1-billion in federal funding to match the provincial government’s planned investment.

What’s wrong with BHP Billiton? – by Amanda Saunders (Australian Financial Review – January 7, 2015)

January 9, 2015

http://www.afr.com/

What is wrong with BHP Billiton? Well, a lot, according to Bernstein’s senior mining analyst, Paul Gait. London-based Mr Gait says the Big Australian is “a colossus with feet of clay” in a 54-page note that puts BHP through the wringer.

His views are understood to be in line with those held by pockets of the market in London. BHP shares have taken a hammering there in the past five weeks, falling 13 per cent since the start of December to 1324.50 pence on Tuesday. In Australia, BHP has plunged 29 per cent since August to $28.11.

BHP does not deserve the valuation premium it enjoys over its “high-quality” peers, particularly arch-rival in iron ore, Rio Tinto, Mr Gait said.

And he said it is doubtful BHP is ¬willing to take responsibility for capital discipline, including withholding supply. He accuses the mining giant of “hubris” over its potash strategy.

BHP has a set of some of the highest quality, best-run assets in the game across its four pillar commodities – iron ore, copper, coal and petroleum. That quality, combined with low operating costs and broad diversification have made BHP a “must-own” mining stock.

Commodities conundrum a hard one to puzzle out – by Hilary Joffe (Business Day Live – January 7, 2015)

January 9, 2015

http://www.bdlive.co.za/

WILL the positives for SA’s economy of a lower oil price outweigh the negatives of lower commodity prices all round? It’s hard to get economists to agree on the question, let alone the answer.

The new year’s collapse in the oil price has fuelled a raging debate on how low it will go and for how long. What will happen to other commodity prices is the subject of almost as much debate, however, and the balance matters a great deal for SA.

In oil, the fall has been sudden and steep and, at not much more than $51 a barrel yesterday, the Brent crude oil price was about 55% down on its June 2014 level. But the 40% slide in iron-ore prices over the past year or so has been almost as sharp, if more gradual, as was a 40% decline in thermal coal prices since 2011.

The common factor is weak global growth, and in particular the slowdown in China’s economic growth rate and the shift in the composition of China’s growth away from the heavy investment and infrastructure-led pattern of the past. That’s the underlying factor in what most would agree is a structural shift in global commodity markets over the past couple of years — some would call it the popping of the commodity supercycle bubble.

SA and other emerging market commodity exporters benefited hugely from that supercycle in the years leading up to the crisis.

China challenges India’s polished diamond throne – by Tanya Ashreena (Reuters U.S. – December 25, 2015)

January 9, 2015

http://www.reuters.com/

NEW DELHI, Dec 26 (Reuters) – India’s long-held position as the world’s top diamond polisher is being challenged by soaring output from China, compelling the south Asian country to seek help from ally and top rough diamond supplier Russia to defend its market share.

India has traditionally relied on the middlemen in trading hubs of Antwerp, Tel Aviv and Dubai for its supply of rough diamonds, which mainly come from Russia or Africa. Most of the world’s diamond output is sent to India for cutting and polishing before being retailed around the world.

But China has managed to break the established trade route by getting diamonds directly from African mines in which Chinese companies have a stake. This has boosted the value of China’s net exports of polished diamonds by 72 percent in the past five years to $8.9 billion.

While India’s exports, supplied by firms such as Asian Star , Gitanjali Gems Ltd and Venus Jewel, rose 49 percent to $14 billion over that time, shipments have seen a sharp drop this year.

“China’s active procurement of rough supply from African countries was reducing the supply available to Indian manufacturers,” said Sandeep Varia, an executive of Indian industry body Assocham. “Many units across the country had to lay off workers due to losses.”

History of Mining: The evolution of shaft sinking systems (Part 5 of 7) – by By C. Graham and V. Evans (CIM Magazine – February 2008)

January 9, 2015

http://www.cim.org/en/

Shaft sinking from 1940 to 1970: The Golden Age

The period between 1940 and 1970 can really be called the golden age of shaft sinking. It was during this period of time that the shaft sinking records, which still stand today, were in a number of countries around the world. Listed below are the shafts which were sunk at record-breaking speeds:

January 1960: President Steyn #3 shaft (South Africa) — 1,020 feet (311 metres)
March 1962: Buffelsfontein shaft (South Africa) — 1,251 feet (381 metres)
September 1964: Staric main shaft (Czechoslovakia) — 1,053 feet (321 metres)
April 1964: Proletarskaya (USSR) — 1,280 feet (390 metres)
May 1969: 17–17 Bis mine (Ukraine) — 1,316 feet (401 metres)

Shaft sinkers from the Republic of South Africa generally claim to hold the shaft sinking record for their sinking project at the Buffelsfontein mine in 1962; however, as can be seen from the list above, both the Russians and the Ukrainians were faster.

The South Africans used much larger sinking crews than Europe or North America. Table 1 compares statistics on some of the shafts sunk during this period. Note the number of persons employed on the Buffelsfontein project.

History of Mining: The evolution of shaft sinking systems (Part 4 of 7) – by By C. Graham and V. Evans (CIM Magazine – February 2008)

January 9, 2015

http://www.cim.org/en/

Shaft sinking from 1900 to 1940: start of the Modern Era

Mine shafts sunk during 1900 to 1940 in North America were almost all rectangular, timbered shafts while in Europe nearly all were circular and lined with brickwork or concrete. The reason for this was ground conditions. The majority of North American shafts were sunk in hard, competent rock. In Europe, on the other hand, the majority of the shafts sunk were in soft sedimentary rock, often with major water-bearing strata.

This was a busy period for shaft sinkers in a number of areas in the world. In the Ruhr district of Germany alone over 200 shafts were sunk: 124 shafts (1904–1914); 71 shafts (1915–1932); 13 shafts (1933–1940).

This was also an exciting time for the Canadian mining industry, with many of the famous mining camps opening up from 1900 to 1940. After the discovery of silver in Cobalt, Ontario, in 1903, prospectors ranged widely over the Precambrian areas of Ontario, Quebec, Manitoba, Saskatchewan and the Northwest Territories. In Ontario and Quebec, Abitibi and Larder Lake were discovered in 1906, Porcupine in 1909, Swastika in 1910, Kirkland Lake in 1911, Matachewan in 1916, Rouyn-Noranda in 1924 and Red Lake in 1925.

In Manitoba, the Rice Lake district was discovered in 1911, and in the Northwest Territories the deposits in the sediments in the Yellowknife area were discovered in 1933 and those in the greenstones in 1935. In Saskatchewan, the Box and Athona mines were discovered in 1934 and three shafts were sunk at these properties in the La Ronge gold belt.

Rare earths and China’s self-correcting folly – Alan Beattie (Financial Time – January 8, 2015)

January 8, 2015

http://blogs.ft.com/beyond-brics/

This week, a trade war that was supposed to tear the world of high-tech manufacturing apart ended peacefully, quietly and with few casualties.

China announced plans that would comply with a WTO decision from last year by removing export quotas and other restrictions on rare earth elements (REEs), the minerals used widely in the manufacture of electronics, computers and cars. It was another success for the US, which has not only chalked up a series of impressive wins against China in the WTO’s dispute settlement process but also (by no means a given) often succeeded in getting Beijing to implement the decisions.

So, a big victory for global governance? Huzzah for the international rule of law, and a celebratory round of Dan Drezners? Sort of. In reality, it was the free market as much as trade rules that did for China’s attempt to corner global commerce in rare earths. Moreover, in a rather choice irony, Chinese companies employed the very tricks that they use to sidestep trade restrictions by other governments to sabotage the export quotas set by their own.

By 2010, China produced 97 per cent of the world’s basic rare earth oxide production and much of the processing business. In its submission to the WTO, Beijing laughably argued that a complex system of export restrictions it had placed on its REE companies since the mid-2000s was aimed at protecting the environment by controlling mining.

Platreef PFS underpins ‘excellent’ economics – Ivanhoe – by Natasha Odendaal (Mining Weekly.com – January 8, 2015)

January 8, 2015

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

JOHANNESBURG (miningweekly.com) – The prefeasibility study (PFS) of TSX-listed Ivanhoe Mines’ Platreef project had demonstrated the robust nature of the latest major new underground, mechanised platinum mine, near Mokopane, in Limpopo, executive chairperson Robert Friedland said on Thursday.

Ivanhoe aimed to develop the Platreef platinum, palladium, rhodium, gold, nickel and copper mine in three phases, with an initial production rate of four-million tonnes a year to establish an operating platform to support future expansions.

The latest study confirmed the “excellent” economics and technical viability of the low-cost operation, Friedland said of the mine that would eventually expand production to eight-million tonnes a year, before reaching a steady-state 12-million-tonne-a-year operation in the third phase.

The PFS – an important milestone in Ivanhoe’s planned transformation of the Platreef discovery into one of the pre-eminent South African platinum-group metals producers – covered the first phase of development, including the construction of an underground mine, concentrator and other associated infrastructure to support initial concentrate production by 2019.

Inquest into Fram, Chenier mining deaths called for April 8 – by Ben Leeson (Sudbury Star – January 7, 2015)

January 8, 2015

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

Briana Fram knows the coroner’s inquest into the death of her brother, Jordan Fram, and Jason Chenier will a difficult time for her family, but hopes it will result in a safer workplace for those who work in mines.

Dr. Reuven Jhirad, deputy chief coroner of the Office of the Chief Coroner for Ontario, announced Tuesday that an inquest will be held into the deaths of Fram, 26, and Chenier, 35, both killed at the 3,000-foot level of Vale’s Stobie Mine when they were overcome by a run of muck on June 8, 2011.

Inquests into workplace deaths are mandatory in Ontario. “With tragedy, often good emerges,” Briana Fram said. “We’re hopeful that this inquest will bring results that will prevent deaths in the future and protect the lives of miners and people that work in mines.”

Dr. David Eden will preside as inquest coroner. Susan Bruce and Roberta Bald will be counsel to the coroner. The inquest will be at the Sudbury Courthouse, 155 Elm St. in Sudbury, beginning on April 20 at 9 a.m. and is expected to last 10 days, according to the chief coroner’s office.

The inquest will examine the circumstances surrounding the Stobie accident and the inquest jury may make recommendations aimed at preventing similar deaths from occurring.

Iron ore bounce likely to be shortlived – by Neil Hume (Financial Times – January 6, 2015)

January 8, 2015

http://www.ft.com/home/us

Few in the iron ore industry will remember 2014 with any fondness. The steelmaking ingredient was the worst performing major commodity, plummeting 50 per cent as a flood of new supply hit the market and swamped demand.

But it has started 2015 on the front foot with benchmark Australian ore advancing almost 8 per cent since Christmas. The question for the industry is whether this is a dead cat bounce or the start of a recovery in prices, which recently hit a five-and-a-half-year low of $65.60 a tonne.

So far few are convinced the rally will last. Analysts believe the bounce in prices is being driven by restocking at steel mills ahead of the Chinese new year and changes to reserve requirements for Chinese banks. With more supply set to come on line and demand in China weak, many believe prices will come under further pressure this year, even trading into the $50s.

This would be bad news for big mining houses such as BHP Billiton, Rio Tinto and Vale, which have spent billions of dollars expanding operations and generate most of their profits from iron ore.

“We view the upward correction as a similar experience to that recently encountered while climbing Skiddaw (the fourth highest mountain in England) . . . in a gale,” said analysts at Investec Securities in a report.

Sask. potash royalty structure ‘alarmingly inefficient:’ report (Canadian Press/CTV News – January 7, 2015)

January 8, 2015

http://regina.ctvnews.ca/

A new report says Saskatchewan’s potash royalty structure needs to be overhauled because it is too complex and “alarmingly inefficient.”

Jack Mintz, a professor at the University of Calgary, says the royalty program is the most complicated in the world. “Hardly anyone understands the Saskatchewan system,” said Mintz, who is the director of the university’s School of Public Policy.

His report released Wednesday says that while Saskatchewan produces almost one-third of the world’s potash, its tax on the resource isn’t competitive on an international level. “What you really want is something that’s stable,” said Mintz, who added that there are wide fluctuations in the current approach.

The royalties collected by governments from resource companies help fill provincial coffers. Saskatchewan’s system includes a production-based levy, revenue-based levies, profit-based taxes and other taxes on capital investment.

“Saskatchewan is competitive as long as there is a lot of investment that is undertaken by firms,” Mintz said. “But it’s not very competitive — in fact it actually has the highest effective tax rate on investments compared to any other country that we look at — when companies aren’t investing as much as the 2002 period.”

2015 Black Swans – or another BRIC in the wall – by Lawrence Williams (Mineweb.com – January 8, 2015)

January 8, 2015

http://www.mineweb.com/

A New Year newsletter offers some fascinating interpretations of current geopolitical issues and a positive view on gold as the best currency at such a time of uncertainty.

China set to play leading role in setting up and financing financial entities which will be strong rivals to the IMF and the World Bank.

As Mineweb’s principal commentator on precious metals matters I tend to be in receipt of various emails virtually everyday or so from precious metals and geopolitical analysts and commentators – some of whom provide some really good and interesting new material, while others provide views and thoughts which, quite frankly, are not worth taking the time to scan them.

Some of these analysts are somewhat trapped in a groove saying the same things over and over again. Eventually they may well turn out to be right – what goes around comes around – but sometimes this can take an awful long time eventuating. And of course, there are a number out there trying to promote their own premium services, which is fair enough as people need to make a living, but the problem here is that too many of them preach entirely to their own vested interests.

While there is often much that is good in what they have to say it is sometimes difficult to separate the wheat from the chaff.