Republic of Mining

UPDATE 1-Zambia may be backing off steeper mine royalty rates -Barrick – by Nicole Mordant (Reuters India – October 30, 2014)

October 30, 2014

http://in.reuters.com/

Oct 30 (Reuters) – There are indications Zambia may be backing away from plans to impose a 20 percent royalty rate on open pit mining in the country, a top executive with Barrick Gold Corp said on Thursday.

Zambia’s Finance Minister Alexander Chikwanda rattled mining companies with investments in the copper-rich southern African country earlier this month when he announced that from January royalties on open pit mines will rise to 20 percent and on underground mines to 8 percent from 6 percent currently.

Barrick, which is the world’s biggest gold producer but also owns the Lumwana copper mine in Zambia, has said that a 20 percent royalty would seriously challenge the economics of the large open-pit mine.

“Our sense is that the government realizes that the numbers they have imposed will be very challenging for the industry,” Barrick co-president Kelvin Dushnisky said on a conference call to discuss the company’s third-quarter results, which were released late on Wednesday and beat market expectations.

“I don’t want to handicap anything, but going into this week, our sense is there would be movement away from that number. I can’t guarantee it but that’s certainly the direction discussions were going,” he said.

Mine closures contribute to 60-70% jobless rate in Tumbler Ridge, says deputy mayor – by Jonny Wakefield (Alaska Highway News/Business Vancouver – October 30, 2014)

October 30, 2014

http://www.biv.com/

Hundreds of people in the district of Tumbler Ridge lost their jobs in a rash of mine closures this year.

But the town’s exact rate of unemployment – which district staff say would help a push for government assistance – remains a mystery.

Tumbler Ridge councillor Rob Mackay, who also serves as deputy mayor, said a local unemployment rate of between 60 and 70% “would be in the right ball park” since Anglo American Coal and Walter Energy idled their mines in Northeast British Columbia.

The town of 2,700 has been largely dependent on mining since it was incorporated in 1981. Around 700 people directly lost their jobs over a period of around six months, and by the end of the year, there will be no working coal mines in Tumbler Ridge.

“[60 to 70% unemployment] has got to be fairly close, though I don’t know the exact number,” said Mackay. “Those mines were the major employers in Tumbler Ridge.” Both companies cited falling metallurgical coal prices as the reason for the shutdowns.

Jordan Wall, Tumbler Ridge’s economic development officer, said being able to put a hard number on the town’s unemployment rate would underline how bad things are to senior levels of government.

Ebola Fight Means Taking 5,000 Temperatures at Mittal’s Ore Mine – by Thomas Biesheuvel (Business Week – October 28, 2014)

October 30, 2014

http://www.businessweek.com/

Kleber Silva takes his temperature twice a day, enters the results in his BlackBerry and sends them to the company he works for, ArcelorMittal.

Silva, the head of iron ore for the world’s biggest steelmaker, is home from Liberia for three weeks. When he returns to the African nation next month, he’ll still be in the 21-day incubation period for the Ebola virus. The temperature checks won’t end, and neither will his need for vigilance.

Silva’s experience is typical for those working to keep businesses going, even as a health crisis explodes around them. His job is to keep safe almost 5,000 ArcelorMittal employees working in Liberia, along with their families. The effort, which will cost $3 million by year’s end, is important both on a human scale, and financially: The company relies on the iron-rich Nimba mountains to feed its blast furnaces, and Liberia depends on mining to generate a fifth of its economy.

“We want to keep this mine alive,” Silva said in an interview at ArcelorMittal (MT)’s London offices. “For the country, for the people, for the company. We need to deal with the crisis, deal with the outbreak, but have the vision beyond this. This will not stay forever.”

The outbreak has infected more than 10,000 people in West Africa, killing almost half. It threatens to erase the progress Liberia has made since it emerged from civil war more than a decade ago with Finance Minister Amara Konneh forecasting zero growth this year because of the disease.

Barrick Gold Trims Cost Forecast After Expenses Drop – by Liezel Hill (Bloomberg News – October 30, 2014)

October 30, 2014

http://www.bloomberg.com/

Barrick Gold Corp. (ABX), the largest producer of the precious metal, reduced its forecast for operating costs this year after reporting third-quarter expenses that beat analysts’ estimates.

So-called all-in sustaining costs will be $880 to $920 an ounce, compared with a previous range of $900 to $940, Toronto-based Barrick said yesterday in its third-quarter earnings statement.

Barrick is among gold producers that have reined in spending and delayed growth plans after the metal’s 28 percent decline last year. Third-quarter costs fell 8.8 percent to $834 an ounce, compared with the $916 average of three estimates.

“Their earnings look reasonably good, the cash costs are good, the guidance looks good,” David Christensen, chief executive officer of San Mateo, California-based ASA Gold & Precious Metals Ltd., said in a phone interview. His company manages $250 million including Barrick shares. “All in all, it looks like they’ve done a good job.”

Earnings excluding one-time items were 19 cents a share, topping the 17-cent average of 23 estimates compiled by Bloomberg. Sales declined 13 percent to $2.6 billion, exceeding the $2.49 billion average estimate.

Minister promotes N.L. iron ore in China – by Ashley Fitzpatrick (St. John’s Telegram – October 30, 2014)

October 30, 2014

http://www.thetelegram.com/

Lab West waiting as Derrick Dalley presses mining sector investment

Eight months after the idling of the Scully Mine in Wabush, less than a month after putting a pin in construction of a mine-fuelling power line and facing continued, dismal pricing for iron ore, the Government of Newfoundland and Labrador is actively promoting iron mining in Labrador West.

Natural Resources Minister Derrick Dalley told The Telegram Wednesday the potential in iron ore was key to his presentations and conversations during a 10-day mission to China earlier this month.

He took to the microphone at industry gatherings in Shanghai and Beijing, at the Canada Natural Resources Forum and Canada Mineral Investment Forum. He met with the Canadian Ambassador to China, representatives for China’s National Development and Reform Commission, and Ministry of Land and Resources, and steel producers from companies including Wisco and Hebei Iron and Steel.

“From my perspective, it was a great opportunity to reinforce the relationship that we had forged in recent years, to understand the China economy, but as well to present on behalf of the province some opportunities and to encourage Chinese investment,” he said.

The province, it was noted in a statement issued earlier this month, provided $13,900 to help Mining Industry NL representatives make the trip and maintain a trade show booth at China Mining, the continent’s largest mining conference.

How green energy is fleecing Ontario electricity consumers – by Ross McKitrick and Tom Adams (National Post -October 30, 2014

October 30, 2014

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

Adding renewable generating capacity triggers changes throughout the system that multiply costs for consumers

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.

However, such analyses ignore the indirect costs that arise from the way renewables interact with the rest of the power system.

CEO Mocks Analyst, Refuses To Answer His Question On Public Webcast Because His Stock-Price Target Is Too Low – by Myles Udland (Business Insider – October 29, 2014)

October 30, 2014

http://www.businessinsider.com/

Lourenco Goncalves, CEO of the mining and natural resources company Cliffs Natural, doesn’t take questions from haters.

On Cliffs’ earnings conference call on Tuesday morning, Goncalves told Wells Fargo analyst Sam Dubinsky that he wouldn’t answer Dubinsky’s questions because “you already know everything about my company.”

“You have a $4 price target and you think we can’t sell assets, so I’m going to take the next question, I’m not going to answer you,” Goncalves said. It is a jarring exchange.

In a note to clients following the report, Dubinsky wrote that Goncalves was “pretty bold” on the earnings call. It was also Goncalves’ first earnings call as CEO since being named to the position on Aug. 7.

And the exchange, or really just the shutting down of Dubinsky’s questions by Goncalves, shows some of the complications inherent in the relationship between companies and analysts.

It is Dubinsky’s job, as a research analyst, to publish his assessment of the companies in his coverage area and, based on this work, publish a recommendation on how he believes the stock will perform going forward.

Ring of Fire doubts ‘baseless and false’ – by Carol Mulligan (Sudbury Star – October 30, 2014)

October 30, 2014October 30, 2014

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Cliffs Natural Resources’ new chief executive officer may have shaken the confidence of some this week when he said he had “zero hope” the Ring of Fire would be developed in the next 50 years.

But Lourenco Goncalves didn’t cause three proponents of the chromite deposits 500 kilometres northeast of Thunder Bay to lose faith the Ring will be mined and will add billions to the province’s economy when it is.

Goncalves, 55, told The Financial Post he didn’t expect to see the Ring developed in his lifetime, and that he intends to be around for another 50 years.

The newly named CEO of the Cleveland-based company was, no doubt, expressing the frustration of the company with one of the biggest claims in the Ring of Fire. It has suspended work on its project after investing $500 million in it.

In May 2012, Cliffs and the Government of Ontario announced Cliffs had upgraded its Ring of Fire project to the feasibility stage and reached a number of key agreements with the province. Most important to Sudbury was Cliffs’ decision to locate a $1.8-billion ferrochrome processing plant in Capreol, just north of the city.

News Release: New survey of ‘hidden’ supply sector nearly doubles mining contributions to Ontario’s economy

October 29, 2014

www.camese.org

October 28, 2014

The industrial sector providing equipment, supplies and services to the global mining industry, generates 68,000 jobs across Ontario, contributing billions to Ontario’s GDP.

Markham, Ontario – A new economic impact survey reveals information previously lacking about the mining supply and services (MSS) industry, which The Conference Board of Canada has called a ‘hidden’ sector, not directly measured by Statistics Canada.

The study, executed by PricewaterhouseCoopers LLP for the Canadian Association of Mining Equipment and Services for Export (CAMESE) is based on the activities of 913 companies that consider themselves mining suppliers in 2011.

Jon Baird, the outgoing Managing Director of CAMESE says: “Finally we have proof of the important economic contribution of Ontario’s mining suppliers, supporting not only the province’s mines, but servicing mining activity worldwide.”

Mining supply activity occurs throughout Ontario. While one-third of the companies’ head offices are in Northern Ontario, 21 percent are in the Greater Toronto Area and nearly half are in other parts of the province.

Teck Resources water-treatment plant shut after dead fish found – by Mark Hume (Globe and Mail – October 28, 2014)

October 29, 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 $100-million treatment plant that is a key piece of Teck Resources Ltd.’s plan to address a selenium pollution problem in British Columbia’s Elk Valley has been taken off line because of a fish kill.

In a statement, Teck says the Line Creek plant, which went into operation in July, temporarily shut down “as a precautionary measure” while technicians try to figure out what went wrong. Teck states a problem was first noticed Oct. 16 when “fish were found deceased in the area of the water-treatment facility.”

A total of 45 fish were found dead near the plant, which was built as part of a $600-million, five-year plan to address the pollution threat to westslope cutthroat trout and other aquatic life in the Elk Valley.

Environment Canada recently reported selenium levels are so high in the Fording River that trout are hatching with deformed gills, fins, jaws, spines and craniums. Teck’s statement says the cause of the Line Creek fish kill isn’t known at this time.

NEWS RELEASE: Miners launch successful one-day friendly invasion of Queen’s Park

October 29, 2014

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.

Scores of company representatives from Ontario Mining Association member companies constructively presented their industry’s attributes and contributions to politicians, staff and public servants in the province’s main political arena yesterday. There was a full day of activities helping to bring mining from around the province to Queen’s Park. “The theme today is Mining Builds Communities,” said OMA President Chris Hodgson.

At an evening reception, Michael Gravelle, Minister of Northern Development and Mines, said “Meet the Miners is a long standing tradition for all those who care about the mining industry in Ontario and it has been a tremendous day. Mining is important to the economy and communities.”

Mr. Gravelle referred to the recently released OMA gold mine study “An Au-thentic Opportunity: The economic impacts of a new gold mine in Ontario” in his address. There are impressive statistics in the new OMA gold mine study and it provides an opportunity to educate the positive impact of mining.”

Interim Progressive Conservative Leader Jim Wilson said “I am pleased to meet with the representatives of your Association. We want to make Ontario one of the best mining jurisdictions in the world and we know you want greater predictability and support on electricity pricing and skilled trades development.”

Shake-out of ferrochrome industry overdue – by Kunal Bose (Business Standard – October 27, 2014)

October 29, 2014

http://www.business-standard.com/ [India]

India’s ferroalloys producers have built capacity of 5.25 million tonnes (mt), including 3.2 mt of manganese alloys and 1.75 mt of chrome alloys, anticipating much faster growth in domestic production of carbon, alloys and stainless steel than is actually the case. As a result, every segment of the ferroalloys sector has considerable idle capacity. The sector’s attempt to beat overcapacity blues through exports has seen limited success in the face of oversupply of ferroalloys in the global market, thanks largely to Chinese dumping.

Ferromanganese is used for desulphurisation and strengthening of carbon steel, while ferrochrome imparts non-corrosive properties to stainless steel.

Bansidhar Panda, chairman of Indian Metals & Ferro Alloys (IMFA), says “the chromium sector is at a crossroads, buffeted by rising costs, stagnant prices” and China’s overbearing presence in both ferrochrome and stainless steel sectors. Overcapacity is hitting non-integrated producers here, without ownership of chrome and manganese ore mines and captive power plants, the hardest. Such units in the chromium segment are never sure of securing the required supplies of chromite from the Odisha government-owned Odisha Mining Corporation.

Grid power is expensive, as it is highly irregular. For ferroalloys plants without captive power, the electricity bill alone accounts for about 35 per cent of the overall production cost. Therefore, it isn’t surprising that standalone units, which have to buy chromite and electricity, are in dire straits. Only a few, with toll smelting assignments from mines-owning ferroalloys groups, are able to keep their heads above water.

Moon exploration will reduce the shortage of rare earth metals – by Aram Ter-Ghazaryan (Russia Beyond the Headlines – October 26, 2014)

October 29, 2014

http://rbth.com/

Russian scientists are already referring to the Moon as a hub for flights to other planets. However, the main goal in exploring Earth’s satellite is to expand the production of rare earth metals.

As part of the Federal Space Program, Moon exploration operations will be launched in 2016. In 2018 the first spacecraft will be sent to the Moon to deliver comet material back to Earth. A manned flight is scheduled for 2030-2031. Future plans include the mining of rare earth metals required for the development of high-tech industries.

Looking for comet substances on the lunar south pole

Scientists from the Russian Academy of Sciences, the Moscow State University Sternberg Astronomical Institute and the Russian Federal Space Agency are participating in this Moon exploration project.

The first spacecraft to be sent to the Moon will be relatively simple. According to Vladislav Shevchenko, the Sternberg Institute’s Head of the Department of Lunar and Planetary Research, this is because the Russian space program has not carried out a Moon landing for over 40 years.

China’s ‘new normal’ still global metals demand driver – by Lawrence Williams (Mineweb.com – October 29, 2014)

October 29, 2014

http://www.mineweb.com/

Although China’s growth has slipped the Asian dragon remains the key driver for metals and minerals prices and trade.

LONDON (MINEWEB) – Consensus opinion at last week’s Bloomberg East meets West seminar in London was that the latest growth figures from China, which have been considerably lower than those of the previous few years, are indeed the ‘new normal’ rather than just a downwards blip.

Government policy now seems to have abandoned the growth-at-any-costs scenario, which saw double digit GDP growth, to a more sustainable level which seems more likely to encompass annual growth figures of between 5% and 8%.

But even so, because of the size of its metallurgical processing and manufacturing sector China will remain the principal demand driver for global metals and minerals. This point was ably put by Bloomberg Intelligence’s global head of metals and mining, Ken Hoffman, in his introductory remarks, and was a point picked up by several other speakers and panel participants too.

Bloomberg notes that part of the problem facing the global resource sector is that perhaps the West did not understand the Eastern drive for growth over the past decade and its subsequent slowdown.

COLUMN-Chinese stockpiles mean bauxite may not be a sure bet – by Clyde Russell (Reuters India – October 29, 2014)

October 29, 2014

http://in.reuters.com/

LAUNCESTON, Australia, Oct 29 (Reuters) – Bauxite is one of the few natural resources to attract positive commentary amid the sharp falls in many commodities in the past few months.

Certainly the outlook appears quite constructive for the mineral used to make alumina, which in turn is the primary ingredient for aluminium.

Indonesia produced about 12 percent of the world’s output and was the top supplier to China prior to Jakarta imposing a ban on exporting raw mineral ores in January.

The Ebola outbreak in West Africa appears to have had a limited impact on shipments from Guinea, so far, but the risk of disruption rises as long as the deadly disease remains prevalent in the region.

Also, much of the planned new supply is in West Africa, including major projects in Mali, and the longer the Ebola crisis endures, the more likely delays and cost overruns become.

Throw in signs that, excluding China, aluminium demand is rising as the U.S. and other economies recover, while Chinese aluminium output remains robust, and it’s not hard to see bauxite as a shining light in the commodity firmament.