Republic of Mining

Iron ore and the dangers of living by the sword – by Andy Home (Reuters U.S. – November 11, 2014)

November 11, 2014

http://www.reuters.com/

LONDON – (Reuters) – The price of spot iron ore has sunk to $75.50 per ton this week, its lowest level since 2009. The scale of the price collapse has been breath-taking. Iron ore has dropped by over 35 percent since the start of the year, a significantly worse performance than any other industrial metal.

But what’s really shocking is that the price is now at a level that until recently was collectively deemed impossibly low. It was only in April that José Carlos Martins, executive officer of ferrous and strategy at Vale, the world’s largest producer of iron ore, told analysts that “one thing is for sure, the price will not go below $110 on a sustainable basis”.

This was not irrational producer exuberance. Martins was only voicing the prevailing consensus view when he went on to argue that “we have many times seen the price going below this level but recovering very fast”. Well, here we are with the price trading not just below $110 but a lot lower still. And sustainably so.

That tells you that something has gone very wrong with the iron ore narrative. This market is in a place it was not supposed to be.

And while big producers such as Vale, Rio Tinto and BHP Billiton are sticking to that narrative, they are now facing the unpredictable consequences of a pricing war they collectively started.

Gina Rinehart children seek profits from iron ore projects including Roy Hill and Hope Downs – by Louise Hall (Sydney Morning Herald – November 11, 2014)

November 11, 2014

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

Gina Rinehart’s two estranged children are seeking to claw back profits from the mining magnate’s major iron ore projects which they say are rightfully theirs.

But lawyers for Mrs Rinehart, Australia’s richest person, claim John Hancock and Bianca Rinehart’s latest legal action in their long-running family feud should not be allowed to go ahead because it is an abuse of process.

In an urgent hearing in the Federal Court on Tuesday, lawyers for Mrs Rinehart and her flagship company, Hancock Prospecting, asked Justice Peter Jacobson to suppress details of the childrens’ allegations of fraudulent concealment and deceptive conduct because any publicity could affect the US$10 billion ($11.6 billion) Roy Hill iron ore mining project.

The barrister for Mr Hancock and Bianca Rinehart, Christopher Withers, told the court his clients were seeking a constructive trust and an account of profits of four mining tenements, including Roy Hill and Hope Downs.

John Sheahan QC, for Hancock Prospecting, asked the court to suppress the case until he could apply for a stay on the grounds it was an abuse of process.

PRECIOUS-Gold falls over 2 pct as dollar rises; open interest eyed – by Frank Tang and Jan Harvey (Reuters U.S. – November 10, 2014)

November 10, 2014

http://www.reuters.com/

NEW YORK/LONDON, Nov 10 (Reuters) – Gold fell over 2 percent on Monday as the dollar rose, nearly wiping out its previous session’s rally, but signs of renewed buying interest in the U.S. futures market could underpin prices, traders said.

A combination of oil futures tumble and higher U.S. stock markets also weighed down on the yellow metal’s appeal as a safe haven.

On Friday, it rallied almost 3 percent after U.S. payrolls data marginally missed expectations, sending the dollar lower. While most analysts had cited short covering for Friday’s gains, exchange data suggested speculators might have increased new bullish bets in the gold futures market.

CME’s latest data showed COMEX open interest on Friday unexpectedly climbed about 16,000 lots, or 4 percent, to 434,295 lots, a 15-month high. “Some people interpret that as new longs have decided to enter the market,” said Paul Sacks, principal and chief investment officer at Aurum Options Strategies in New York.

Improved physical demand at lower prices and gold’s holding support at its key 38-percent Fibonacci retracement level should also underpin bullion prices, Sacks said.

Mining companies, investors steer through rising tide of water risks – by Dorothy Kosich (Mineweb.com – November 10, 2014)

November 10, 2014

http://www.mineweb.com/

573 financial institutions with assets of US$60 trillion are concerned about water risks, including mining corporations.

RENO (MINEWEB) – More than 70% of the western U.S. has been hit by drought, while China has been suffering from a national shortage of water and energy resources, prompting plans to develop 172 major water projects by 2020, says Paul Simpson of the CDP research firm working for institutional investors.

A survey by CDP of the world’s largest listed companies finds an increasing number of corporate executives say water is or soon will become a restraint on their corporate growth. In the CDP Global Water Report 2014, more than two-thirds of the Global 500 companies reported substantive water risks, “therefore investing to conserve, manage or obtain water has become crucial for some sectors,” said Simpson.

For instance, BHP Billiton has invested nearly US$2 billion “in a desalination plant in Chile to ensure adequate water is available for its desert mining operation,”’ he noted.

“Competition for scarce water resources is leading to business disruption, brand damage and the loss of the license to operate. A lack of water, or insufficient water of the right quality, can cut or even halt production,” observed the survey. “This is of growing concern to institutional investors as evidenced by investors’ support for CDP’s water programs.”

573 financial institutions with assets of US$60 trillion were signatories to the CDP 2013 water questionnaire dated Feb. 1, 2014.

1,500 Tons of Gold on the Line in Swiss Vote to Buy Back Bullion – by Nicholas Larkin and Catherine Bosley (Bloomberg News – November 5, 2014)

November 10, 2014

http://www.bloomberg.com/

There are people in Switzerland who resent that the country sold away much of its gold last decade. They may be a splinter group of Swiss politics, but they’re a persistent bunch.

And if they get their way in a referendum this month, these voters will make their presence known to gold traders around the world.

The proposal from the “Save Our Swiss Gold” proponents is simple: Force the central bank to build its bullion position up to at least 20 percent of total assets from 8 percent today. Holding 522 billion Swiss francs ($544 billion) of assets in its coffers, the Swiss National Bank would have to buy at least 1,500 tons of gold, costing about $56.3 billion at current prices, to get to the required threshold by 2019.

Those purchases, equal to about 7 percent of annual global demand, would trigger an 18 percent rally, giving a lift to gold bulls who’ve suffered 32 percent losses in the past two years, Bank of America Corp. estimates. With polls showing voters split before the Nov. 30 referendum, the SNB and national government are warning that such a move could undermine efforts to prevent the franc from surging against the euro and erode the bank’s annual dividend distribution to regional governments.

“It would have a major impact if it passes,” said Joni Teves, an analyst at UBS AG in London. “If they do launch a buying program, it would have effectively a constant bid in the market.”

“The clock is ticking” on Algoma Central Railway – by Greg Gormick (Northern Ontario Business – November 2014)

November 13, 2014November 10, 2014

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

A takeover of the Algoma Central Railway (ACR) passenger service from CN by a third-party operator is in the works and, at first blush, this seems to hold the promise of reviving the Agawa Canyon tour train and the full Sault Ste. Marie-Hearst service.

CN’s business is moving large volumes of freight over long distances, not hauling passengers. A new operator can bring expertise and enthusiasm that’s been understandably lacking under CN. Its involvement is only a consequence of its 2001 purchase of the ACR as part of a larger package of railway lines from Wisconsin Central (WC), which acquired the ACR in 1995. CN really didn’t want the ACR or its federally-subsidized passenger service, but was obliged to take both because it wanted other strategically-valuable WC lines.

But in the cheering about the potential improvements that could come with a new passenger service provider operating on CN infrastructure, there are two issues not being fully considered.

The most obvious one is the subsidy, which has been provided by the federal government since 1968 under a program to support passenger trains vital to regions lacking adequate air and road access.

As price of gold drops, miners race to cut costs – by Rachelle Younglai (Globe and Mail – November 10, 2014)

November 10, 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.

Gold’s rapid drop threatens to weed out the weaker players, pressuring high-cost producers and setting the stage for mines to be shuttered.

“If the price stays below $1,200 for any appreciable length of time, then you will see mine closures or at least mines shrunk down considerably,” Goldcorp Inc.’s chief executive Chuck Jeannes said in an interview.

The precious metal lost about $100 (U.S.) an ounce over the past two weeks due to monetary-policy decisions in the United States and Japan that sent the U.S. dollar soaring. Gold sank as low as $1,137.40 an ounce before recovering to $1,178.50 on Friday. Miners that spend more than $1,100 to produce an ounce of gold are feeling the pinch.

Iamgold Corp. is racing to slash expenses. The Toronto-based company, with mines in Canada, South America and West Africa, spent nearly $1,200 to produce an ounce of gold in the first quarter. That was whittled down to $1,136 in the following quarter.

“If the gold price drops below $1,100 per ounce, the company will have difficulty generating free cash flow,” said Chris Mancini, an analyst with the Gabelli Gold Fund.

China using weak prices to stockpile iron ore – by Scott Murdoch (The Australian – November 10, 2014)

November 10, 2014

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

CHINA is building up its iron ore stockpiles to take advantage of the commodity’s weak prices despite deliberately slowing steel production over the past month.

New figures released by Xinhua-China Iron Ore Price Index showed stockpiles of imported iron ore at 33 major Chinese ports surged 1.44 per cent last week compared with a week earlier due to weak demand.

Iron ore inventories at the 33 ports across China rose by 1.47 million tonnes to 103.44 million tonnes, one of the highest levels in the past year. Most Australian imported iron ore is stored at the Tianjin port, south of Beijing, the largest in China.

The Xinhua report said a slowing economy and mounting environmental pressure was hurting the profit margin of the steel industry, softening demand for iron ore.

China has slowed production and output in the Hebei region, the steel capital of China, in a bid to reduce pollution during the Asia-Pacific Economic Co-operation leaders’ meeting, which begins today in Beijing.

Sudbury’s Transition Metals juggles several exploration projects – by Jonathan Migneault (Sudbury Northern Life – November 08, 2014)

November 10, 2014

http://www.northernlife.ca/

CEO Scott McLean calls the company a ‘project generator’

The last year was difficult for mining exploration companies, but it was an improvement over 2013, says Scott McLean, president and CEO of Sudbury-based Transition Metals.

“2015, I expect, is going to be better than 2014,” McLean said at the 2014 Ontario Prospectors Association Exploration and Geoscience Symposium. “But realistically speaking, I think we’re a ways out from the good traction in the mining equity markets.”

McLean went on to say the mining sector’s current down-cycle is the worst he has experienced since he started his career in 1985. But with every bust comes a boom, he said, and he expects the rebound to also be the biggest in his career.

To prepare for that rebound, Transition Metals has taken on a more ambitious portfolio of properties than most junior miners. McLean calls the company a “project generator,” because instead of exploring just a few properties, it has 24 across Canada, and one in the United States.

“Generally speaking, it is a pretty niche part of the market,” he said. “Right now is a time when companies are desperate for cash and are forced into raising money at very poor valuations. We don’t have to do that.”

Norway proves oil-rich nations can be both green and prosperous – by Barrie McKenna (Globe and Mail – November 10, 2014)

November 10, 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.

OTTAWA — Conventional wisdom suggests a big fossil fuel-producer like Canada can’t be both green and prosperous. It’s one or the other. Norway’s experience suggests this is a false choice.

Through a combination of steep carbon taxes, careful management of its oil wealth and strategic investments in innovation, oil-rich Norway has found a comfortable balance between the environment and growth.

It’s a lesson Canadians should take to heart in the wake of a stark new warning from the United Nations’ Intergovernmental Panel on Climate Change that the planet is headed for destructive and irreversible climate change without dramatic carbon emission cuts.

Forget Dutch disease. Canadians should embrace the Norwegian antidote. Compared to Canada, Norway’s economy is more competitive, scores better on a range of innovation performance measures and consistently produces higher per capita gross domestic product, and incomes.

And it’s greener, too.

‘Mining bill shows us where we stand’ – by Chris Barron (Business Day Live – November 9, 2014)

November 10, 2014

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

HOW ironic that the executive director of Anglo American South Africa, who is also the vice president of the Chamber of Mines of South Africa, Khanyisile Kweyama, should be declared Africa’s most influential woman in mining — at a time when her firm’s South African interests are dwindling and the local mining industry is becoming less influential by the day.

The accolade was bestowed on her by CEO Communications, which owns CEO Magazine. Kweyama, 49, is not sure she agrees about the decline in mining. But the industry she leads contributes just 4.9% of South Africa’s GDP, down from 21% in 1970 and 6% just three years ago. It is 64th out of 112 global mining jurisdictions.

“Even if it is declining in South Africa, relative to the rest of the continent South Africa is still a large mining jurisdiction,” she says.

But South Africa’s prestige and influence as a mining destination in Africa is slipping. It is now only the eighth most important mining country on the continent, out of 16. “That is worrying,” Kweyama says.

To what extent does the local industry have itself to blame for this, and to what extent is it the result of government policy?

B.C. aboriginal training program ends amid funding dispute – by Wendy Stueck (Globe and Mail – November 9, 2014)

November 10, 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 federally funded program that helped more than 1,000 First Nations people land jobs in British Columbia’s mining sector has abruptly closed its doors, saying it was not able to operate without secure financing from Ottawa.

The federal government, however, says the $10-million program – known as the Aboriginal Mentoring and Training Association, or AMTA – filed “questionable expense claims” and was unable to account for some of the money it received before it ceased operations.

The group insists it can account for all the funds it has received and spent. The unhappy ending mars what had been a success story for industry, First Nations communities and people such as Meagan Sam.

Ms. Sam, currently working as a contract truck driver at the Gibraltar mine, about 65 kilometres north of Williams Lake, said AMTA counsellors helped her get through training programs, including a stint in the College of the Rockies in Cranbrook.

“They really opened doors for me,” Ms. Sam said Friday in an interview. “I maybe could have done it [the training] on my own, but it would have been a lot harder.”

At Alaska mining conference, talk of Pebble and Mount Polley – by Yereth Rosen (Alaska Dispatch News – November 6, 2014)

November 10, 2014

http://www.adn.com/

The owner of the Canadian mine that suffered a disastrous dam breach in August might face sanctions as serious as criminal penalties, British Columbia government officials said on Wednesday.

Decisions on corrective and possibly punitive steps will be made after provincial officials learn the findings of three separate investigations into the Mount Polley Mine dam failure, said Bill Bennett, British Columbia’s minister of energy and mines.

The Aug. 4 dam failure, though unprecedented for British Columbia, undercut confidence in the safety of mining in the province and around the world, Bennett told an audience at the Alaska Miners Association annual convention in Anchorage. “If it could happen there, where else can it happen? And that’s a question that’s on all of our minds, I think,” he said.

The Mount Polley dam breach has been cited by opponents of the controversial Pebble mine as a harbinger of risks that project poses to Alaska’s salmon-rich Bristol Bay region. Mount Polley is considered a moderate-sized mine for British Columbia; the proposed Pebble copper and gold project would be much bigger, with a much bigger tailings dam and much bigger potential damages, critics say.

Mount Polley’s woes also concern fishermen and environmentalists in Southeast Alaska, many of them already on edge because of spreading mine development just over the border in British Columbia.

Russia, North Korea Strike Deal: Improved Railway for Mineral Resources – by Yonho Kim (Voice of America – November 8, 2014)

November 10, 2014

http://www.voanews.com/

WASHINGTON— A senior Russian official said Russia and North Korea are expanding economic ties through a rare joint project that would overhaul the North’s railway system.

Recently, the two countries reached a deal that calls for Russia to improve North Korea’s railway network in return for access to the North’s mineral resources.

According to press reports, Moscow plans to put $25 billion into modernizing more than 3,000 kilometers of the North’s railroads over 20 years.

“The railway modernization project will be funded through the implementing of the product sharing agreement. It’s the result of our discussion with the DPRK’s party. The process of field work and mining will go hand in hand with the process of railway modernization,” said Alexander Galushka, Russia’s minister for the development of the Russian Far East, in an email sent to VOA.

Galushka said a group of Russian firms, including Mostovik, a construction company, is participating in the project. The joint venture is titled Pobeda, which means victory in Russian.

NEWS RELEASE: Largo initiates exploration program on potential new discovery of chromite and PGMs

November 10, 2014

Symbol: LGO (TSX.V)

www.largoresources.com

TORONTO, Nov. 10, 2014 /CNW/ – Largo Resources Ltd. (“Largo” or the “Company”) is pleased to announce that it has begun an exploration program for chromite and PGMs (platinum group metals) at its Capivara Prospect which is located in the Maracas region of Bahia, Brazil, but outside of the current mining area of its Maracas Menchen Mine.

Largo has recently discovered a new chromite showing on its Capivara Prospect (Figure 1). The Capivara Prospect lies 32 km north of the Campbell pit at the Maracas Menchen Mine. The original objective was to evaluate the known magnetite horizon which includes high grade vanadium values. While evaluating this magnetite horizon, the discovery was made of a number of zones containing chromite layers with fine grained sulphides. Samples have been collected and submitted to the lab with results pending.

The chromite layers have been traced over an area of 3km (north-south) by 0.5 km (east-west). There are at least two zones of chromite layers from 20 to 25 metres wide at surface. These zones lay 400 metres west of the Magnetite horizon that contains vanadium and anomalous platinum. The chromite layers are hosted in a thick ultramafic sequence including olivine gabbro, olivine pyroxenite and dunite. In the zones, the chromite layers consist of fine-grained massive chromite (˃ 60% chromite) and disseminated sulphides that could potentially contain PGMs. These massive chromite layers are 0.50 metres to 1.0 metre thick separated by material containing lesser chromite (˂ 10% chromite) and disseminated sulphides.