Republic of Mining

Keystone showdown in U.S. emerges as report warns of oil supply threats – by Claudia Cattaneo (National Post – November 13, 2014)

November 13, 2014

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

The U.S. Congress prepared to hold votes on the Keystone XL pipeline, Thursday, just as a new report confirmed that Americans need it more than they might think. The International Energy Agency (IEA) predicted that the tight-oil boom that has helped wean the U.S. off imports will likely run out of steam in the next decade.

U.S. Democratic Senator Mary Landrieu said she would propose a vote on Thursday to approve the US$8-billion project, which would transport 830,000 barrels a day, primarily from Canada’s oil sands, to refineries in Texas.

Ms. Landrieu, who is at risk of losing her Louisiana seat in a runoff election in December, said on the Senate floor Wednesday she was “confident” she has the votes to pass a bill that would force Washington’s approval, over President Barack Obama’s resistance.

“I believe it is time to act,” said Ms. Landrieu, chair of the Senate Energy Committee and a vocal supporter of KXL, as Congress convened for a lame-duck session.

“I believe we should take the new majority leader at his word and stop blocking legislation that is broadly supported by the public and has been for some time.” A similar vote was expected in the House of Representatives.

How green energy is fleecing Ontario electricity consumers – by Ross McKitrick and Tom Adams (National Post – November 13, 2014)

November 13, 2014

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

Ross McKitrick is a Professor of Economics at the University of Guelph and Senior Fellow of the Fraser Institute. Tom Adams is an independent energy consultant and advisor.

Ontario’s green energy transformation – initiated a decade ago under then-Premier Dalton McGuinty – is now hitting consumers. The Nov 1 increase for households is the next twist of that screw. As Ontario consumers know all too well, the province has gone from having affordable electricity to having some of the highest and fastest-increasing rates in Canada.

Last year, in a report for the Fraser Institute called “Environmental and Economic Consequences of Ontario’s Green Energy Act,” one of us (McKitrick) explained how the Green Energy Act, passed in 2009, yielded at best tiny environmental benefits that cost at least ten times more than conventional pollution control methods, and was directly harming growth by driving down rates of return in key sectors like manufacturing.

But complex financial structures and a lack of official disclosure around large embedded costs have let supporters of the green energy act deny that green power is responsible for the price hikes. Green industry advocates, including the consulting firm Power Advisory and advocacy group Environmental Defense, have added up the direct payments to new renewable generators, and concluded that since those costs are relatively small, the impact of renewables on the total cost of power is likewise small.

Falling oil prices, new tax cuts combine to reduce future surplus projections – by Bill Curry (Globe and Mail – November 13, 2014)

November 13, 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.

TORONTO — The recent drop in oil prices has forced Ottawa to chop billions off its revenue projections, a development that when combined with new tax cuts means the government is expecting only modest surpluses in the coming years.

The annual fall fiscal update is based on an average forecast from private-sector economists, but those figures were delivered in early September and failed to capture the steep drop in oil prices over the past few weeks.

The private sector economists assumed North American crude would be around $98 (U.S.) per barrel, but prices have since dropped to around $81 (U.S.) per barrel.

That has a significant impact on revenues. The government is lowering its expectations for them by $500-million this year and $2.5-billion per year from 2015 to 2019, a move economists described as reasonable in light of the circumstances.

The impact of the reduction – when coupled with recent tax-cut announcements – is that the forecast for next year’s surplus will be $1.9-billion.

Micro-organisms have mega-potential for mining – by Steve Armstrong, Carl Weatherell and Jean Vavrek (Halifax Chronicle Herald – November 12, 2014)

November 12, 2014

http://thechronicleherald.ca/

Steve Armstrong is president and CEO, Genome Atlantic; Carl Weatherell is executive director and CEO, Canadian Mining Innovation Council; Jean Vavrek is executive director, Canadian Institute of Mining, Metallurgy and Petroleum.

Canada is fortunate to have a plethora of natural resources. In Nova Scotia alone, the mining industry is turning some of those resources into 5,500 jobs, contributing $420 million to the annual economy, and of course, providing the raw materials for products that are used every day.

But all of that doesn’t come easily. Globally, the mining sector faces environmental challenges, rising production costs, and fluctuating prices that warrant substantial interest in discovering new solutions to extract these resources in the most efficient and sustainable way.

Deloitte’s 2014 Tracking the Trends report on mining says: “Miners should innovate by adopting technologies to enable mine design and planning, energy supply, as well as adoption of emerging technologies.”

One of those emerging areas of technology is genomics — the combination of genetics, biology and computer science that studies the DNA in a living organism. This may seem an unusual focus for a sector like mining, but hidden within the rocks and dirt are countless communities of microscopic organisms known as microbes (such as bacteria) that could play a gigantic role in the sector.

Bonfire of the juniors avoided as role of alternative finance gathers pace – by Simon Rees (MineWeekly.com – November 11, 2014)

November 12, 2014

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – The number of companies that have delisted from the TSX and the TSX-V is far fewer than many commentators predicted, while the level of financing activity by mining companies on both exchanges has also increased, attendees at the mineLatinAmerica convention, in Toronto, were told.

Alternative fiscal models had also helped many companies weather the downturn, although success had frequently depended on a company having the right investment profile: either being in production or holding advanced-stage projects.

GETTING BETTER

In a market still looking for signs of improvement, the increase in the number of financings on both the TSX and TSX-V compared with 2013 had been a positive development, TSX-V venture exchange director for listed services Tim Babcock said. This included companies in the mining sector and reversed the downward trend witnessed over the past few years, he added. “So 2013 was, hopefully, the bottom.”

Issuers in the mining sector had raised $6.7-billion year-to-date in the third quarter, Babcock highlighted, although he noted that this included an early first-quarter raise of around $2.4-billion by Turquoise Hill Resources, the operator of the Oyu Tolgoi copper/gold mine, in Mongolia.

BHP pulls sale of Nickel West as it finds no buyer – by Barry FitzGerald (The Australian – November 13, 2014)

November 12, 2014

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

BHP Billiton’s simplification drive under chief executive Andrew Mackenzie has hit a snag as it decided to pull the sale of the loss-making Nickel West after failing to secure an acceptable price.

Nickel West, which BHP most wanted to sell off, is the collection of Western Australian nickel assets picked up by BHP with its 2005 acquisition of WMC Resources.

That BHP has not been able to find a buyer is not a complete surprise as the assets were pointedly not good enough to be included in BHP’s spin-off of NewCo, announced in August.

NewCo is a $20 billion company that would join the stock exchange lists next year holding BHP’s other unwanted assets (South American nickel, aluminium, South African coal and manganese) outside of its “four pillars’’ of iron ore, copper, petroleum and coal.

“We believe that Nickel West is neither a good fit with BHP Billiton nor with NewCo,’’ Mr Macknezie said in August. He cited the maturity and complexity of the business as the reasons for not including it in NewCo, or BHP itself.

Second Mount Polley probe looking into government’s disclosures – Mark Hume (Globe and Mail – November 11, 2014)

November 12, 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.

VANCOUVER — A second investigation has been launched into the question of whether or not the B.C. government has improperly withheld information about the catastrophic collapse of the Mount Polley tailings pond.

In a letter to the Environmental Law Centre at the University of Victoria, Michael McEvoy, the acting Information and Privacy Commissioner for B.C., has confirmed his office has opened a file into a complaint by the ELC about the government’s refusal to release routine mine inspection reports concerning Mount Polley.

Since the Aug. 4 accident, which discharged nearly 15 million cubic metres of toxic mine waste into the Fraser River watershed, the government has refused to release documents related to the mine, including the annual dam safety inspection reports from 2010 to 2013.

The government said documents couldn’t be released because an investigation is under way. That prompted the ELC to complain to the Information and Privacy Commissioner that the release of documents “relevant to the greatest mining environmental disaster in B.C. history is a matter of clear and pressing public interest.”

Glencore writes off $6bn more on Aussie assets as mining weakens – by Matt Chambers (The Australian – November 13, 2014)

November 12, 2014

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

TRADING and mining giant Glencore has been forced into an extra $6 billion of 2013 writedowns on its Australian subsidiary beyond those already booked by the Swiss-based parent company, because of a weak economic environment since taking over Xstrata last year.

On top of this, the company has revealed it has made a $780 million provision for Australian take-or-pay coal mining contracts as coal prices fell.

A hefty $16bn of writedowns, on Australian and overseas assets, reflects the worsening commodities environment in 2013 and current mine plans — factors Glencore was not required to take into account in its London reports filed eight months ago.

In its 2013 accounts filed with the Australian Securities & and Investments Commission this week, Glencore said it had booked the $16bn of impairments on goodwill and other unspecified mining property, plant and equipment.

“The calculations reflect the prevailing economic environment and also the latest mine plans,” Glencore said in the accounts, which were signed this month by the company and its auditors. In its 2013 results, released in March, the Glencore parent company recorded a still significant $US9.1bn of impairments, most of which was on goodwill.

Canada injects $300m in Chile’s copper giant Codelco – by Cecilia Jamasmie (Mining.com – November 12, 2014)

November 12, 2014

http://www.mining.com/

Export Development Canada (EDC) said Wednesday it has granted a US$300 million loan to Chile’s owned copper producer Codelco to help it with a much needed massive investment program aimed to guarantee the firm’s status as the world’s biggest copper producer.

The Chilean miner will procure goods and services from Canadian companies down the road, particularly small-to-medium sized enterprises.
As part of the agreement, the Chilean miner will procure goods and services from Canadian companies down the road, particularly small-to-medium sized enterprises.

“Such loans have been very productive in the past, especially with Codelco, where they have helped promote Cdn$888 million worth of purchases from more than 150 Canadian companies in the last five years,” a spokesman for EDC told MINING.om.

Jean Cardyn, EDC’s Regional Vice-President in South America said in a statement that the Canadian trade finance agency has identified Chile as a market that holds tremendous promise and potential for growth.

Late last month President Michelle Bachelet enacted a special law to spur the company’s output, which grants Codelco an extra injection of S$4 billion between 2014 and 2018.

Investment giant Capital Group boosts Potash Corp. stake above 10% – by Peter Koven (National Post – November 12, 2014)

November 12, 2014

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

The global investment giant Capital Group Cos. appears to be a fan of Jochen Tilk.

The Los Angeles-based firm disclosed in a filing this week that it has boosted its stake in Potash Corp. of Saskatchewan Inc. to 83.1 million shares, or just above 10% of the total. It owns nearly double the shares of any other single investor.

In late 2013 and early 2014, Capital Group’s stake in Saskatoon-based Potash Corp. was around 40 million shares. It has skyrocketed since then, a period that roughly coincides with Mr. Tilk joining the company. He was named chief executive in April and took over for the retiring Bill Doyle in July.

Capital Group has a history with Mr. Tilk, dating to his days as CEO of Inmet Mining Corp. Capital Group was Inmet’s third-biggest shareholder when it was acquired early last year by First Quantum Minerals Ltd. for $4.8-billion. That takeover made Mr. Tilk a free agent until Potash Corp. came calling.

Mr. Tilk spent more than two decades at Inmet in various roles and played a key role in the company’s success. He is known for his strong operational skills, though he is far less of a promoter than Mr. Doyle.

COMMENT: Taking a sharp knife to gold miners – by Marilyn Scales (Canadian Mining – November 11, 2014)

November 12, 2014

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Cut, cut, cut. As market factors cut the price of gold, so miners are struggling to cut the cost of producing it, shaving away with staff cuts, asset sales, operating costs, and closure.

The gold price has fallen to four-year lows. Now it is struggling to boost itself up from US$1,142/oz on Nov. 5 to about US$1,165/oz at noon on Nov. 11. Is this the start of an upward trend or is it merely a small blip on a continued downward spiral? No one knows.

Despite strong demand from Asia, the gold price just seems to go nowhere. The strengthening American dollar is also exerting downward pressure on the price of gold. The result is that few optimists are singing gold’s praises these days.

Gold miners were an enthusiastic group as the gold price ran up to US$1,924/oz. Margins were understandably high and producers focussed on getting as many ounces out the door as possible to take advantage of the price. But the next year, 2012 saw a softening and the seeds of the current problems were sown. The price continued to slide, and a year later the industry took write downs in the neighbourhood of US$26 billion.

The low price is particularly alarming as small producers on the high end of the cost curve report all-in sustaining costs at US$1,200 and more. Many mid-tier producers are bumping up against the US$1,100 ceiling.

Ford bets it all on aluminum-bodied F-150, which heads to dealers next month – by Dee-Ann Durbin (The Associated Press/Windsor Star – November 12, 2014)

November 12, 2014

http://www.windsorstar.com/index.html

DEARBORN, Mich. – Russell Barnett, a Ford dealer in Tennessee, is ready for aluminum.

Ford is using the metal almost exclusively in body of the 2015 version of its bestselling F-150 pickup, which starts arriving at dealerships next month. Barnett is already answering customers’ questions about the truck. And he’s updated his repair shop not only for the F-150, but in anticipation that other Ford brands such as the Mustang will eventually make the switch from steel.

But, just in case, he ordered some extra steel-bodied 2014 pickups.

“There will be some people who won’t want to change for a while,” says Barnett, who says pickups make up around half of the annual sales at his dealership in rural Winchester.

Ford is doubling down on aluminum, which is lighter — and more expensive — than steel but just as tough. The new truck is the company’s response to customers’ requests for a more fuel-efficient and nimbler pickup. Ford hopes the advantages outweigh customer doubts about the durability of aluminum or potential repair costs for the pricier metal.

It’s a big risk. So far this year, one out of every three vehicles Ford sold in the U.S. was an F-Series pickup. Morgan Stanley estimates F-Series trucks account for 90 per cent of Ford’s global automotive profit.

Interview with a Quaternary Geoscientist – by Samantha Bajc and Daniel Watchorn (Ring of Fire Blog – November 11, 2014)

November 12, 2014

http://ring-of-fire222.blogspot.ca/

We interviewed Dr. Andrew Bajc, a Quaternary Geoscientist from Sudbury, Ontario on issues regarding the Ring of Fire. In his occupation he studies the deposits and landforms left by the glaciers over the last few hundred thousand years in Ontario.

What is your involvement in Northern Ontario’s Ring of Fire?

I work for the Ontario Geological Survey, a branch of the Ministry of Northern Development and Mines. Our branch undertakes geoscience projects in the Ring of Fire area to help understand the geology and setting of mineralization in the region. We also do baseline geochemical studies to obtain a picture of the environmental conditions of the region prior to development. This is important should there be impacts on the landscape and drainage systems from the mining operations. We also map the surficial geology of the region to provide information required for infrastructure development. Knowing the location of aggregate resources for road building, clay for tailings ponds as well as determining optimal routes for road construction is critical to the success of this project.

What do you believe is the biggest factor slowing the development of the mining operation?

First Nations issues and infrastructure development. Need all season access to the site to construct infrastructure and transport people and ore out from the deposit area. An all season road is required. Also need full buy in from First Nations. Revenue sharing and employment of first nations peoples needs to be negotiated.

Underground entrepreneurs: Red Lake miners now members of small business cells operating with more autonomy – by Alexandra Lopez-Pacheco (CIM Magazine – November 2014)

November 12, 2014

https://www.cim.org/en.aspx

Last fall Goldcorp’s Red Lake mine was organized conventionally, with teams reporting to supervisors who in turn reported to a general foreman. With a wicket system in place, employees arriving for their shift lined up to receive their assignment from their supervisor for the day, taking them to different parts of the mine. It was a hierarchical approach that managers had determined was less than ideal.

To build the foundation for a more employee-driven organization, Red Lake management chose to reorganize operations into 14 different cells – or business units – each comprising between 10 and 15 members. Each cell is assigned dedicated resources that include equipment, labour and support of organizational structures. And each one handles its own accounting and metrics.

“Essentially, we set up each cell to act as an independent small business,” says Bob MacDonald, operations manager at Red Lake. “Collectively, we get to learn from the best practices of each unit, and independently, each unit is best equipped to deal with its own unique operating conditions. It’s a win-win.”

The planning process for the new organizational structure took three months, carried out by a team made up of a general foreman and a technical services representative as well as Trevor Krawchyk, Goldcorp’s operations excellence manager. They also worked closely with daily supervisor and technical teams to revise and fine-tune every aspect of the plan.

Nickel’s Waning Price Boom Leaves BHP With Unwanted Mines – by David Stringer (November 12, 2014)

November 12, 2014

http://www.bloomberg.com/

The failure to find a buyer for its Australian nickel business has left BHP Billiton Ltd. (BHP) with unwanted smelters and pits after the collapse of a price boom.

The metal reached a two-year high on May 13, a day before the world’s biggest miner outlined a plan to sell all or part of the unit. Since then, the price has declined 27 percent. Nickel West, which includes mines, concentrators, the Kalgoorlie smelter and Kwinana refinery, didn’t attract a suitable bid, the company said today in a statement.

While Glencore Plc (GLEN) Chief Executive Officer Ivan Glasenberg said earlier his company planned to examine Nickel West and would be “kicking its tires,” no acceptable offers were made, BHP said.

The biggest miners have found some units more difficult to divest as they trim portfolios amid lower commodity prices. Rio Tinto Group (RIO), the second-largest, halted work last year to try and sell its diamond unit after failing to find a buyer.

BHP said the nickel unit will remain within the company’s main portfolio, after CEO Andrew Mackenzie signaled it wouldn’t be included in a planned spinoff next year of smaller assets. The division doesn’t fit with either BHP’s core businesses, or operations, which will form the proposed new company, he said in August.