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Vale Says Base Metals Unit May Be Worth Up to $35 Billion – by Juan Pablo Spinetto (Bloomberg News – December 2, 2014)

http://www.bloomberg.com/

Vale SA (VALE5), the world’s largest nickel producer, said it may raise cash selling a minority stake in its metals-producing unit worth as much as $35 billion as it faces lower commodity prices.

Chief Financial Officer Luciano Siani said the base metals unit, the company’s largest business after iron ore, may be worth between $30 billion and $35 billion. Vale will only consider selling the stake if the company can get a “fair price,” Chief Executive Officer Murilo Ferreira told investors during a presentation in New York.

“An IPO could be considered,” Siani said in an interview with Betty Liu on Bloomberg Television today. “We want to be ready sooner rather than later to take the opportunity when it presents itself very clearly if that’s the case.”

Vale, whose shares have dropped 43 percent this year, is seeking to move beyond a series of setbacks including strikes in Canada, plant faults in Brazil and an acid spill in New Caledonia. While its earnings outlook was boosted by nickel’s first-half rally, prices have plunged 18 percent from a Sept. 8 peak as Vale increased production.

Nickel output will climb to 303,000 metric tons next year while copper is forecast to rise to 449,000 tons, The Rio de Janeiro-based company said in its annual budget release today.

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The 2015 Metals Outlook Series: Nickel – by Cole Latimer (Australian Mining – December 1, 2014)

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

The story of nickel is finally one of stability.

Since 2005 the me­tal has been wracked by skyrocketing highs and sharp declines that have caused massive job losses and uncertainty that has seen an exodus from the sector by many of the larger players.

Much of this was due to a fall in stainless steel demand, working inversely to the growing demand for construction steel. IBISWorld put it succinctly: “Nickel prices, having reached unprecedented highs prior to the global financial crisis, plummeted as global economic growth slumped in subsequent years.”

And while the future is slated to be better, a swift and strong recovery is not forecast. Earlier this year the metal reached a two year high in May, but since that time has reversed its gains, falling 27 per cent.

Much of this spike was based on Indonesia’s implementation of a ban on unrefined nickel being exported, with prices surging 56 per cent at the time, however the fall came quickly due to the likelihood of current global supply more than meeting the hole left by the Indonesian ban.

BHP’s attempts to sell off its Nickel West assets exemplified the confused nature of the sector. While the miner saw the assets as valuable enough to retain during its greater demerger earlier this year, it did not see them as vital enough to keep within its mix.

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Noront Sixth Annual Ring of Fire Christmas Fund

It is that time of year again! Noront Resources’ employees are running our Sixth Annual Ring of Fire Christmas Fund. Over the past 5 years Noront has raised over $75,000 in donations, and has ensured that each child under the age of 13 living both on and off reserve in the communities of Marten Falls …

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NEWS RELEASE: WESDOME GOLD MINES TO POUR ITS ONE MILLIONTH OUNCE OF GOLD AT EAGLE RIVER MINE IN WAWA, ONTARIO

December 1, 2014 – Wesdome Gold Mines Ltd is pleased to announce that it will pour its one millionth ounce of gold at its Eagle River mine in Wawa, Ontario on December 5, 2014. Since the first gold brick was poured on October 17, 1995, the Eagle River mine has produced 1.0 million ounces of gold from 3.4 million tonnes at a recovered grade of 9.2 grams per tonne, with higher grades realized in recent years and projected in coming years.

Initially purchased in March 1994 and put into production at a cost of $15.5 million, the Eagle River mine’s profitable production enabled the acquisition of the Edwards mine (1997-2002) and the Mishi mine (2002-present), also located in Wawa. High gold grades and an experienced work force have insulated operations during gold price down cycles enabling a 20-year continuous mine life to date. Wesdome emphasizes local and regional vendors through whom it now spends $30 million annually.

Wesdome has had recent drilling success in identifying the potential for another additional high grade mining area at depth and in recently recognized parallel zones within range of existing workings. Further drilling is underway to fully delineate and define two new parallel structures (the 7 Zone and 300 Zone), and their size potential. Prospecting efforts will attempt to trace their projection to surface. Wesdome expects to release additional drilling results later this year.

Mr. Rolly Uloth, President and CEO commented, “I would like to thank the entire team at Wesdome as well as our suppliers, whose hard work, dedication to mine safety, and commitment to productivity has made this significant milestone possible.

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Why volatility in commodity prices is still nothing close to a ‘crash’ – by Peter Koven (National Post -December 2, 2014)

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

When looking at commodity prices, investors tend to have short memories.

Words like “crash” and “collapse” have been thrown around with frequency in recent days and weeks. The panic appeared to hit a high point on Monday morning, when commodities fell sharply in the early hours before rebounding through the afternoon.

But experts noted that the current market action does not rate as anything close to a “collapse.” To see what that looks like, one only has to look back six years.

After the global financial crisis unfurled in the fall of 2008, oil prices plunged below US$35 a barrel, copper dropped to about US$1.20 a pound, and gold bottomed out at close to US$700 an ounce. Many of the world’s top producers were struggling to make much (if any) money at those prices.

By comparison, the latest commodity volatility barely qualifies as a blip. US$66 oil, US$2.90 copper and US$1,150 gold are prices that those industries can easily live with. Even iron ore, which has plummeted almost 50% in 2014, is priced at a level that guarantees massive profits for the world’s three major producers.

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Gold miners in trouble – Hambro/Raw – by Lawrence Williams (Mineweb.com – December 2, 2014)

http://www.mineweb.com/

A fairly downbeat presentation on gold mining stocks from Blackrock executives at Mines & Money London.

LONDON (MINEWEB) – A gloomy morning in London was not uplifted for gold mining stock investors by a decidedly downbeat update on the sector from Blackrock’s Evy Hambro and Catherine Raw. They were speaking to a packed hall on the first main day of this year’s Mines & Money event.

Perhaps the only positive comment on the sector from those running what is probably the world’s biggest gold mining investment fund, Blackrock Gold & General, was that after many years of underperforming the gold price, the stock index beta is now once again following gold more closely – perhaps small comfort to those who have seen gold stock investment decimated over the past two to three years, with the gold price itself at the lowest level for around five years.

One has to add though that the previous speaker, Peter Boockvar of the US’s Lindsey Group, was more positive on current prospects for the gold price pointing to the continuing scale of central bank money printing, despite the US Fed’s withdrawal; the Fed’s worries about dollar strength impacting the US economy; the symbolism of the Swiss gold referendum, despite the ultimate low vote, the loosening of import restrictions by the Indian government and with his comment that demand for physical gold is off the charts. He predicted that the gold price has bottomed – but warned that he also said that a year ago too!

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The problem isn’t aboriginals as Stephen Harper suggests. It’s us – by Haroon Siddiqui (Toronto Star – November 30, 2014)

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.

The Harper government is behaving in colonial ways towards our indigenous peoples.

“When the school is on the reserve, the child lives with his parents who are savages; he is surrounded by savages and though he may learn to read and write, his habits and training and mode of thought are Indian. He is simply a savage who can read and write.”

That was our first prime minister, Sir John A. Macdonald, speaking in the House of Commons in 1883, rationalizing the residential schools where aboriginal children were consigned to be cleansed of their Indian-ness.

Of the 150,000 who suffered that fate, many were sexually abused. Many were starved to be used as guinea pigs for nutrition experiments. Not until 2003 did Ottawa acknowledge the horror. In 2008 it formally apologized. More than 100,000 former residents have since been compensated from a $1.9-billion fund. A Truth and Reconciliation Commission has been hearing from survivors and examining 3.5 million documents, earlier withheld by Ottawa.

Thatgenocidal practice was but one element of a vast infrastructure of racism designed to keep “the white people, pink people, at the top,” writes John Ralston Saul, author, philosopher and Canada’s pre-eminent public intellectual.

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Why the call for bigger and better carbon taxes is about to escalate – by Terence Corcoran (National Post – December 1, 2014)

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

When the first OPEC oil crisis struck in 1973, sending the price of crude as high as US$140 a barrel in today’s dollars, policymakers around the world — including Canada — scrambled for ways to bring the price back down. Today, the opposite is true. As the 2014 OPEC crisis pushed oil down to US$65 Monday, the major policy objective in many circles is to find a way to bring the price back up.

Consumers may like the idea of low energy prices and the inevitable boost to global economic growth, opening the door on a world of increasing prosperity and wealth distribution. But a large number of governments, climate activists and corporate interests have a vested interest in keeping oil prices high. Will they succeed?

As the world price of oil fell over the past few days, there has been no shortage of handwringing over the negative consequences.

The U.S. shale oil industry was said to be doomed. Oil-rich nations dependent on massive dollar flows would be unable to meet their budget and debt payments. Capital investment in developing countries with oil potential would dry up. Big oil companies would suffer as share prices plunged.

And there would certainly have been no cheering Monday in Lima, Peru, where international climate negotiators were gearing up for the 20th annual United Nations’ Climate Change Conference. Low oil prices equal increased demand for oil that will drive up carbon emissions.

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Boldly Building a Silicon Valley in Canada… for Mining – by Joe Lee (Tech Vibes.com – December 1, 2014)

http://www.techvibes.com/global

Toronto, Kitchener-Waterloo, Montreal, and Vancouver are all recognized tech clusters in Canada. But the story around a new hub in Sudbury, Ontario can be traced back to a round of golf between Kirk Petroski, the CEO of Symboticware, and Dick DeStefano, the Executive Director of SAMSSA (Sudbury Area Mining Supply and Service Association), where Petroski urged DeStefano to speak to MaRS about mining innovation.

As some VCs and consultants have argued, building the next Silicon Valley means a community should not try to replicate the Valley, but that the community should work towards differentiation and being the best in a specific domain. By all accounts, Greater Sudbury, home to approximately 160,000 and a major producer of nickel, is on its way to becoming the Silicon Valley of underground mining technology.

While the formation of the cluster may be an anomaly, the growth trajectory and development direction are not. These two points became abundantly clear when DeStefano, a self-professed disciple of Harvard Business School’s Michael Porter’s theories, shared his vision of turning Sudbury into an underground mining ecosystem and his journey as one of the pioneers.

Builders, Leaders and Feeders

“In 2001, I took myself out of retirement, researched the Sudbury community, and looked at companies. I tracked them down and invited them to get together. Only six people showed up to first meeting,” DeStefano recounts the early days of his mission to focus Sudbury’s talent and energy in mining supply and technology.

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Rio keen to blend mining and marketing – by James Wilson and Neil Hume (Financial Times – December 1, 2014)

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

Pilbara Blend. Robe Valley. Yandicoogina Fines. The names may sound as if they belong on a tea caddy or in a wine cellar – but Rio Tinto investors know better. These are the labels under which the company sells Australian iron ore, the prosaic yet hugely important commodity on which its fortunes depend.

The idea of branding a commodity that is shovelled into blast furnaces to make steel may seem strange. But iron ore has many variations in mineral content and purity.

Miners such as Rio say part of their skill lies in matching ores to the right buyers. Their marketing strategies are therefore crucial to their success – more so this year, when a flood of low-cost supply from Rio and its peers helped to drive the iron ore price down by almost 50 per cent.

Now investors have another important reason to consider Rio’s marketing skills: they are central to a possible tie-up with Glencore, the rival commodities group that this year approached Rio about a potential merger.

Glencore is one of the world’s most successful and entrepreneurial trading companies, spanning commodities such as coal, copper, oil and agricultural products. Its pursuit of a combination with Rio next year may hinge on whether Ivan Glasenberg, Glencore’s chief executive, judges he can extract value from Rio’s iron ore assets – the source of almost 90 per cent of its earnings – with better marketing and trading.

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When emissions disappear, so do jobs – by Donna Laframboise (National Post – December 2, 2014)

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

This is the dirty little secret lurking behind every new emissions deal: when emissions
disappear, so do jobs, economic opportunities, and human well-being.

The manufacturing jobs found in factories and the auto industry need affordable power –
not the intermittent, stupendously-priced, boutique power generated by wind turbines.
Coal mining feeds families. Oil wells put food on the table.

We used to view the dignity that accompanies a paying job as an important social good.
We used to care that unemployment, substance abuse, and family breakdown are closely
connected.

These days, we’ve convinced ourselves that driving CO2-emitting factories into bankruptcy
is smart. That throwing people out of work makes sense. That plunging families into crisis
is the path to glory. (Donna Laframboise)

Following Barack Obama’s recent visit to China, the White House issued a joint U.S.-China climate announcement that says “China intends to achieve the peaking of C02 emissions around 2030.” But that isn’t news.

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Brazil’s Vale mulling IPO for part of base metals business – sources – by Nicole Mordant and Euan Rocha (Reuters U.S. – December 1, 2014)

http://www.reuters.com/

VANCOUVER/TORONTO – Dec 1 (Reuters) – Brazil’s Vale SA is considering listing part of its global base metals business, two sources with knowledge of the matter said on Monday, as the miner looks to fund capital projects amid a collapse in iron ore prices.

The sources, who asked not to be named as they have not been authorized to discuss the matter publicly, said the world’s top iron ore producer is likely to retain a majority interest in the new entity if it proceeds with the plan.

Vale could outline the plan to list a new entity in Toronto and London as early as Tuesday at an investor day event being held in New York, said one of the sources.

The event at the New York Stock Exchange will be webcast. The second source said there had been significant discussion inside Vale about listing the base metals assets, which have fared better than its iron ore business due to steadier prices.

A Vale spokeswoman in Brazil could not be reached for comment after hours.

Vale’s iron ore business contributed 62 percent of the company’s gross revenue in the third quarter. Outside of iron ore, Vale’s global asset portfolio includes nickel assets in Canada, Indonesia and New Caledonia, coal mines in Australia and Mozambique as well as copper projects in Canada, Brazil and Zambia.

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Can cost-cutting break Rio Tinto’s link with iron ore price? – by Clyde Russell (Reuters U.S. – December 1, 2014)

http://www.reuters.com/

LAUNCESTON, Australia – (Reuters) – Rio Tinto launched a stirring defense of its iron ore strategy last week, with the basic message that it will still make huge profits even as the price slumps to five-year lows.

Leaving aside, for the moment, that some of Rio Tinto’s price and demand assumptions for the steel-making ingredient still look heroic, the real question to be answered is can the company convince the market that it’s on the right path?

To do so, Rio Tinto will have to break the shackles of the strong correlation of its share price to that of Asian spot iron ore.

Since the 2008 recession the Australian-listed shares of the world’s second-biggest iron ore miner have moved pretty much in lockstep with the price of the steel-making ingredient, although this year the correlation has shown signs of breaking down.

Iron ore has fallen a dramatic 48 percent this year, with the close on Nov. 28 of $69.80 a tonne only marginally above the $68 reached on Nov. 26, which was the weakest since June 11, 2009. Rio Tinto’s shares ended at A$59.10 ($49.64) on Nov. 28, down just 13.3 percent for the year.

The question is whether the nexus between the share price and iron ore has broken or whether the relationship is likely to be restored, most probably by the shares losing value since the prospect of iron ore rebounding is slim given the huge supply overhang in the market.

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Globe-Trotting Vale CEO Faces Wall Street as Iron Plunges – by Juan Pablo Spinetto (Bloomberg News – December 1, 2014)

http://www.bloomberg.com/

Vale SA’s chief executive officer says he travels so much that the mining company’s executive jet is among the most flown in Bombardier Inc.’s fleet this year.

“I like to visit all our operations at least once a year but normally I go more than that,” Murilo Ferreira said in an interview at the company’s Rio de Janeiro headquarters on Nov. 26. “I travel a lot, a lot, a lot,” he said in a weary tone.

Ferreira, 61, will board his Global Express XRS jet to visit investors in New York and London this week, adding to the more than 240,000 kilometers (149,000 miles) flown in the first 10 months of 2014. On the agenda? How the world’s largest iron-ore producer will adapt to a collapse in the price of the commodity that prompted analysts to have the bleakest opinions about the stock since at least 1999.

Vale is producing iron ore at a record pace and its base metals unit — which for years experienced delays, accidents and stoppages — is finally starting to contribute to profits. Yet expanding global supply at a time of slowing demand in China, the largest consumer of metals, has pushed down prices of the steelmaking raw material to the lowest in more than five years and made Vale the worst performing major mining stock.

The reaction from Vale, as with other mining companies, has been to cut costs, put lower-return expansions on hold and focus on its most profitable businesses. The company probably will announce tomorrow a $10.4 billion budget for next year excluding research and development expenses, the lowest since 2009 and 25 percent below last year’s approved capital expenditures, according to the average of nine analyst estimates compiled by Bloomberg News.

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Iron ore prices could stay depressed for 10 years – by Scott Murdoch (The Australian – December 1, 2014)

http://www.theaustralian.com.au/business

A PROMINENT Chinese fund manager has grimly forecast that the global iron ore price could remain under pressure for 10 years as oversupply continues to hit the market and the Chinese residential property market slumps.

Shanghai Jianfeng vice-president Liang Ruian believes prices could slide below $US60 a tonne within the next year and could even fall to as low as $US50 a tonne, with major consequences for miners around the world.

The iron price on the weekend was $US71.32 a tonne, up $US1.34, but the commodity is down more than 50 per cent this year. The price slide has prompted miners to rethink capital expenditure plans and intensifies pressure on companies struggling to bring projects to the production stage.

Mr Liang, a well known fund manager in Shanghai, said the price of iron ore would be heavily affected by the performance of the domestic Chinese real estate ¬market.

About 30 per cent of China’s steel output is used in residential development, which is forecast to remain flat in the next few years after a surge following the global financial crisis. It is estimated China now has a nationwide inventory of housing to last up to three years.

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