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How $40 oil would impact Canada’s provinces – by Jeff Rubin (Globe and Mail – January 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.

What does Canada’s economy look like with oil prices at $40 a barrel? Certainly it won’t be the energy superpower envisioned by Prime Minister Stephen Harper.

If $40 a barrel still seems a ways off, consider that the benchmark price for oil sands crude is already trading in that price range. What’s more, if production from high-cost sources isn’t withdrawn from an oversupplied market, oil prices may soon be trading even lower.

The first thing Canadians should recognize about the new world order for oil prices is that – contrary to what we’re being told by our federal government – the economy is no longer in dire need of any new pipelines. For that matter, it can live without the new rail terminals being built to move oil as well. Yesterday’s transportation bottlenecks aren’t relevant in today’s marketplace.

At current prices there won’t be any massive expansion of oil sands production because those projects, which would produce some of the world’s most expensive crude, no longer make economic sense.

The recent spate of project cancellations by global oil giants – Total’s Joslyn mine, Shell’s at Pierre River, and Statoil’s Corner oil sands venture – is only the beginning. As oil prices grind lower, we can expect to hear about tens of billions of dollars of proposed spending that will be cancelled or indefinitely postponed.

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Slowdown in China Bruises Economy in Latin America – by Eduardo Porter (New York Times – December 16, 2014)

http://www.nytimes.com/

SANTIAGO, Chile — Few people are as intensely worried about the slowing Chinese economy as Latin Americans. Not only does China buy nearly 40 percent of Chile’s copper, but its once-insatiable demand helped push copper prices from $1 to $4 a pound.

Meanwhile, Beijing plowed billions into Peruvian mines and fisheries and spent billions more buying soybeans from Argentina and Brazil. And it propped up the Venezuelan government to the tune of $50 billion in loans, to be paid in shipments of oil.

China’s voracious hunger for Latin America’s raw materials fueled the region’s most prosperous decade since the 1970s. It filled government coffers and helped halve the region’s poverty rate.

That era is over. For policy makers gathered here last week for the International Monetary Fund’s conference on challenges to Latin America’s prosperity, there seemed to be no more clear and present danger than China’s slowdown.

“The commodity boom allowed governments and companies to avoid hard choices,” Andrés Velasco, Chile’s finance minister from 2006 to 2010, told me. “For goodness’ sake even Argentina grew by 5 to 6 percent per year for almost a decade.”

Copper is back under $3. As commodity prices continue to swoon, driven in large part by China’s weaker demand, the going will get much tougher.

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2014 a gruelling year for B.C. miners – by James Kwantes (Victoria Times Colonist – January 1, 2015)

http://www.timescolonist.com/

How bad was 2014 for Vancouver-based mining companies? With coal prices stumbling along at 52-week lows, even the lumps in the stocking were a stinking money-loser.

Take mining heavyweight Teck Resources, which is better-positioned than most coal producers to weather low prices. While its six coal mines were profitable for the three months ended Sept. 30, third-quarter profit dropped largely due to lower metallurgical coal prices. The stock has slumped more than 40 per cent this year to $16 on the Toronto Stock Exchange, pushing its dividend yield up to nearly six per cent.

Gold looked to break even at about $1,200 US an ounce after hitting highs of $1,385 during 2014. As for the prices of other resources produced in B.C. — copper, molybdenum, natural gas — each finished the year lower as economic growth in China continued to slow.

However, it was Vancouver’s mineral exploration companies — which rely on fresh capital infusions to continue their quest for buried treasure — that felt the most pain.

The S&P/TSX Venture Composite index — a bellwether of sorts for the junior exploration sector — finished the year at 690, comparable to levels at the height of the 2008 financial crisis. Several junior mining companies even gave up on mineral exploration and switched over to the burgeoning medical marijuana industry, while others closed their doors or hunkered down in cash-conservation mode.

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Bad year for Cliffs gives way to uncertain future – by John Myers (Duluth News Tribune – December 28, 2014)

http://www.duluthnewstribune.com/

A bad year is nearly in the rear-view mirror for Cliffs Natural Resources, but the view through the windshield doesn’t look great, either.

The Cleveland-based mining company with a huge presence on Minnesota’s Iron Range has seen its stock value evaporate in 2014, the price for its iron ore halved and Wall Street confidence in its ability to thrive reach rock bottom. How bad was 2014?

In the past 12 months:

  • Cliffs’ stock has fallen from $27 per share to about $6, and some analysts say it may go lower. That’s for a stock that hit $100 per share in 2011 and $75 as recently as 2012.
  • Cliffs’ management team was ousted in late July when the company became the victim of a hostile takeover by the New York hedge fund Casablanca Capital. Casablanca, which called Cliffs’ old guard an “incompetent and entrenched” board that had “destroyed shareholder value” by expanding too fast and ringing up debt at the expense of profit, said it would downsize the company and sell off many or all of its foreign holdings.
  • Cliffs permanently shuttered its Wabush iron ore mine and shipping facilities in Newfoundland and Labrador early in the year. Then in November it announced it was seeking “exit options” to shut down its Bloom Lake operations in Quebec if a buyer didn’t come forward. So far, no buyer has emerged, and the operations appear doomed, at least in the short run. Ironically, closing the plant will cost Cliffs millions more.

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Mining of the future – by Lindsay Kelly (Northern Ontario Business – December 28, 2014)

http://www.northernlife.ca/

Real-time communications to allow deep mining

It may sound like something straight from science fiction, but for miners of the future, suits and helmets that monitor their vital signs, regulate their body temperature and communicate to above-ground operators isn’t so far from reality.

Sudbury company Jannatec Technologies is working to develop fully connected, wearable gear that would do all these things to help miners go deeper underground.

“We’re very good at mining, but our communications and how we move ore and how we move things is still back 30, 40 years, so we have to catch up, and we need higher speed data under there,” Jannatec president Wayne Ablitt said. “We have to give the same working tools underground that are above ground, and that’s our goal.”

Jannatec is one of the partners in the Ultra-Deep Mining Network — established by Sudbury’s Centre for Excellence in Mining Innovation (CEMI) — focused on four areas of innovation: rock-stress risk reduction, energy reduction, material transport and productivity, and human health. The network defines ultra-deep mining as mining taking place up to 2.5 kilometres underground.

Last January, the network received $15 million from the Business Led Network Centres of Excellence; an additional $31 million has come from cash and in-kind contributions.

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Canada’s mining sector braces for another challenging year – by Ross Marowits (CBC News/Canadian Press – December 28, 2014)

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

Industry will benefit from weakened Canadian dollar

Canada’s mining sector is bracing for another challenging year in 2015 as slower growth in China is expected to continue to dampen selling prices for many metals.

Iron ore suffered the biggest drop in the past year, losing nearly half its value to reach the lowest price in more than five years. Some expect the price could fall further — perhaps to US$60 per tonne — on increased supply from Australia and Brazil by giants like Rio Tinto and BHP Billiton, outpaces demand.

Coal, silver, potash, copper and lead prices also weakened in the past year. Not all metals and minerals suffered. Nickel was the big winner, with prices rising 17 per cent following Indonesia’s ban on exports. Other gainers were uranium, aluminum, zinc and diamonds.

Although mining is in a multi-year global slump, prices are significantly higher than they were a decade ago, said Pierre Gratton, president of the Mining Association of Canada.

“It’s a cyclical industry and we have to weather this,” he said in an interview. Gratton said mining companies are very focused on reducing costs and will benefit from both the weakened Canadian dollar and dramatically lower energy prices.

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My Take on Snow Lake – by Marc Jackson (Thompson Citizen – December 24, 2014)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000.  editor@thompsoncitizen.net

Former Snow Lakers abound at mining convention

Walking the exhibition floor at the annual Manitoba Mining and Mineral Convention is just like old home week for a Snow Laker. A wide variety of people who have either lived here, or had extended visits, were around every corner, or in some cases working a booth on the convention centre’s massive exhibition floor.

This was indeed the case for several gents clustered on one of the central avenues of the floor looking to drum up interest in their “prospective” properties.

Dan Ziehlke, representing his company Strider Resources Ltd., was welcoming, conversational, and partaking in something he called “the miner’s breakfast” (a bag of popcorn from the kettle maker set up on the convention floor) when we happened upon him. Dan firmly believes – and he can back it up with the geology, prospecting and geochemical work – that he has another Nor-Acme type deposit on the east side of Wekusko.

Jim Parres was set up immediately to the left of Ziehlke and promoting his Jiminex Properties: Misehkow River near Pickle Lake; Northern Eagle near Hemlo; and the Parres and Parres Two near Osborne Lake.

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Roger Warren, Giant Mine Bomber, Has Day Parole Extended (Canadian Press/Huffington Post – December 24, 2014)

http://www.huffingtonpost.ca/

A man who murdered nine people by bombing a Yellowknife mine 22 years ago continues to make “positive contributions to society” since being released from prison, a federal parole board has ruled in extending Roger Warren’s day parole.

The Parole Board of Canada granted the 71-year-old an additional six months parole on Nov. 21, stating board members found that by all accounts he is doing well and respecting conditions the board imposed.

“While mindful that the victims of your crime remain deeply affected by your actions,” reads recently obtained documents, “with no evidence that your risk is increasing and given the positive work you have done throughout your incarceration and community supervision, the Board finds that your risk to reoffend is not undue…”

Warren was sentenced to life in prison for second degree murder in January 1995 in the killing of nine replacement workers during an acrimonious strike at the Giant Mine.

He was found guilty of rigging a trip wire that detonated a massive dynamite explosion deep underground when it was snagged by a passing ore car holding the victims.

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Canadian miners brace for ‘knife fight’ after year of dumping assets at fire-sale prices – by Peter Koven (National Post – December 30, 2014)

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

The mining business has a long history of companies grossly overpaying for assets. But no one will accuse George Dethlefsen of that crime.

Mr. Dethlefsen’s firm, Corsa Coal Corp., was approached this year about buying coal assets in Pennsylvania from Russian steel giant OAO Severstal, which was bailing out of the United States.

Severstal had bought these operations for $900 million in 2008, when steelmaking coal prices were hitting all-time highs. Mr. Dethlefsen would not pay anything close to that in today’s awful coal market, but he didn’t have to. Corsa bought the operations for a grand total of US$60 million, or less than 8% of what Severstal paid.

“It’s a tough market. We have our work cut out for us with this business and it’s not going to be easy,” said Mr. Dethlefsen, Corsa’s chief executive. “But we’d rather start by paying US$60 million than US$500 million.”

Indeed. It used to be that when mining companies put assets up for auction, they wouldn’t actually sell them unless they got a very full price. That could be because their commodity price assumptions were too optimistic, or they were just too attached to them and convinced they could extract more value. Dozens of interesting projects were put up for auction in recent years and never changed hands because sellers demanded too much money.

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What Really Needs to Happen to Make the Ring of Fire a Reality – by Chief Cornelius Wabasse (Huffington Post – December 24, 2014)

http://www.huffingtonpost.ca/politics/

Cornelius Wabasse is the Chief of Webequie First Nation.

We have heard a lot in the news recently about whether resource development in the Ring of Fire in Ontario will ever become a reality. Newspapers are filled with discussion about why progress has not been faster, of companies abandoning development projects, and of concerns that Ring of Fire development may never be achieved.

These discussions focus on the wrong questions.

If Ring of Fire development is to be successful, the question should not be whether the development is happening fast enough. It should be whether the process is taking place based on a foundation of recognition and respect for Webequie First Nation and the other Indigenous nations who call this land home.

Despite all the words written and spoken about the Ring of Fire, Webequie and our Indigenous neighbours remain invisible to most of the boosters, pundits and speculators. We are the unnamed “First Nations” or “Aboriginal people.” It is time people learned more about who we are and our vision for our lands and future.

We have always lived here. We are not going anywhere. We have our own laws separate from Canadian laws.

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The Klondike Gold Rush debuts Jan. 6 on PBS – by Tony Wong (Toronto Star – January 1, 2015)

http://www.pbs.org/wned/klondike-gold-rush/home/

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Documentary about Yukon gold rush in the late 1800s based in part on Charlotte Gray’s Gold Diggers.

Canadian author Charlotte Gray has mined literary gold by plumbing the history of the Klondike. Her well-reviewed 2010 book Gold Diggers: Striking It Rich in the Klondike spawned a scripted miniseries executive-produced by Ridley Scott, starring Tim Roth and Sam Shepard on the Discovery Channel. And now PBS is premiering TheKlondike Gold Rush on Tuesday, Jan. 6.

The documentary is not entirely based on Gray’s book, but the Ottawa author is featured extensively in the hour-long program, along with historians Michael Gates and Terrence Cole.

“People set off with very little clue about where they were going, they were swept up in this mass hysteria,” says Gray in the film. “The saying was that there was gold as thick as a cheese on a sandwich.”

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Chilean mining firms nervous about impending labor reforms – by Fabian Cambero (Reuters U.S. – December 22, 2014)

http://www.reuters.com/

SANTIAGO – Dec 22 (Reuters) – Mining firms in Chile, the world’s top copper producer, say the government has left them in the dark over a new labor bill to be delivered to Congress this month, undermining the confidence of investors grappling with low metal prices.

President Michelle Bachelet’s socialist government says it wants to modernize collective contract negotiations and strengthen unions, though it has been vague on details. Senators close to the government have said it could seek to limit mining companies’ ability to replace workers during strikes.

The labor reform is part of a battery of measures aimed at reducing Chile’s gaping wealth gap, and Bachelet faces a tricky balancing act as mining accounts for half of Chile’s exports.

Mining companies fret the reforms will jack up labor costs and increase the power of unions in a country where strikes are relatively uncommon.

“It’s not the moment to implement a radical labor reform because we have had too many changes and each change creates uncertainty,” said Diego Hernandez, president of Antofagasta Minerals.

State-run Codelco and private firms like BHP Billiton, Anglo American, Glencore, and Antofagasta are all juggling weak copper prices, due to slacker demand from China, and surging costs.

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Iron Ore Extends Drop to Five-Year Low as China Economy Weakens – by Jasmine Ng (Bloomberg News – December 22, 2014)

http://www.bloomberg.com/

Iron ore sank to the lowest level since 2009 as supply exceeds demand and China, the biggest user, contends with its weakest expansion in almost a quarter century.

Ore with 62 percent content delivered to Qingdao, China, retreated 1.8 percent to $67.90 a dry metric ton, data compiled by Metal Bulletin Ltd. showed. That’s the lowest since June 3, 2009, and extends this year’s slump to 50 percent.

The steel-making raw material is headed for the biggest annual loss in at least five years as BHP Billiton Ltd. (BHP), Rio Tinto Group and Vale SA (VALE5) expanded output, betting increased production will boost revenue and force less competitive mines worldwide to close. Gripped by a property downturn and excess capacity, China is set to grow 7.4 percent this year, the slowest full-year expansion since 1990. Australia cut its price estimate for next year by 33 percent as a surplus builds.

“The falling price this year has been far deeper than anyone anticipated,” Andrew Hodge, an analyst at Wood Mackenzie Ltd. in Sydney, said before today’s prices were released. “China has had weaker than expected demand from its own residential property sector. For the big three, they have the lowest cost operations so there’s no reason to stop producing,” he said, referring to BHP, Rio and Vale.

The market needs to absorb a surplus of about 110 million tons next year, almost double the 60 million tons in 2014, Goldman Sachs Group Inc. estimated in October. The bank forecasts a price of $80 next year.

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Editorial: Top stories of 2014 – by John Cumming (Northern Miner – December 22, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.  jcumming@northernminer.com

Mining and mineral exploration are by nature businesses for optimists, but looking back over 2014, it’s hard not to conclude that difficulties and disasters tended to outweigh the brighter spots of achievement and growth. Here is our choice of the top stories of 2014:

10. Peter Munk’s exit — One of the giants of Canadian mining took his final bow in the mining world in April 2014, as Barrick Gold founder and chairman Peter Munk delivered his last address to shareholders at the company’s annual meeting. Having played a pivotal role in growing Barrick from modest beginnings to the world’s No. 1 gold producer, Munk’s reputation as a company builder is secured. As the year progressed, Barrick saw a major turnover in top management.

9. Rise of the house of Lundin — While other miners focused on cutbacks, the Lundin Group of Companies was a mine developer and bargain hunter. On top of financing numerous struggling juniors, the Lundin group piled up successes such as Lundin Mining’s start-up of its Eagle mine in Michigan and purchase of the Candelaria mine from Freeport-McMoRan; Fortress Minerals’ purchase of Kinross Gold’s Fruta del Norte project; and Lucara’s continued success in diamonds.

8. Crises in West Africa — A favourite destination for junior gold miners had a deadly year marked by an outbreak of Ebola that killed 7,300 people in Sierra Leone, Liberia and Guinea.

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