Republic of Mining

Oil price plunge is Canadian business story of year – by Lauren Krugel (Toronto Star – December 31, 2014)

January 7, 2015

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.

CALGARY — From Alberta oilfields to Bay Street boardrooms to the gas station on the corner, the precipitous drop in crude prices is expected to have far-reaching impacts across the country heading into 2015, making it The Canadian Press Business News Story of the Year.

The abrupt turnaround in oil markets was chosen by half of the 50 editors and news directors across the country who participated in the annual survey.

In explaining their pick, many respondents noted the story’s ripple effects beyond the oilpatch. Richard Dettman, business editor at News 1130 in Vancouver, said the halving in crude prices over a six-month span created a “gusher of stories” — the hit to federal and provincial government coffers, the plunging loonie and the benefit to consumers, to name a few.

Lynn Moore, assistant city editor, business at the Montreal Gazette, highlighted several ways in which oil’s decline will reverberate across Canada.

“A sustained period of low oil prices will throw a big wrench into the works of the Canadian economy and collective psyche.

The end of Canada’s oil superpower pipe dreams – by Terence Corcoran (National Post – January 7, 2015)

January 7, 2015

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

The Washington dust has not yet settled around Canada’s Keystone XL pipeline, but the fuzzy images visible Tuesday through the political storm do not look promising. Nothing in the current play of politics and oil prices would lead to the conclusion that Keystone will ever get approved.

But it’s worse than that for Canada. As the world oil market swirls, not just Keystone is at stake. The greater risk is that the great national global energy superpower dream is going down the drain, washed away by a confluence of forces over which Canada has no control.

On Tuesday, the White House said President Barack Obama would veto the latest Republican effort to push a Senate Keystone bill through Congress. It was an easy decision for the President to announce, since it appears the Senate failed to come up with the necessary 67 votes to override Mr. Obama’s veto.

When even a Republican-dominated Senate can’t muster enough support to force the President’s hand, it’s a sure sign that environmentalists and other activist opponents of Keystone still dominate the pipeline decision-making process.

While Canada’s dreams of exporting more oil sands production to the United States face a grim political environment, the economic environment looks even shakier.

Can the once-mighty TSX Venture Exchange be saved? – by Peter Koven (National Post – December 27, 2014)

January 7, 2015

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

Canada’s junior stock market is in crisis. Hundreds and hundreds of companies can’t raise money, do anything productive to create shareholder value, or get anyone to trade their stocks. But the biggest problem may be that most people just don’t seem to care.

Tell a Canadian market participant that the S&P/TSX Venture composite index hit an all-time low in December and you will likely be met with astonishment.

The once-mighty junior exchange, a place where issuers have raised more than $80 billion in capital during the past 13 years, has fallen so far off the investment community’s radar that most investors seem to have no idea it is plumbing such depths.

The raw numbers are grim. The index is down a whopping 73% since March 2011, and 80% from its all-time high in 2007. The total market value of the exchange’s nearly 2,000 companies is less than $30 billion.

By comparison, the market cap of companies on the Canadian Venture Exchange was more than $100 billion in 2001 before it was acquired by TMX Group Inc. and became the TSX Venture Exchange.

Ontario and federal government need to work together to move Ring of Fire forward: Gravelle – by Jodi Lundmark (tbnewswatch.com – January 7, 2015)

January 7, 2015January 7, 2015

http://www.tbnewswatch.com/default.aspx

THUNDER BAY — A collaborative partnership between the provincial and federal government is crucial in developing the Ring of Fire.

That’s what Minister of Northern Development and Mines Michael Gravelle said is clear after Ontario Premier Kathleen Wynne met with Prime Minister Stephen Harper met early Monday evening to discuss the economy, including nationally significant infrastructure projects like the Ring of Fire.

Gravelle said he had already spoken to Conservative Minister of Natural Resources Greg Rickford over the holidays about the mining project, but the recent meeting between the two leaders has encouraged the two ministers to speak further on the topic.

“There is no question again that this is an extraordinarily exciting economic opportunity,” said Gravelle Tuesday afternoon.

“It’s a complex project, but one where in order for us to truly reach the full potential, both the economic development potential and the social potential, the partnership and the shared funding by the federal government is going to be crucial.”

The provincial government has committed $1 billion to the Ring of Fire, specifically for transportation infrastructure.

Restructuring Ontario Northland prepares to pick up steam – by Ian Ross (Northern Ontario Business – January 7, 2015)

January 7, 2015

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.

A new “transformational” era has arrived at a reformed Ontario Northland Transportation Commission (ONTC) and its interim CEO is urging everyone to get on board.

Senior management at the North Bay-headquartered Crown agency are hitting the road for a series of town hall discussions in communities across northeastern Ontario to lay out their plans to transition into a new chapter.

“I’m hoping it’s sort of a Northern Ontario family initiative,” said chief operating officer Corina Moore, who’s temporarily occupying the seat while a search is underway for a permanent chief executive.

Paul Goulet resigned as president and CEO in October after more than four years at the helm. The ONTC’s telecommunications arm, Ontera, was sold to Bell Aliant during the Ontario government’s aborted divestment attempt, but the rest of the rail, motor coach and repair shop business units remain intact.

Nevertheless, some major changes are in store as Ontario Northland’s restructuring plan is rolled out over the next three years to usher in a more sustainable version of the corporation; one that’s more efficient and less reliant on taxpayer subsidies.

Coal India Workers Strike to Fight Modi’s Privatization Plans – by Rajesh Kumar Singh and Abhishek Shanker (Bloomberg News – January 6, 2015)

January 6, 2015

http://www.bloomberg.com/

A strike by coal miners in India has shut down some mines and disrupted supply at others as unions vowed the biggest walkout in decades to halt plans by Prime Minister Narendra Modi to privatize the industry.

“The strike is on,” said R. Mohan Das, a personnel director at state-run Coal India Ltd. (COAL), the world’s biggest miner of the fuel. It’s too early to assess supply losses, he said, adding that all workers have walked out at some mines, while others are partially closed.

Unions called a five-day strike starting today after rejecting an offer to meet management this morning. Hundreds of union members protested outside Coal India’s Kolkata office denouncing the privatization plans.

“If this strike intensifies there will be a severe coal shortage,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. “With many power utilities being hand to mouth as far as coal supplies are concerned, the problem may be severe.”

Of the 100 power plants that run on local coal, 42 had supplies for less than seven days as of Jan. 1, according to the power ministry’s Central Electricity Authority. Twenty of these plants had less than four days of stock.

Energy Fuels strikes $179M deal to buy Uranerz amid rough uranium market – by Peter Koven (National Post – January 6, 2015)

January 6, 2015

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

TORONTO – Two Toronto-listed uranium miners are merging as they try to build a stronger company that can thrive amid low uranium prices.

Energy Fuels Inc. announced Monday that it is buying Uranerz Energy Corp. for roughly $179-million in stock. The move brings together two U.S.-focused companies that are struggling to make money and attract investor interest in the stagnant uranium market.

The offer is a 37% premium to Uranerz’s closing price last Friday, and some investors thought that was too rich. Energy Fuels shares plunged almost 15% on Monday after the deal was announced.

“The premium didn’t make a lot of sense to us,” said Aaron Salz, a research associate at Dundee Capital Markets. Dundee concluded that the deal is dilutive to Energy Fuels’ net asset value by 35%, and thinks a competing bid is unlikely.

But from a strategic standpoint, experts said the deal is logical. It gives Energy Fuels more scale, lower operating costs and a uranium mine in Wyoming called Nichols Ranch where production can be expanded.

Baffinland deflects Nunavut regulator’s recommendations (Nunatsiaq News – January 6, 2015)

January 6, 2015

http://www.nunatsiaqonline.ca/

“Changes in the health of caribou because of project activities are unlikely”

Baffinland Iron Mines Corp. has responded to recommendations from the Nunavut Impact Review Board, but the company doesn’t plan to follow many of them at its Mary River mine site.

The NIRB’s 2013-14 monitoring report -— designed to keep Mary River in compliance with its project certificate — did not raise any issues of significant concern, but made some recommendations following a September 2014 site visit.

Most had to do with different wildlife monitoring and waste management programs at the Baffin site, like the NIRB’s recommendation to analyse dust-fall or ash in caribou pellets.

Baffinland said it would continue to gather caribou fecal pellet samples for different kinds of monitoring, but that the program would be limited because there are so few caribou in the project area.

“Samples will be analyzed for ash content when a sufficient sample of fresh pellets are collected,” read Baffinland’s Dec. 12 response to the NIRB.

Breakingviews: Water woes could open taps on corporate risk – by Antony Currie (Reuters U.S. – January 5, 2015)

January 6, 2015

http://www.reuters.com/

NEW YORK – (Reuters Breakingviews) – Water is set to become a more serious risk for companies and investors. It’s already recognized. World Economic Forum attendees named H2O a top-three risk two years running. And two-thirds of the world’s largest companies worry about how constraints may affect their business, according to environmental research firm CDP. Few, though, are well prepared for problems. That is set to change.

A few high-profile droughts have helped shake off some complacency. Taps in Brazil’s Sao Paulo may run dry as early as March. California’s supply is low after three years of scarce precipitation. The likes of Illinois and Indiana are starting to use their relative abundance of water to lure companies to their states.

Some firms have taken action. SABMiller has a goal of reducing water used in its breweries by a quarter by 2015. Coca-Cola used 2.08 liters of water for every liter of its own drinks in 2013, down 23 percent since 2004, and wants to be water neutral by 2020. Lockheed Martin, Kimberly-Clarke, AstraZeneca, AT&T and others have implemented water-saving strategies.

That’s not always enough. Often, a company’s idea of water risk is very narrow, CDP points out in a 2014 survey of big companies. Only two-fifths include other local users in their assessments.

Iron Ore Kicks Off 2015 With Rally on China Stimulus Speculation – by Jasmine Ng (Bloomberg News – January 2, 2015)

January 6, 2015

http://www.bloomberg.com/

Iron ore plummeted last year as surging global supplies topped demand. It opened 2015 by posting the biggest weekly gain in 18 months amid speculation that China will take more steps to spur growth in the world’s largest user.

Ore with 62 percent content delivered to Qingdao, China, was unchanged today at $71.26 a dry metric ton, following gains in the previous five trading sessions, according to data from Metal Bulletin Ltd. That took this week’s advance to 5.8 percent, the most since the period to July 5, 2013.

The steel-making ingredient tumbled 47 percent in 2014 as BHP Billiton Ltd. (BHP) and Rio Tinto Group expanded low-cost supplies, pushing the market into a surplus just as growth in China slowed. Data from Asia’s largest economy released on Jan. 1 showed that the government’s Purchasing Managers’ Index (CPMINDX) retreated in December to the lowest level in 18 months, adding pressure on policy makers to do more to bolster growth this year. The country buys two-thirds of global seaborne iron ore supply.

“There’s potential for the Chinese economy to be stimulated sometime soon” given the weaker PMI data, James Wilson, a Perth-based analyst at Morgans Financial Ltd., said by phone. “That may lead to more demand for steel products and iron ore. The December-January period is when the Chinese restock traditionally, so there’s some demand from there.”

The coming showdown between Canadian and Saudi oil producers on the U.S. Gulf Coast – by Geoffrey Morgan (National Post – January 6, 2015)

January 6, 2015

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

CALGARY – A fight between Canadian and Saudi Arabian oil producers is expected to play out on the U.S. Gulf Coast during the course of this year, as the two countries battle for market share in the world’s largest refining district. The fight could help keep oil prices depressed for another six months.

Citigroup analyst Edward Morse released a report Monday that points to an oversupply of oil on the Gulf Coast thanks in part to an influx of heavy crude from Canada, even without TransCanada Corp.’s long-delayed Keystone XL pipeline. At the same time, the report says Saudi Arabia is attempting to regain its market share in the area.

The 2014 showdown between light oil producers — U.S. shale oil companies and OPEC members such as Saudi Arabia — for share of the North American refining market will change, according to Citigroup. “Now the confrontation should shift to sourer and heavier crudes,” the report said.

Oilsands crude is considered heavy, because it has the consistency of molasses, and sour, because of its sulphur content.

Scotiabank vice-president and commodity market specialist Patricia Mohr agreed there is potential for Canadian oilsands shipments to push Saudi Arabian and North African oil out of refineries on the Texas and Louisiana coastline.

NEWS RELEASE: Cliffs Natural Resources Inc. Concludes the Sale of Logan County Coal and Provides Update on Bloom Lake

January 6, 2015

CLEVELAND, Jan. 2, 2015 /PRNewswire/ — Cliffs Natural Resources Inc. (NYSE: CLF) is pleased to announce that it has completed the sale of its Logan County Coal assets in West Virginia to Coronado Coal II LLC, an affiliate of Coronado Coal LLC, for $174 million in cash and the assumption of certain liabilities. The expected tax benefit associated with the transaction will be between 20% to 25% of the previously disclosed pre-tax loss of approximately $400 million, which represents an additional benefit of $80 million to $100 million in future cash tax savings. Cliffs will record the results of this sale in its fourth quarter earnings.

Separately, Cliffs confirms that active production at Bloom Lake has completely ceased and the exit from Eastern Canada continued to be executed on schedule as previously announced. The mine has transitioned to care and maintenance status and, consequently, at this time only a small number of employees involved in such activities are still in the payroll. The last shipment of iron ore out of the Port of Sept-Iles will be completed in early January 2015.

Lourenco Goncalves , Cliffs’ Chairman, President and Chief Executive Officer said, “The execution of the strategic initiatives outlined during our Q3 Conference Call in October 2014 continued to progress as planned during the last two months. The sale of Logan County Coal, which included a meaningful tax benefit to the Company, clearly demonstrates our ability to execute complex transactions despite an adverse M&A environment for commodity related transactions. Additionally, as we approach the final steps of our exit from Eastern Canada, we have brought to an end the flawed expansion that has cost Cliffs and its shareholders billions of dollars.”

Fool’s Gold: The limits of tying aid to mining companies – by Marco Chown Oved (Toronto Star – December 15, 2014)

January 6, 2015

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.

Barrick Gold’s massive mine in Peru has sped up community development, including schools and a hospital. So why are so many locals still jobless and poor?

QUIRUVILCA, PERU—Towering atop a pedestal in the main square, a golden statue of a miner with his headlamp and jackhammer gleams in the morning sun, a monument to the mineral wealth on which this town was built.

The Quiruvilca mine opened almost 100 years ago, and its blackened wooden structures still loom on the mountainside above the rooftops. But a century of mining copper, silver, zinc and gold brought little development to this remote settlement, nestled in a steep valley more than 4,000 metres up in the Peruvian Andes. The roads weren’t paved; many people didn’t have electricity.

Nine years ago, another mine opened, operated by Toronto-based Barrick Gold, the world’s biggest gold mining company. It has paid hundreds of millions of dollars in taxes and royalties and the new-found wealth is visible everywhere. The local government has brought power to virtually everyone in town and is now hooking up remote villages. Through an infrastructure-for-taxes program, Barrick has constructed roads, a police college, a hospital and a school. A new highway has cut travel time to the coast from eight hours to 3.5.

Mining: Tragedy, safety and Ring of Fire mark 2014 – by Staff (Sudbury Northern Life – December 31, 2014)

January 6, 2015

http://www.northernlife.ca/

The spring of 2014 was a sombre time for Sudbury’s mining community, marked by three tragic deaths. In April, Vale millwright Paul Rochette was killed by severe head trauma from a malfunction with an ore crusher.

The next month, two drilling contractors, Marc Methe, 34, and Norm Bissaillon, 49, were killed by a fall of material in First Nickel’s Lockerby Mine. Both men worked for Taurus Drilling Services.

The deaths highlighted the importance of province’s ongoing review of mining health and safety, which reached a high point in September with the release of progress report that made several recommendations.

Those included guidelines for bright and reflective clothing for workers underground, and health and safety training that focuses on six of the most common hazards miners face.

The Mining, Health, Safety and Prevention Review committee is expected to release its final report in the New Year. The ongoing standstill in the Ring of Fire was also a dominant mining story in 2014.