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Cliffs Natural Resources retreats from Canadian ‘disaster’ – by Nicolas Van Praet (Globe and Mail – November 21, 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.

MONTREAL — The chief executive officer of mining giant Cliffs Natural Resources Inc. is taking aim at his predecessors for their decision to pump billions of dollars into Canada, saying every single investment it made here in recent years was a “disaster” that failed to produce any profit.

“I’m walking away from Canada big time – Canada for Cliffs has not been a good thing,” Lourenco Goncalves, the company’s chairman and CEO, said in an interview Thursday. “All these investments that the company made in Canada after the Wabush mine were a disaster.”

“I’m not the type of guy that’s too much of a Monday morning quarterback,” he said. “But these [decisions] are very clear. Misguided decisions all the way.”

Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent $6-billion (U.S.) in all on its Bloom Lake iron ore mine in northeastern Quebec over the past three years and “never made a penny” on the investment, Mr. Goncalves said. The company on Wednesday announced that it is “pursuing exit options” for its Eastern Canadian iron ore operations, evaluating its maximum exposure to close the Bloom Lake site at $700-million. The company will also close its mine in Wabush, Nfld., which had been in operation for more than 40 years.

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Wall Street Banks dumping some physical commodities units – by Dorothy Kosich (Mineweb.com – November 21, 2014)

http://www.mineweb.com/

Several witnesses indicate they could support increased regulation of their activities.

RENO (MINEWEB) – As Goldman Sachs, JPMorgan and Morgan Stanley defended their commodities activities before the Senate Permanent Subcommittee on Investigations Thursday, the world’s largest aluminum consumer and U.S. senators argued the lack of adequate regulation is hurting consumers of aluminum, copper and other commodities.

At least two of the Wall Street banks under investigation by the U.S. Senate told the subcommittee they are in the process of or have eliminated their ownership of assets such as power plants and oil tankers, and substantially lowered their physical copper holdings.

However, two executives involved in and around the aluminum industry asserted Goldman Sachs’ Metro International Trade Services warehousing interests are having “a profoundly negative impact” on aluminum consumers. Goldman, which is in the process of selling Metro, is not about to get out of the commodity trading business or physical committees.

Jorge Vasquez, managing director of HARBOR Aluminum Intelligence, told the subcommittee Thursday that the London Metal Exchange (LME) “has partially failed as an effective ‘market of last resort’ for the aluminum consumer (the manufacturers of aluminum semi-finished products”.

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Richest Woman in Asia-Pacific Buys Iron as BHP Calls End to Era – by Jasmine Ng and David Stringer (Bloomberg News – November 21, 2014)

http://www.bloomberg.com/

Gina Rinehart, the Asia-Pacific’s richest woman, is set to start exports in September from her new A$10 billion ($8.6 billion) iron ore mine undeterred by prices trading near five-year lows and forecast to extend losses.

“We don’t like the ore price going down, but we’re in the lower quartile” of production costs, Rinehart, chairman of Hancock Prospecting Pty, said yesterday in an interview at the Roy Hill mine in Australia’s iron-rich Pilbara region.

She was talking just hours after Andrew Mackenzie, chief executive officer of BHP Billiton Ltd. (BHP), called an end to the era of “massive expansions of iron ore.” BHP and rivals Rio Tinto Group (RIO) and Vale SA (VALE5) are flooding the global market, spurring a surplus after a $120 billion spending spree to boost the capacity of their mines from Australia to Brazil.

“I don’t think next year would be ideal to be adding new supply,” Daniel Morgan, a Sydney-based analyst at UBS AG, said in a Nov. 17. phone interview. “The market is pretty well supplied for the next few years.”

BHP stock lost 4.7 percent in Sydney this week for the biggest weekly loss since March, while Rio shares fell 6.1 percent. Fortescue Metals Group (FMG) Ltd., the country’s third-biggest shipper, retreated 54 percent this year.

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There are many good reasons for takeover interest in Nevsun — and one really big downside – by Peter Koven (National Post – November 21, 2014)

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

Canadian miner Nevsun Resouces Ltd. has emerged as a potential takeover target, but any bidder is going to have to overcome a major deterrent: Eritrea.

The Vancouver-based miner revealed Thursday it recently received inquiries from “various parties” about a potential transaction. The announcement came after Bloomberg News reported that a Qatar-backed private equity fund called QKR Corp. is eyeing a US$1-billion bid for the company. Nevsun shares jumped 11%, giving the firm a market value of $942-million.

There are good reasons for the interest. Nevsun’s Bisha mine is extremely rich, with high-grade copper output that will transition into high-grade zinc output in a couple of years, when many analysts are forecasting shortages in the zinc market. The company has promising exploration ground in the area that could yield more mines. It also has close to US$400-million of cash, which means a takeover would largely pay for itself.

But the downside is that Bisha is in Eritrea, which is ruled by one of the world’s most repressive governments. The country is facing international sanctions, and Western governments may not look kindly at any company looking to do business there.

The Eritrean government has caused major problems for Nevsun.

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By erecting new hurdles for Energy East, Quebec is caving to pipeline opponents – by Claudia Cattaneo(National Post – November 21, 2014)

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

As if TransCanada Corp.’s 30,000-page application to the National Energy Board for its proposed Energy East pipeline wasn’t good enough, the Quebec government has laid out seven conditions of its own before allowing the $12-billion project.

In a Nov. 18 letter (in French) to TransCanada president and CEO Russ Girling, Quebec Environment Minister David Heurtel said the conditions include passing an environmental assessment that examines its impact on greenhouse gas emissions, echoing President Barack Obama’s warning that he won’t approve Keystone XL if it exacerbates greenhouse gas emissions.

“If the company doesn’t respond to the conditions, the project cannot go ahead,” Mr. Heurtel said.

Quebec approval of Energy East, which would take 1.1 million barrels per day of Alberta crude oil to refineries in Quebec and New Brunswick and to ports in both provinces for export, is also contingent on the project providing a thorough emergency plan with a compensation fund in case of a spill; consultations with communities on the potential social impacts; use of the highest technical standards to assure public safety and protection of the environment; satisfying issues dealing with First Nations; generating economic benefits for all of Quebec, especially in job creation in areas where the pipeline will be located.

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RPT-Quebec’s ambitious Plan Nord mineral project goes south – by Allison Lampert and Nicole Mordant (Reuters India – November 21, 2014)

http://in.reuters.com/

Nov 20 (Reuters) – A plan by the Canadian province of Quebec to spend billions to develop the mineral riches of its northern region has been dealt a crippling blow by the pending closure of a major mine as iron ore prices sink and China’s interest wanes.

The Plan Nord project hopes to attract C$80 billion ($71 billion) of investment to the vast northern region, of which the iron ore-rich Labrador Trough is a major component. The French-speaking province is trying to sell the plan globally and is hoping miners will flock to northern Quebec after the government invests in the infrastructure necessary to open it up.

But Plan Nord took a big hit on Wednesday, when Cliffs Natural Resources said it is closing its Bloom Lake iron ore mine after struggling to secure funds to expand the mine and make it viable. Chinese steelmaker Wuhan Iron & Steel owns a minority stake in Bloom Lake.

Bloom Lake, one of three producing iron ore mines in Quebec, would have become a major customer for a railway line being considered under Plan Nord.

“Without Bloom Lake there’s no Plan Nord,” Cliffs Chief Executive Lourenco Goncalves told Reuters. “Without the mine, there’s pretty much nothing for Plan Nord to transport from point A to point B.”

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NEWS RELEASE: Could demolition of Sudbury’s superstack signify environmental progress?

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Imagine Paris without the Eiffel Tower, Seattle without its Space Needle and Kuala Lumpur minus the Petronas Towers on the skyline. Now, try to imagine Sudbury without the Superstack! Okay these may not be structures designed for similar functions but they do cast a shadow over their cities, the psyches of their residents and how the rest of the world views them.

Recently, it was widely reported that Kelly Strong, Vice President of Ontario and U.K. Operations for mining giant Vale, told the Greater Sudbury Chamber of Commerce that his company was assessing the possibility of no longer requiring the 1,250 foot tall Superstack. It was built by Vale predecessor company Inco for an estimated cost in 1970 of $25 million. Construction started on the tallest smoke stack in Canada in 1970 and it was first operational in 1972.

The purpose of this structure was to disperse sulphur dioxide emissions and other waste from the nickel and copper smelter process. It was considered to be the right thing to do environmentally at that time. So the possibility of its dismantling must be a good sign environmentally, right?

“Given the tremendous reduction in emissions and change in our processes, we are working to figure out if we should continue to use the current 1,250 foot stack, or build something much smaller,” said Mr. Strong at the Greater Sudbury Chamber of Commerce event.

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Australia positioned as an Indo-Pacific power with new China, India trade deals – by Matthew Fisher (National Post – November 21, 2014)

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

CANBERRA — Australia is on the kind of diplomatic tear Canada can only dream of. Brisbane got lots of global attention by hosting the Group of 20 leaders summit in Brisbane last weekend because so many participants lined up behind Canada’s Stephen Harper to disparage Russian President Vladimir Putin for the Kremlin’s malignant actions in Ukraine.

Less than 24 hours later in Canberra, the Australian capital, Chinese President Xi Jinping and Australian Prime Minister Tony Abbott signed China’s biggest trade deal ever. Mr. Abbott followed that triumph by announcing a strategic security alliance with Indian Prime Minister Narendra Modi and, perhaps rashly, promised another trade deal could be expected by the end of 2015.

As Australia’s daily Financial Review crowed, “Simultaneous visits by Xi and Modi mark us as no longer an appendix to Asia, but as a core Indo-Pacific power.”

The optics must have looked good to the 2.6 billion people back home in China and India, too. The two leaders were accorded rapturous welcomes when they addressed Australia’s parliament on consecutive days.

Mr. Xi talked about how it was best to achieve peace through trade. Mr. Modi spoke of the bonds that Indians and Australians share. Both countries are democracies, he said, and their citizens love cricket.

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Why mining companies might be the Arctic’s best hope – by Edvard Glücksman (The Conversation.com – November 19, 2014)

http://theconversation.com/us

Economic interests are set to play an increasingly important role in shaping development in the Arctic. Yet prominent members of the mining industry, familiar with the economic and reputational perils of impatient investment, remain cautious. They can – and should – play a pivotal role in guiding responsible industrial activity in the region.

Corporate development of the Arctic appears to be a foregone conclusion and this is reflected by the development of major transnational agreements. For example, with Arctic shipping projected to increase massively in the coming years, the UN Maritime Safety Committee (MSC) will adopt the Polar Code, international guidelines for the safety of ships operating in polar waters.

On the back of such recognition, countries are making longer term economic commitments. China, for instance, has just agreed to purchase oil and gas from the Russian Arctic over the next decades, while at the same time having secured stakes in Russian oil platforms in the region.

The Arctic is rich in oil, gas, and metals such as nickel, copper, gold, uranium, or tungsten. It even has large diamond reserves. Rapidly shrinking sea ice exposes new shipping routes through the Arctic Ocean that will save time and money for companies moving goods from Asia to Europe, while also providing new opportunities for tourism and fishing.

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Teck to control contaminants from mining operations in B.C.’s Elk Valley (Canadian Press/Huffington Post – November 19, 2014)

http://www.huffingtonpost.ca/british-columbia/

VICTORIA – A plan to address decades of coal-mining contaminants leeched into the Elk Valley watershed has been approved by the B.C. government.

The water treatment plan by Teck Resources Ltd. would control selenium and nitrate that have been dumped into nearby rivers and streams as the mining giant expanded operations over the years.

The company will construct water diversions and treatment facilities at several of its mine sites, including at Line Creek, Fording River and Elkview Operations, the government said. Environment Minister Mary Polak said Tuesday that the measures will improve water quality.

“This plan represents the next step in the long-term plan to ensure a healthy watershed in the Elk Valley,” she said in a statement. “Many different groups have come together to find solutions.”

In April 2013, the government ordered Teck Resources to stabilize and reverse water-quality concentrations. It cited the presence of several chemicals, including selenium, cadmium, nitrate, sulphate and the formation of calcite in the water.

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Miners unite to market platinum – by Allan Seccombe (Business Day – November 19, 2014)

http://www.bdlive.co.za/

SA’s platinum miners have set up an international council to drive investment in the metal as prices remain stagnant, despite the five-month blow to supply earlier this year and recycling being a competitive source of metal.

Anglo American Platinum (Amplats), Aquarius Platinum, Impala Platinum, Lonmin, Northam Platinum and Royal Bafokeng Platinum will each fund the council in a formula based on their refined platinum production, and have representatives on the council’s board.

The London-based World Platinum Investment Council, funded by SA’s six largest platinum miners, will set up offices in Asia and the US to encourage platinum investment by financial institutions, wealthy individuals and retail investors.

“If we see gaps in countries or regions that don’t have exchange-traded funds of the right kind or don’t have enough inventory of bars and coins to stimulate the market and satisfy demand, we will encourage financial services companies to fill those gaps and we’ll work with them to understand what those needs are that haven’t been satisfied,” said Paul Wilson, the council’s CEO.

The council would also talk to central banks about holding platinum in the same way they held gold, as a source of value in their countries’ reserves, he said.

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Kompania Pleads for Polish Utilities to Rescue Coal Mines – by Maciej Martewicz and Maciej Onoszko (Bloomberg News – November 19, 2014)

http://www.bloomberg.com/

Kompania Weglowa SA, the European Union’s largest coal producer, faces massive job cuts to survive unless Poland quickens the state-owned industry’s revamp, which may include help from power utilities.

“If we want to quickly heal Kompania, we should shut five mines and fire 15,000 people,” Chief Executive Officer Miroslaw Taras said at an industry summit in Katowice, Poland today. “But if we want to avoid social unrest, we should probably think about somehow combining coal mining with power generation either by means of agreed prices or takeovers of some mines.”

Poland, which relies on coal for 90 percent of its electricity production, is under growing pressure to overhaul the cash-burning industry after its two biggest producers this month failed to sell bonds abroad to finance operations. The government of new Prime Minister Ewa Kopacz yesterday appointed Wojciech Kowalczyk, a former banker, to oversee the mining restructuring.

Coal producers, which employ more than 100,000 people, have struggled to survive as sluggish economic growth cut demand for the fuel and sent prices to a seven-year low. Kompania, which runs 14 mines in the southern industrial region of Silesia, produces about a quarter of the EU’s coal output and half of Poland’s.

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Province on defensive after federal accusations of Ring of Fire inaction – by Jamie Smith (tbnewswatch.com – November 20, 2014)

http://www.tbnewswatch.com/

The provincial and federal governments seem to be in a war of words over the Ring of Fire. Federal Natural Resources Minister Greg Rickford (Con., Kenora) said in the House of Commons Wednesday that the province’s much-touted $1 billion for infrastructure and development corporation in the Ring of Fire isn’t actual policy.

“Ontario has not committed a red cent and has set up a development corporation that is not supported by First Nation communities, the private sector, and it is not a policy option for this government in its current form,” Rickford said.

“We have made significant investments in the Ring of Fire and will continue to demonstrate our commitment by working with First Nation communities and the provincial government should it identify the Ring of Fire as an actual priority.”

He was responding to a question by MP David McGuinty (Lib., Ottawa South) on whether Prime Minister Stephen Harper will meet with Ontario Premier Kathleen Wynne by the end of the year on the issue.

In Queen’s Park Thursday Ontario Northern Development and Mines Minister Michael Gravelle (Lib., Thunder Bay-Superior North) said the province is absolutely committed to the project despite the absence of the federal government.

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China ‘triple bubble’ points to long slide for commodities – by William Watts (MarketWatch.com – November 20, 2014)

http://www.marketwatch.com/

Don’t try to catch a falling China knife, says Credit Suisse

NEW YORK (MarketWatch) — The “commodity super cycle” is dead. Now, it’s time to get used to the “commodity super down cycle, and China is the biggest reason why, warn strategists at Credit Suisse in a Thursday note.

Commodity demand tends to be very cyclical. Commodities, however, have been underperforming cyclical indicators of growth, including industrial production and new manufacturing orders (as measured by Institute for Supply Management survey data), they say. Much of the blame is on China, the strategists argue, noting that the country remains the “most significant source” of demand for most industrial commodities.

Moreover, they see China on track for a “hard landing” at some point in the next three years.

The report adds to some of the recent gloom around China, where the fate of the economy remains a topic for debate. Standard & Poor’s Ratings Services on Wednesday said its negative outlook for Chinese property developers is casting a pall on the rest of the Asia-Pacific region, though it sees prospects for the sentiment to recover next year thanks to looser government policies, particularly on mortgages.

The Credit Suisse strategists, meanwhile, see a “triple bubble” in credit, real estate and investment.

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Rock-bottom prices forcing Cliffs to pull up stakes in Canada – by Bertrand Marotte and Nicolas Van Praet (Globe and Mail – November 20, 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.

MONTREAL — Cliffs Natural Resources Inc.’s Canadian adventure is winding down. The Ohio-based mining giant is preparing to shut down its money-losing Bloom Lake iron ore mine in northeastern Quebec amid rock-bottom prices for the mineral and high operating costs. It has already closed a Labrador iron ore property at Wabush and said it is looking to sell its chromite deposits in northern Ontario’s Ring of Fire.

Cliffs has spent hundreds of millions of dollars developing the high-potential Ring of Fire deposit and the existing Lake Bloom operations, but has run into a series of roadblocks, including a five-year low for iron ore prices, slumping Chinese demand and major delays in getting agreements with Ontario and First Nations over essential infrastructure for the Ring of Fire.

A shutdown of Bloom Lake would be a major blow to the local economy and to the provincial government’s multibillion-dollar Plan Nord economic development strategy pinned on natural resources extraction north of the 49th parallel.

Likewise, the Ontario government had made the Ring of Fire the centrepiece of its ambitious development plans for the mineral-rich region about 500 kilometres northeast of Thunder Bay in the James Bay Lowlands. And Cliffs had been the leading mining player in that plan.

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