Twitter

Will the Swiss go for gold? – by Peter Schiff (National Post – November 27, 2014)

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

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital.

For most of my career in international investing, I had always placed a great deal of faith in Switzerland’s financial markets. In recent years, however, as the Swiss government has sought to hitch its wagon to the flailing euro currency and kowtow increasingly to U.S.-based financial requirements, this faith has been shaken.

But November 30th a referendum in Switzerland, on whether its central bank will be required to hold at least 20% of its reserves in gold, will offer ordinary Swiss citizens a rare opportunity to reclaim their country’s strong economic heritage. It’s a vote that few outside Switzerland are following, but the outcome could make an enormous impact on the global economy.

Traditionally, the Swiss franc had always attracted international investors looking for a long-term store of value. That’s because the Swiss government had always kept sacred the idea of conservative central banking and fiscal balance. When the idea of the European common currency was first proposed, the Swiss were wise to stay out.

They did not want to exchange the franc for an unknown and untried pan-national currency. The creators of the euro had suggested that it would become the heir to the strong Deutsche mark. Instead, it has become the step-child of the troubled Italian lira and the Greek drachma. In retrospect, the Swiss were wise to take no part in the experiment.

Read more

Ontario’s economy lurches from disaster to disaster – by Livio Di Matteo (Troy Media – November 27, 2014)

http://www.troymedia.com/

Livio Di Matteo is Professor of Economics at Thunder Bay’s Lakehead University.

The province has surpassed Quebec as the largest federal total transfer recipient in the country

THUNDER BAY, ON/ Troy Media/ – Ontario’s economic prospects have declined, with implications – despite Finance Minister Sousa’s insistence he can balance the budget – for both its future standard of living and its fiscal position.

Although employment, fueled by a lower dollar, has rebounded, the province’s economic fall from grace over the last two decades is evident from a number of key economic indicators.

While still the largest economy among the 10 provinces, its share of provincial output dropped from 42 per cent in 1990 to 37 per cent by 2013. Its real per capita GDP was the second highest (after Alberta) in 1990 but has dropped to fifth place, behind British Columbia and above Manitoba. Its real per capita GDP growth has been one of the lowest in the country.

Ontario’s economy reached a crucial point after the 1980s economic boom that saw free trade with the U.S. and a shift away from the traditional east-west economic alignment. After the jarring recession of the early 1990s, its decline was forestalled by both a combination of a lower dollar and booming U.S.  economy, which drove Ontario’s export sector, and a public sector restructuring that lowered taxes.

Read more

Dirty tricks on both sides of the pipeline debate — and environmentalists have led the way – by Claudia Cattaneo (National Post – November 27, 2014)

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

TransCanada Corp. is cutting its ties with Edelman, the United States-based public relations firm that recommended using aggressive tactics to win public support for its proposed Energy East pipeline project.

Good on TransCanada for choosing to have a “respectful conversation” instead. The $12-billion project to transport Alberta oil to Canada’s East Coast stands on its own merit without having to manipulate public opinion.

The U.S. firm had recommended using third parties to attack the pipeline’s opponents, by creating “an echo chamber of aligned voices.”

Greenpeace, which publicized the leaked documents last week, said they involved “secret public relations and a ‘grassroots advocacy’ strategy by TransCanada to put pressure on politicians and critics of their Energy East pipeline proposal – tactics similar to those employed by the oil industry in the U.S. to attack environmental advocates.” It accused TransCanada of “dirty tricks.”

On Thursday, TransCanada said it never took Edelman’s recommendations and is ending its association with the firm at the end of December because the controversy has become a distraction, particularly in Quebec.

Read more

Turkey’s miners pay a deadly price for cheap coal – by Piotr Zalewski (Financial Times – November 27, 2014)

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

In parts of Istanbul, as in most Turkish cities, you can smell the coming of winter before you properly feel it. Just as the first cold spell arrives, a woolly, sour blanket of smoke, pumped into the air from coal-fired furnaces, settles over the city’s poor neighbourhoods.

Turks are noticeably better off than a decade ago, but with the prospect of high natural gas bills, many still rely on coal to heat their homes. More than 2m families rely on the state to provide it for free.

Under a programme launched by the ruling Justice and Development (AK) party in 2003, a government agency hands out about 2m tons of coal to underprivileged families each year.

For a country that depends on imports for roughly 70 per cent of its rapidly growing energy needs, coal appears to be both part of the solution and part of the problem.

Over the next decade, Turkey’s government plans to increase the share of coal in electricity production, from 25 to 30 per cent. To help meet its goal of total installed capacity of 120,000MWs by 2023, it also plans to tap into all the country’s coal reserves.

Read more

Finland exploring rail connections to Arctic Sea – by by Juhani Niinisto (Shanghai Daily – November 27, 2014)

http://shanghaidaily.com/

HELSINKI, Nov. 26 (Xinhua) — Finland has one third of its territory inside the Arctic Circle, but is the only Nordic country without any seaport by the Arctic Sea.

Opportunities of seafaring courses have triggered long-term consideration of how to establish rail connections to the Arctic Sea further north beyond the Norwegian border.

The main idea so far has been to build tracks from the western part of Finnish Lapland via Sweden and Norway.

A connection via Russia remains a less likely option, but it became slightly more feasible on Tuesday when the Finnish government chose to support railroad links to a potential mine in Eastern Lapland near the Russian border.

So far, tracks towards the Artic Sea only reach the Western Lapland mining town of Kolari. Development of rail connections in Eastern Lapland moved forward on Tuesday as the government preferred rail links over road transit in arranging services for a mining project at Sokli in the east.

The owners of the potential phosphate mines, Norway’s Yara, has set public transport input as a condition for the project. The investment would extend Finnish heavy duty rail tracks to just 60 km away from the Russian border.

Read more

Nunavik says no to uranium mining – by Sarah Rogers (Nunatsiaq Online – November 26, 2014)

http://www.nunatsiaqonline.ca/

Final round of Quebec public hearings to visit the region next week

KUUJJUAQ — Nunavik’s leadership has taken a position on the future of uranium mining in the region — and it’s a resounding “no.”

And Makivik Corp. and the Kativik Regional Government plan to say so in a joint brief that will be submitted to public hearings in Nunavik next week.

The independent Quebec body called the Bureau d’audiences publiques sur l’environnement, or BAPE, is returning to the region for a third and final round as part of its province-wide tour to gauge the public’s opinion on uranium mining.

“We’re going to say that there should be no uranium mining in Nunavik, period,” KRG chair Maggie Emudluk told a meeting of regional councillors in Kuujjuaq Nov. 26.

The BAPE has been to Nunavik twice already in 2014, but while its previous visits took questions and provided information to the public, its upcoming stops in Kuujjuaq Dec. 2 and Kangisualujjuaq Dec. 3 will be to hear the region’s position on potential uranium development.

It wasn’t clear until now that Nunavik’s leaders have takes a public stand on the issue.

Read more

Cheap energy is the new cheap labour – by John Gapper (Financial Times – November 26, 2014)

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

For companies wondering where to locate, the world has turned upside down

The price of oil keeps on falling; the shale gas boom has reduced the price of natural gas in the US to a third of that in France; Germany has appealed to Sweden for its support in expanding two coal mines; and the EU’s effort to switch to clean energy is troubled. For companies wondering where to locate, the world has turned upside down.

Cheap energy is the new cheap labour. For two decades, the biggest driving force in industrial globalisation was the gap in the price of labour between the developed world and China. That induced many industries – textiles, electronics and others – to shift production from high-cost factories in the US and Europe to places where people would work for a fraction of the cost.

Now, as the wage arbitrage between the north and south narrows, the energy gap is widening. Wage rates adjusted for productivity in China have risen to more than half the level in the US, according to Boston Consulting Group. Meanwhile, energy prices have been falling and the Opec oil-producing countries have failed to halt the decline. Some fortunate countries, especially the US, are gaining from both of these trends at once.

Although cheap fuel theoretically helps every energy-dependent country, the gains are distributed unevenly. The big beneficiary, thanks to shale natural gas, is the US. Not only is it helped by companies bringing manufacturing home but it is also an oasis of cheap gas. That is luring energy-intensive industries such as chemicals, petrochemicals, aluminium and steel.

Read more

UPDATE 1-Former African Barrick Gold to go underground at North Mara – by Roshni Menon (Reuters India – November 27, 2014)

http://in.reuters.com/

Nov 27 (Reuters) – Acacia Mining Ltd, formerly African Barrick Gold Plc, said on Thursday it planned to start underground mining at its North Mara mine in Tanzania in the first half of 2015.

The open pit North Mara mine has a chequered past, with villagers illegally entering the site to scour tailings that may contain small quantities of gold, and some have been killed or injured by mine security guards and police.

“The North Mara decision to go underground … minimises our impact on the community, reduces the opportunity for illegal miners to enter that operation, and reduces our footprint with respect to needing land to dump waste,” Chief Executive Brad Gordon told Reuters on Thursday.

Acacia has been cutting mining costs, reducing its workforce and increasing output to counter the sharp drop in gold prices that has forced many gold and silver miners to shelve projects.

The company, unveiling its long-term strategy at an investor meeting in London, said the underground expansion was expected to produce 450,000 ounces of gold over a five-year mine life at an all-in sustaining cost (AISC) of under $750 per ounce.

Read more

NEWS RELEASE: YUKON PROSPECTOR TURNED MUSHROOMS INTO GOLD [Shawn Ryan] – “60 Minutes,” SUNDAY ON CBS – by Sara Bibel (October 16th, 2014)

Shawn Ryan Parlayed a Mushroom Business Into a Gold Prospecting Bonanza

Shawn Ryan turned mushroom hunting into gold. In Canada’s Yukon Territory, the scene of a famous Gold Rush more than a hundred years ago, Bob Simon finds a man whose technique for finding mushrooms inspired him to create a method to find gold, making him one of the Yukon’s biggest gold prospectors. Ryan’s story will be broadcast on 60 Minutes, Sunday, Oct. 19 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

Ryan has made millions as a mountain prospector while others, like their 1896 predecessors, look mainly in the rivers. Ryan looks for gold on Yukon slopes by taking soil samples and analyzing them to produce data he can use to find the likeliest places for gold. That process grew out of an analytical and very successful way he used to search the mountains for morels, mushrooms that high-end restaurants will pay dearly for.

Read more

Iron ore prices – Where’s the bottom? (Northern Miner Editorial – Novmeber 26, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

As the daylight hours shorten and winter chill takes hold of the iron ore mines and surrounding communities in the Labrador Trough, it’s as good a symbol as any of the deep freeze that is engulfing the global iron ore market, as spot prices continue to head south.

Back in October, Cliffs Natural Resources said it would permanently close its Wabush iron ore mine on the Labrador side of the Trough, after having laid off some 500 workers in February when it first idled the mine.

And now Cliffs says it has failed in its attempts to find investment partners for the US$1.2-billion expansion of its Bloom Lake iron ore mine on the Quebec side of the Trough — an expansion that the struggling major said was needed to make the Bloom Lake mine financially viable.

While Cliffs had been optimistic about finding such financial partners as recently as a month ago, layoff notices have been sent to some 400 workers at Bloom Lake ahead of the closure of the entire Bloom Lake complex, which will take affect in mid-December. Around 80 workers will be kept for care and maintenance.

Cliffs now states bluntly that it is pursuing its “exit options” for all its Eastern Canadian iron ore assets. Perhaps the biggest surprise in the announcement is the high price tag that Cliffs has put on closing shop and leaving Eastern Canada: up to US$700 million in the next five years.

Read more

Rio Invests $350 Million in Diamond Project After Walsh Backing – by David Stringer (Blomberg News – November 26, 2014)

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second biggest mining company, approved a $350 million project to expand a diamond mine in northwestern Canada, weeks after Chief Executive Officer Sam Walsh flagged an investment.

Construction of the A21 kimberlite pipe at the Diavik mine, 220 kilometers (140 miles) south of the Arctic Circle, will start next year, London-based Rio Tinto said today in a statement. Rio owns 60 percent of the mine, with Dominion Diamond Corp. (DDC) holding the remainder.

The investment comes after Walsh said in an interview this month that there were “seriously good” opportunities in diamonds, a unit that had been put up for sale by former CEO Tom Albanese. Demand globally will probably rise 4 percent to 4.5 percent this year with U.S. consumption increasing as much as 6 percent, according to De Beers, the biggest producer.

“I love diamonds,” Walsh said in an interview on Nov. 10 with Bloomberg Television in Beijing, when he flagged an expansion at its Canadian diamond operation. “I think it’s a seriously good business.”

Production from the pipe is expected to start from late 2018. The expansion will ensure output at Diavik continues at existing levels, Rio Tinto said. The mine’s current production plan has output continuing until 2023, it said.

Read more

UPDATE 4-Gulf states seek to block OPEC oil output cut – by Shadia Nasralla and David Sheppard (Reuters U.S. – November 27, 2014)

http://www.reuters.com/

VIENNA, Nov 27 (Reuters) – Gulf oil producers led by Saudi Arabia looked set on Thursday to block any cut in OPEC output, ignoring calls from poorer members of the exporters’ group for action to halt a slide in crude prices.

With markets sensing OPEC will keep its production unchanged despite huge global oversupply, the price of benchmark Brent crude oil fell $2 to a 50-month low under $76 a barrel.

“OPEC is unlikely to cut today,” a Gulf delegate told Reuters shortly before ministers began one of their most closely-watched meetings in years in Vienna on Thursday. Another delegate agreed, although a third said the outcome was too difficult to predict. OPEC ministers started a closed session shortly before 1000 GMT.

Wealthy Gulf states seem ready to ride out the weak prices that have hurt the likes of Venezuela and Iran – OPEC members which need output cuts to stabilise the market and ease pressure on their state budgets, but cannot afford to make any themselves.

On Wednesday, Saudi Oil Minister Ali al-Naimi and his United Arab Emirates counterpart, Suhail bin Mohammed al-Mazroui, said they expected the oil market to stabilise itself.

Read more

Prem Watsa embraces his roots with launch of Fairfax India – by Jacqueline Nelson (Globe and Mail – November 27, 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.

Fairfax Financial Holdings Ltd. founder Prem Watsa has always seen major growth potential in his birthplace of India, and now he is putting money behind that vision with a new investment holding company that has already raised $500-million (U.S.).

Toronto-based Fairfax said Wednesday that it will sponsor and promote Fairfax India Holdings Corp., which will operate as a public company that invests in businesses focused on India’s marketplace.

Fairfax India will be funded in part by a $300-million investment by Fairfax, in exchange for 30 million voting shares, according to an initial public offering prospectus filed Wednesday. Hyderabad-born Mr. Watsa will serve as chair of the new company.

“We’ve been in India for at least 15 years, but we’ve found that the amount of money we could invest given regulatory constraints is limited.

The opportunity in India is greater than our ability to invest alone so we decided to create a separate company to allow other investors to participate,” Mr. Watsa said when reached by phone in Toronto. The company will be listed on the Toronto Stock Exchange.

Read more

Glencore readies for Rio Tinto round two – by Amanda Saunders (Sydney Morning Herald – November 26, 2014)

http://www.smh.com.au/

Glencore chief executive Ivan Glasenberg’s second attempt to force a merger with Rio Tinto will involve an attack on Sam Walsh over dwindling hopes of substantial capital returns, as he tries to win the support of Rio’s biggest shareholder, Chinese giant Chinalco, by promising to sell key assets Oyu Tolgoi and Simandou.

That’s the view of Bernstein’s London-based senior analyst Paul Gait, who predicted Glencore would make a move on Rio in September, a month before Rio confirmed the approach.

That $190 billion merger approach was rebuffed, and under British law Glencore must wait until April to make another attempt. Mr Gait expects Mr Glasenberg will waste little time. “Is he coming back? In my view, yes,” Mr Gait said from London.

Mr Gait told The Australian Financial Review Glencore’s shock announcement that it would shut down its Australian coal operations for three weeks was a strong indication Mr Glasenberg would try again for Rio. He said Mr Glasenberg would be able to point to Glencore’s willingness to pull tonnes out of an oversupplied market in a direct challenge to Rio over its expansion in iron ore.

“To me this coal announcement is clearly Ivan playing games,” Mr Gait said. “It had the language of someone trying to make his credentials on managing the market as a CEO. It’s a shot across the bows to Rio.”

Read more

Why the black stuff can take shine off gold – by Eric Reguly (Globe and Mail – November 25, 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.

ROME — Long suffering investors in gold companies should be feeling the warm glow of sunshine again. Gold prices are up about $40 (U.S.) an ounce, to just under $1,200, since the end of October, when they hit a four-year low of $1,160. But gold shares are not responding. With the exception of Toronto’s Kinross Gold, one of the industry’s hardest-hit players thanks to its Russian mines, the prices of the biggies have dropped over the last month.

How can this be? The rising U.S. dollar could explain part of the share slump. But here’s another explanation: Falling oil prices.

While the connection between oil and gold prices is not immediately obvious, there is no doubt that falling oil prices are triggering disinflation everywhere; in Europe, outright deflation is a clear and present danger, which is why the European Central Bank is warming up the market to the idea of U.S-style quantitative easing.

If you buy gold is an inflation hedge, it follows that disinflation or deflation would encourage you to sell gold. And that’s what appears to be happening, thanks in good part to oil prices that have fallen by 30 per cent since June. Euro zone inflation is running at a paltry 0.3 per cent, well short of the ECB’s target rate of 2 per cent , and could go lower – we’ll get fresh inflation data on Friday.

Read more