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Will we see the return of Inco Ltd. to TSX next summer as Vale re-thinks base metals? – by John Barker (Soundings byJohn Barker.com – December 9, 2014)

http://soundingsjohnbarker.wordpress.com/

Iron ore accounts for three-fourths of Brazilian mining giant Vale’s revenue. With economic growth in China slowing and iron-ore production from Vale’s rivals in Australia speeding up, the benchmark price for the steel-making material has fallen to around $70-$75 per metric ton recently, little more than one-third of the 2011 peak of around $190 per metric ton. Mining analysts estimate that it costs Vale $67 to produce a metric ton of iron ore and ship it to China, making for a very tight profit margin at current commodity prices. Vale’s shares as of last week had fallen 42 per cent year-to-date. What to do?

Vale CEO Murilo Ferreira, in an annual presentation to investors Dec. 2, said the company is considering selling shares of between 30 per cent and 40 per cent of its base-metals division. The division is made up primarily of copper and nickel mines in Brazil, in Indonesia’s island province of Sulawesi, an hour’s flight north of Bali, on the southern tip of Grand Terre, the main island in New Caledonia, an overseas territory of France, east of Australia, and Canada, including nickel mining, milling, smelting and refining in Thompson, Manitoba, where copper and cobalt, along with associated gold, silver, platinum, sulphur, selenium and palladium deposits, are also mined.

The Initial Public Offering (IPO) would be intended, Ferreira said, to “unlock” value in the base metals division, although specifics haven’t been worked out nor has the sale been proposed to Vale’s board of directors. The Thompson smelter and refinery, which opened March 25, 1961, was the free world’s first fully integrated nickel operation and built at a cost of $185 million. Mining analysts believe Vale’s base metals division may be worth $30-billion to $35-billion, including the assumption of debt.

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Jim O’Neill: `Ridiculous’ to Be Bearish on China (Bloomberg News – December 8, 2014)

  http://www.bloomberg.com/tv/ Dec. 8, 2014 (Bloomberg) — Jim O’Neill, a Bloomberg View columnist and the former chairman of Goldman Sachs Asset Management International, talks about the global economy, emerging markets and central bank policies. He speaks with Betty Liu, Brendan Greeley and Olivia Sterns on Bloomberg Television’s “In the Loop.” (O’Neill is a Bloomberg View …

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Zimbabwe, a place of rewards and sanctions – by Memory Mataranyika (Miningmx.com – December 9, 2014)

http://www.miningmx.com/

[miningmx.com] – MINING companies in Zimbabwe have described the current year as a period of negative and positive halves.

On the one hand, the Zimbabwean government saved its miners from total collapse under the heavy saddle of fiscal demands and on the other, it softened demands that platinum miners speedily build a base metals refinery inside the country.

The mining sector in Zimbabwe has continued to be a major mainstay of the country’s economy with mineral exports accounting for 52% of the country’s total exports worth $2.4bn as of end-October, 2014.

The major international mining companies all have a presence in Zimbabwe, but their growth plans and expansion programs appeared to falter under the weight of a difficult operating environment in the country, with softer commodity prices also contributing to this.

It has mostly been the gold mines – Blanket, owned by Caledonia and Freda Rebecca owned by Mwana Africa – that have outlined and acted on their expansion plans. Mwana Africa is additionally raising funds to re-open its nickel refinery operation.

“Capital injections by mining houses, rebound in international gold prices as well as production rump-up at Freda Rebecca Mine will support higher gold production of 16,000 kg in 2015, up from the 14,500kg estimate for 2014,” said finance minister, Patrick Chinamasa.

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Plan Nord prepares the ground for eventual upturn in resources: Arcand – by Robert Gibbens (Montreal Gazette – December 8, 2014)

http://montrealgazette.com/

Quebec’s Plan Nord relaunch is on track, despite the closing of the big Bloom Lake iron ore mine in Quebec-Labrador, because it rests firmly on a key long-term economic and social base, Energy and Natural Resources Minister Pierre Arcand said Monday.

Arcand, responsible for Plan Nord, was backed by a bevy of mining and energy industry leaders at the Board of Trade of Metropolitan Montreal’s Resource Strategy Forum in identifying major projects worth several billion dollars that will find financing once global metal markets turn around.

Quebec has to compete in oversupplied markets and the turnaround may take two years, they said. But developing new iron, base metals and gold mines can take about five years and 12 to 15 years for diamonds, they said, so Quebec must start preparing for the upturn now.

An environmental group protested against the province’s mining and energy policies outside the Palais des congrès de Montréal before the forum began, but the doors remained open.

Arcand said the government’s job is to focus on improving infrastructure in a region “twice the size of France” when replying to industry players who put top priority on cost-cutting in the face of intense global competition and Quebec’s long distance from Asia — driver of the next upturn.

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BIV 25th Anniversary: B.C. mining sector’s lost decade – by Nelson Bennett (Business Vancouver – December 4, 2014)

http://www.biv.com/

NDP policies sparked a decade-long exodus of mining and exploration dollars from the province; industry-friendly Liberals brought them back

July 1993 was a watershed time for mining in B.C. Mike Harcourt’s NDP government had announced the creation of Tatshenshini-Alsek Provincial Wilderness Park in the furthest northwest corner of B.C. on the border of the Yukon and Alaska Panhandle.

It killed the Windy Craggy copper mine project – one of the largest undeveloped copper deposits in the world – which Geddes Resources estimated to be worth $8.5 billion and had spent $50 million trying to develop.

“The killing of the Windy Craggy mine will have repercussions for a mining industry now under siege in our province,” Business in Vancouver columnist David Mitchell predicted in the July 13-19, 1993, issue of BIV.

Those repercussions were felt for a decade. In addition to killing the Windy Craggy project, the NDP announced plans to raise the share of parks and protected areas in B.C. from 5% of the provincial land base to 15%.

An exploration frenzy in the “Golden Triangle” of Northwest B.C. that had started in 1989 with the discovery of the Eskay Creek deposit came to a halt.

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NEWS RELEASE: AME BC Announces 2014 Award Recipients

Leaders in Mineral Exploration and Mine Development to be Recognized at January 27 Gala

Vancouver, BC — December 9, 2014 — The Association for Mineral Exploration British Columbia (AME BC) is pleased to announce the 2014 recipients of its annual awards presented to individuals or teams for significant contributions to the mineral exploration and development industry. The AME BC Awards Celebration of Excellence Gala will be held at 7:30 p.m., Tuesday, January 27, 2015 during Mineral Exploration Roundup in Ballroom C/D at the Vancouver Convention Centre West. Tickets are available through registration at www.amebc.ca/roundup.

This year’s recipients are as follows:

Peter Ogryzlo is the recipient of the H. H. “Spud” Huestis Award for excellence in prospecting and mineral exploration. He is recognized especially for his contributions to the discovery of two additional ore zones at the Huckleberry Copper Mine, 85 kilometres southwest of Houston in west-central British Columbia. These newly-defined resources have led to major open pit and plant expansions to extend the mine life – first from 2007 through 2012, and then from 2012 through 2021.

Bob Gallagher and Jim Currie are recipients of the E. A. Scholz Award for excellence in mine development. They are being acknowledged for their key roles in the early stages of resource and economic evaluation, mine design and construction of the New Afton copper-gold mine near Kamloops, BC. Their cooperative spirit and enthusiasm led to the successful development of the largest underground panel block caving operation in Canada.

David Elliott is the recipient of the Murray Pezim Award for perseverance and success in financing mineral exploration. He has made a significant contribution over his 40-plus year career by financing many mineral exploration companies, particularly at the early stages. Over his career, he has provided seed capital and follow-on financing for hundreds of mineral exploration and development companies, both public and private.

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Congress’ budget crunch yields blessings & miseries for U.S. mining – by Dorothy Kosich (Mineweb.com – December 9, 2014)

http://www.mineweb.com/

RENO (MINEWEB) – As Congress worked on a $1.1 trillion measure to keep the U.S. government operating past midnight Thursday, two mining company land exchanges impacting Arizona and Nevada projects had been attached to the Department of Defense budget scheduled to be reviewed by the U.S. Senate, perhaps, as early as today.

Sen. Carl Levin, D-Michigan, told reporters that he expected the full Senate to take up a joint fiscal year 2015 defense policy bill late today. The House had already passed the $585 billion defense authorization bill on December 4th.

More than 60 lawmakers are either retiring, lost their elections, or will assume new elected offices in January 2015.

In its present form, the National Defense Authorization Act (NDAA) funds not only the Defense Department but also includes the largest public lands package since the Omnibus Public Land Management Act in 2009. Title 30 of the measure (the “National Resources Related General Provisions”) “would give landscapes deemed sacred by Native American tribes to a foreign-owned mining company,” complained environmental groups in letters sent to the U.S. Senate.

The Competitive Enterprise Institute’s Center for Energy and Environment Director, Myron Ebell, called the package “a backroom deal that would lock up use of hundreds of thousands of acres of land.

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Ontario Tories look to appease Northerners – by Carol Mulligan (Sudbury Star – December 9, 2014)

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

Four provincial Progressive Conservative leadership candidates didn’t outright apologize to Northerners two weeks ago at a Sudbury debate. But they did express affection and demonstrated a knowledge of northern issues at the first of six PC leadership debates.

Whitby-Ajax MPP Christine Elliott, Nipissing MPP Vic Fedeli, Nepean-Carleton MPP Lisa MacLeod and Barrie MP Patrick Brown said all the right things at the Nov. 24 event at College Boreal in Sudbury.

They came bearing olive branches, and that the first of six leadership debates was held in the Nickel City was no accident. It was a mea culpa meant to undo a snub by former PC leader Tim Hudak for not participating in a May 26 northern debate before the June 12 election.

Hudak’s failure to attend and his party’s dismal showing are probably just coincidence, but would-be leaders and their party aren’t taking any chances. They have four years to rebuild a party in ruins and gain ground in

11 northern ridings. They represent a small portion of the province’s 107 electoral districts, but they’re important nonetheless to any party wanting to govern.

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TSX suffers worst day in 18 months as oil prices keep tumbling – by David Berman (Globe and Mail – December 9, 2014)

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.

Declining crude oil prices are taking a brutal toll on the Canadian stock market, as investors take a dim view of the country’s economic prospects in an era of cheap, plentiful energy.

The benchmark S&P/TSX composite index fell 329.50 points or 2.3 per cent, to 14,144.17, marking its worst stumble in about 18 months.

At its lowest point during the day, the index was down as much as 490 points. The Canadian dollar fell to another five-year low of 87.10 cents (U.S.), down more than a third of a cent and offering another signal that investors are growing increasingly pessimistic about all things Canada.

The latest setback certainly ramps up the drama surrounding the commodity-exposed Canadian market, but it also continues a painful downturn that has persisted for more than two weeks.

The benchmark index has fallen a total of 6.4 per cent since Nov. 21 – eroding its year-to-date gain to just 3.8 per cent as investors ponder where oil is ultimately headed and what the repercussions will be.

The price of oil has retreated to five-year lows amid evidence that the world is producing more crude than the global economy can consume.

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Report Outlines Ways to Protect Appalachian Communities from Mountaintop-Removal Coal Mining – by Mary Anne Hitt (Huffington Post – December 8, 2014)

http://www.huffingtonpost.com/green/

Mary Anne Hitt is the Director, Sierra Club’s Beyond Coal Campaign.

If you think mountaintop removal coal mining’s days are over, you’re wrong. In 2013, Virginia issued nine new surface mining permits and two acreage expansions, West Virginia issued 25 new permits, and Kentucky issued 30 new permits which will destroy mountains and threaten nearby communities.

An excellent new report out from the Alliance for Appalachia evaluates the Obama Administration’s track record on mountaintop removal, and it does not give the Administration high marks for its efforts to date. The report finds that federal agencies have not followed through with initiatives intended to address mountaintop removal, and it outlines specific next steps the Obama Administration can take to tackle the worst harms to the region’s land, water, and communities.

From the report: “In June, 2009, the Obama administration created a Memorandum of Understanding (MOU) among federal agencies responsible for protecting Appalachian communities from the extreme damage of mountaintop removal coal mining. Though grassroots groups realized this MOU would not fully end the practice of mountaintop removal, nor ensure a just and sustainable economy in our region, citizen groups saw this MOU as a small, though significant, step in the Obama Administration taking much needed federal‐level action to address the intersecting health, environmental, political and economic challenges our region continues to face.”

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Mining’s ‘Cash Machine’ Promise Fades as Prices Crater – by Jesse Riseborough (Bloomberg News – December 8, 2014)

http://www.bloomberg.com/

BHP Billiton Ltd. (BHP) and Rio Tinto Group run the risk of taking on additional debt as a plunge in commodity prices threatens their ability to keep a promise of returning more cash to shareholders.

As the world’s two biggest mining companies reiterate pledges to bolster returns, a near five-year low in iron ore and coal prices raises the specter both will need to borrow to meet their dividend commitments. Along with rivals Glencore Plc (GLEN) and Vale SA (VALE5), the two companies are largely responsible for the supply glut that’s putting downward pressure on prices.

While investors demanded higher industry returns after $1 trillion was spent on acquisitions and new mines in the past decade, the prospect of companies “robbing Peter to pay Paul” doesn’t sit well with Clive Burstow, an investment manager at Baring Asset Management, which oversees $60.5 billion.

“If they start leveraging up the balance sheet just to give investors back some money, I’m not a great fan of that,” said Burstow, who has been reducing holdings of BHP and Rio this year.  “That effectively means they are banking on there being higher commodity prices in the future.”

If current commodity prices prevail, BHP faces an estimated $5.4 billion shortfall to meet a forecast $6.6 billion dividend payout for the fiscal year ending June 30, according to Liberum Capital Ltd. mining analyst Richard Knights.

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The 2015 Energy Outlook Series: Coal – by Vicky Validakis (Australian Mining – December 8, 2014)

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

Coal has had a tumultuous 12 months but will 2015 be any better? Coal prices declined steadily in the first months of 2014 in response to a combination of in-creased supply and lower import demand from China.

Australian benchmark contract prices for high-quality metallurgical coal settled at $US120 in the September quarter, a price that left many coal operations unprofitable.

Thermal coal fared even worse, with Newcastle free on board spot prices averaging US$73 a tonne in the first eight months of 2014, down 16 per cent year on year. The price glut mean something had to give, and 2014 was the year the coal industry decided to restructure its workforce leading to massive job cuts.

Australian Mining estimates that more than 2500 jobs in the coal sector were cut as mining companies either downsized their operations or shut them down completely.

The Integra coal complex in the Hunter Valley was an early victim of coal’s fall from grace, as Vale announced in May that it would close the operation, taking 500 with it.

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Vale London media briefing a virtual charade – by Lawrence Williams (Mineweb.com – December 8, 2014)

http://www.mineweb.com/

A briefing in London will not have earned Vale many media friends, given few questions generated any concrete answers.

LONDON (MINEWEB) – After much exhortation this writer attended the Vale Day annual media briefing in London and really wished he hadn’t bothered. The world’s No. 2 or 3 diversified miner, depending on whose figures one takes, might just as well not set this kind of thing up given the paucity of actual fact delivered.

Firstly the whole event was conducted in Portuguese with simultaneous translation. Now maybe I’m an arrogant Brit thinking that perhaps such an event should be conducted in English given that it was being held in London, but when one knows that most of the Vale executives who participated probably speak better English than the translator, the logic for conducting the whole media briefing in Portuguese perhaps falls away, or smacks of yet another degree of obfuscation.

Indeed a couple of the Vale execs did start to answer questions in English, but were quickly reminded to continue in Portuguese instead. Given that apparently an earlier investor briefing involving many of the same executives had indeed been handled in English, perhaps emphasises the point.

Vale’s CEO, Murillo Ferreira, should have been a politician. He was very adept at ‘answering’ questions, often at considerable length, without actually dealing with the precise query involved – or maybe it was just the simultaneous translation that didn’t convey what he was saying correctly.

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BHP Billiton spin-off named South32 – by Jamie Smyth (Financial Times – December 8, 2014)

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

BHP Billiton ended speculation about the name of its new spin-off company that will hold up to $15bn in non-core assets, calling it South32.

The Anglo-Australian resources group said the name of the new company reflected the fact that most of its assets are located in the southern hemisphere linked by the 32nd parallel line of latitude. It was chosen following the suggestion of an employee, said the company.

“Our heritage and the places in which we operate are an important part of our identity,” said Graham Kerr, chief executive elect of South32.

“While South32 is grounded in the southern hemisphere, we will retain our global reach and ambition as we seek to exceed the expectations of a global shareholder base.”

South32 will have a primary listing in Australia as well as a secondary listing in South Africa and a standard listing in London.

BHP is in the midst of a major corporate restructuring designed to simplify the group and boost profitability. It is bundling a swath of non-core assets into a separate diversified mining company, the “newco”, which it initially proposed to list only on stock exchanges in Australia and South Africa. But following protests from UK investors it changed course.

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Ruble Drop Helps Russian Metal Companies Skirt Selloff – by Yuliya Fedorinova and Ksenia Galouchko (Bloomberg News – December 8, 2014)

http://www.bloomberg.com/

Russian metal and mining companies are winning back investors’ favor this year, avoiding a broader selloff in equities as the weakening ruble helps boost their profits from exports.

Eight of the 10 best performers in the RTS Index (RTSI$) in 2014 are producers of raw materials from steel and nickel to diamonds and soil nutrients. While the dollar-denominated gauge sank 37 percent, United Co. Rusal, the world’s largest aluminum company that touched a record low in November 2013, led the rally in non-oil commodity stocks with an almost fourfold advance.

While stocks from lenders to utilities and airlines have tumbled as Russia’s economy headed for the first recession since 2009, the slumping ruble has lifted metal and mining companies that have costs in the local currency and make sales abroad. Crude, the country’s top export, has sunk into a bear market, driving a 38 percent decline in the ruble and exacerbating the impact that international sanctions linked to the Ukraine conflict have had on gross domestic product growth.

“The stocks of metal and mining companies are turning from ‘l’enfant terrible’ into the best performers,” Alexander Losev, the chief executive officer of Sputnik Asset Management in Moscow, said by e-mail on Dec 4. “Serious ruble devaluation is benefiting metal producers since their costs are in rubles and revenue from exports is in dollars.”

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