Republic of Mining

BHP won’t rush to follow Rio to automate as its manned trucks beat robots – by Matt Chambers (The Australian – October 20, 2014)

October 20, 2014

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

BHP Billiton’s mining truck drivers are outpacing their robotic counterparts when it comes to efficiency and loading at West Australian iron ore mines, indicating the miner is a long way from any decision to follow rival Rio Tinto in a large-scale driverless truck rollout.

For a little more than a year, BHP has been trialling Caterpillar autonomous trucks at its newest Pilbara region iron ore mine, Jimblebar.

The trial was recently extended to March and a decision to add three more trucks to the nine-truck fleet was taken.

But despite autonomous Caterpillar trucks making up a little over a third of the 25 trucks at the overperforming Jimblebar — the mine came on early, ramped up quicker than expected and will now produce more than flagged — they are only moving 16 per cent of the dirt and ore.

The fact annual truck hours in the manned fleet across BHP iron ore have grown from 4500 to more than 6000, a one-third improvement, is a big factor.

“We’ve seen a very material improvement in the manned truck productivity level,” BHP iron ore mines boss Eduard Haegel said at the company’s Perth office last week.

BHP Billiton leads miners’ retreat from supersizing – by James Wilson (Financial Times – October 19, 2014)

October 20, 2014

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

More trucks, more shovels, bigger holes in the ground: the mining sector has been supersizing itself for years, convinced that going large was also the way to earn outsized profits.

But the conviction that size alone matters may no longer hold true, with “diseconomies of scale” a significant factor in mining’s waning productivity, according to a report based on interviews with industry leaders.

The problems caused by growing corporate complexity were among the factors that BHP Billiton, the world’s most valuable mining group by market capitalisation, pointed to when it decided on a big company break-up this year.

Andrew Mackenzie, chief executive, said he was worried by diseconomies of scale at BHP, which is to spin off about $15bn of non-core assets into a separate company. BHP will subsequently run just seven mining projects and five petroleum fields.

However, it is not just unwieldy companies that are a concern, according to the report by EY, the consultancy. It finds that individual mining operations are sometimes getting too large to manage as effectively as companies would like, thereby contributing to the productivity problems plaguing the sector.

South Africa’s economic doldrums heighten disillusionment with ANC – by Stella Mapenzauswa (Reuters India – October 17, 2014)

October 20, 2014

http://in.reuters.com/

JOHANNESBURG, Oct 17 (Reuters) – Finance Minister Nhlanhla Nene will have his work cut out at next week’s budget to try and reassure disillusioned South Africans that the government still has gas in its tank to pull the economy out of the doldrums.

Twenty years after Nelson Mandela swept the African National Congress to power, pledging to unleash the economy and ensure universal access to quality education, jobs and houses, very little of the optimism that engulfed the country then remains.

For South Africans like Mulalo Ramavu, a self-employed handyman who barely scratches out a living for his family of four in Johannesburg’s poverty-stricken Alexandra township, confidence that the ANC can reduce social inequality and significantly improve living standards for blacks has long gone. The future looks even bleaker for his young sons.

“This is not the South Africa I expected after apartheid,” said 40-year-old Ramavu, reflecting on his long-abandoned dreams of becoming an engineer and buying a house in the suburbs, the preserve of whites during apartheid rule.

“After a promising start, the ANC now seems to be taking us backwards, and I fear for the future. I don’t see how Nene can convince me otherwise.”

How Kentucky’s struggling miners view the country’s most expensive Senate race – by Luke Mullins (Yahoo News – October 2, 2014)

October 20, 2014

http://news.yahoo.com/

Mitch McConnell and Alison Lundergan Grimes are vying to be coal’s true champion. But are they merely perpetuating an industry’s mythology?

These days, Bobby Spare feels like the last man standing.

The 59-year-old engineer began working in eastern Kentucky’s coal fields 38 years ago, like his father and grandfather before him. With nothing more than a high school diploma, Spare landed a job with a local mining company and soon earned his engineer’s license. It was a fickle industry; bonuses one year, pink slips the next. But for nearly four decades, it provided a stable, middle-class living for Spare and his six children. Even during the tough years, Spare never lost faith that coal would keep the region’s economy afloat. Today, however, he isn’t so sure.

The headquarters of B&W Resources, the mining company Spare works for, is a one-story building in Clay County, a verdant slice of Kentucky carved out of the Appalachian foothills. Trucks carrying up to 42 tons of coal rumble past the office and dump their cargo into 100-foot-high piles. Inside the building, Spare fixes himself a cup of coffee and explains that he’s never seen the industry so defeated. Coal production in eastern Kentucky has plummeted to its lowest levels in a half-century, and nearly half of the region’s mining jobs have vanished since midyear 2011.

The collapse has been particularly painful here in Clay County, which, according to the New York Times, “just might be the hardest place to live in the United States,” on account of its high unemployment, meager household incomes, and short life expectancies. It’s one of the poorest counties in the nation.

New nickel laterite processing method could halve processing costs and ‘revolutionise’ industry – by Tara de Landgrafft (Australia Broadcasting Corporation Rural – October 16, 2014)

October 17, 2014

http://www.abc.net.au/news/rural/

The company behind a new method of extracting ore from nickel laterite deposits expects the process to revolutionise the nickel industry.

Direct Nickel, the company responsible for inventing the new processing method, believes it will cut production costs in half. Nickel latertite is used to strengthen metals such as stainless steel.

Due to its lower grade and its distribution across large areas, it is traditionally quite expensive to extract. Almost three-quarters of the world’s nickel deposits are nickel sulphide and up to a third of those are based in Australia.

Conventional extraction uses sulphuric acid in the treatment plant, however Direct Nickel’s technology uses the lower cost and, the company claims, a more environmentally friendly Nitric acid instead.

Technical director Graham Brock says it’s breakthrough technology. He says treatment plants are expected to cost around half that of current HPAL processors and treatment costs would be around $2 to $3 a pound. “[That’s] probably about half or less the capital and about half the operating costs,” he said.

“So we see this very much as breakthrough technology that will in fact change the way nickel laterites are treated.”

NEWS RELEASE: New Polling shows Northern Ontario First Nation residents’ perceptions on energy and mining

October 17, 2014

(October 16, 2014, Toronto, ON) New polling of Northern Ontario First Nation community residents that explores their attitudes towards renewable energy and resource develop was presented today by Oraclepoll Research President Dr. Paul Seccaspina at the Renewables & Mining Summit and Exhibition.

Issues surveyed in Northern Ontario First Nation Residents’ Perceptions on Energy and Mining, included:

• First Nation community residents’ attitude towards new energy generation sources (including renewable, nuclear and natural gas).
• Willingness to pay for new energy generation sources.
• Attitude towards provincial government renewable energy and conservation initiatives.
• Acceptability scenarios involving incentives and energy sources associated with a hypothetical mine development.

The research was conducted between September 26 and October 2, 2014 utilizing live person-to-person telephone calling to a random selected audience of First Nation community residents. Of the 200 respondents, a minimum of eight percent lived in communities not connected to the Ontario electricity grid and rely on diesel generation for electricity. The poll was commissioned by Environmental Communication Options, a firm actively engaged in a range of renewable, resource-focused and First Nation matters.

Is the global commodity supercycle over? – by Niranjan Rajadhyaksha (Live Mint – October 17, 2014)

October 17, 2014

http://www.livemint.com/

It is too early to say whether the current decline in global commodity prices is temporary or structural

The sharp drop in global oil prices to their lowest level in four years has provided unexpected relief to the Indian economy. A barrel of the benchmark Brent crude cost around $114 in the middle of June.

It has slipped below $90 four months later. The impact is already becoming apparent. Petrol prices paid by motorists were cut in September.

One reason the Indian financial markets have held up better in the ongoing emerging markets sell-off is that India is a commodity importer that gains from a decline in prices. There is also greater confidence that the government will keep its fuel subsidy bill within the budgeted limit since global prices are well below the $110 a barrel that had been assumed in July.

And it is interesting that Indian monetary policy authorities are projecting inflation using a baseline assumption that oil will remain below $100 for the rest of the year.

The impact of lower global commodity prices on the Indian economy has been quantified. For example, economists at Nomura Financial Advisory and Securities (India) have estimated the likely impact of the fall in global crude prices on important macroeconomic numbers.

Riddle of inventory levels keeps platinum investors shy – by Clara Denina and Jan Harvey (Reuters India – October 17, 2014)

October 17, 2014

http://in.reuters.com/

LONDON, Oct 17 (Reuters) – Investors are unlikely to rush back into platinum any time soon after a minimal price reaction to its biggest-ever supply shock highlighted a major problem: no-one knows how much metal exists above ground or more importantly who holds it.

Analysts predicted a surging market as a record five-month labour stoppage in top producer South Africa wiped out more than one million ounces of output worth $1.28 billion.

Yet platinum, used mostly in automotive catalytic converters which clean up exhaust emissions, also failed to react to a 2.4 million ounce accumulation of metal into exchange-traded funds since 2010. The metal has lost seven percent this year and now sits close to 2009 levels around $1,200 an ounce.

The riddle about the level of inventories holds the key to the price direction of the metal, which is also used in jewellery. As banks start to get uncomfortable about the pace of platinum’s sell-off, they are closing out long positions and reevaluating the global market balance.

“If you start pitching through the historic data, it begins to look like… the demand supply balances in the 2000s weren’t as tight as the data suggests,” Citigroup strategist David Wilson said.

At last, some CEOs who understand the mining cycle – by Lawrence Williams (Mineweb.com – October 16, 2014)

October 17, 2014

http://www.mineweb.com/

Investing in big new mining projects in a cyclical price downturn is how the world’s mega miners got where they are today.

LONDON (MINEWEB) – Mining companies are beset with major investors who browbeat the CEOs and the boards into making major capital cutbacks when metal prices move against them.

They just don’t seem to understand that the time to build major capital projects – and make what may seem like expensive and counter-intuitive investment decisions and acquisitions – is actually at times when metal prices are low. This will enable them to reap the rewards when the mining cycle picks up again as it inevitably will. That is the way the world’s mega miners built their real wealth.

I am probably being unfair in the title here – there are probably plenty of mining CEOs who understand this but they more often than not don’t have the clout to carry their boards and major institutional investors with them. The latter, in particular, tend to look only at the bottom line and the prevailing stock price with their ultra short-term investment outlook, thereby missing the huge upside potential that lies ahead.

As the Elliott Wave followers will point out, all economies move in quite pronounced cycles – there are boom and bust scenarios which repeat over and over again through time – and the mining cycle is more pronounced than most.

Renewable energy a tough sell for prospective RoF developers – by Henry Lazenby (MiningWeekly.com – October 16, 2014)

October 17, 2014

http://www.miningweekly.com/

RONTO (miningweekly.com) – Among the many challenges facing as many as 20 mining companies holding claims in the Ring of Fire (RoF) mineral region of Northern Ontario, the most significant might be the limited infrastructure.

However, besides having to deal with exploration, project planning, First Nations negotiations and local capacity building, project proponents were under mounting pressure from stricter legislation, environmental lobby groups and locals to include renewable-energy sources in their future project plans.

Ontario government RoF Secretariat senior policy adviser Blaine Bouchard on Thursday told delegates at the Renewables and Mining Summit and Exhibition, in Toronto, that the nine-member group of Matawa group First Nations, who inhabit the province’s Far North, had made it clear in multilateral discussions that current diesel-based electricity generation was prohibitive of economic development and posed serious environmental impacts.

The First Nations living in the remote region were completely dependent on diesel electricity generation for their energy needs, owing to the province’s energy grid only reaching as far north as the Dryden region.

McCain: Why I’ll vote for Resolution Copper – by John McCain (Arizona Republic – October 15, 2014)

October 17, 2014

http://www.azcentral.com/

John McCain is Arizona’s senior senator.

Driving through Superior last week, I saw the boarded-up shops that line its Main Street. I spoke with residents of this small community, many of whom are struggling to find opportunities to better their lives and those of their families.

Just a few decades ago, this area, an hour east of Phoenix, was a busy mining community. But its economy bottomed out after the old Magma Copper Mine closed in 1995. Today, a quarter of its residents live below the poverty line. Their neighbors on the San Carlos Reservation are in worse shape, reportedly suffering from a 70 percent unemployment rate and a rampant drug-abuse problem.

Today, hope is on the horizon for this hard-hit community. Last month, Resolution Copper, a joint project of mining giants Rio Tinto and BHP Billiton, finished sinking a tunnel more than a mile underground, within reach of one of the top five undeveloped copper ore deposits in North America. It was a critically important development for this major job creator in one of Arizona’s most economically depressed rural areas.

The Resolution Copper project has the potential to utterly transform these communities. At full capacity, the mine could create as many as 4,000 jobs and produce roughly 25 percent of our nation’s domestic copper supply. Arizona as a whole will likely benefit from tens of billions of dollars in increased economic activity over the lifespan of the mine.

Panic time: As oil goes, so does Canada’s economy – by David Parkinson (Globe and Mail – October 16, 2014)

October 17, 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.

Feel free to panic about oil.

Okay, on a day when the stock market sell-off teetered on the edge of a soul-crushing rout (before bouncing back to merely awful), this might seem like I’m sounding the alarm bell about the wrong market. But it’s not like we’ve never seen an October stock market slump before. ’Tis the season when money managers, eyeing their Oct. 31 fiscal-year-end positions, get nervous and jerky in the knees.

Yes, the Canadian stock market is down 11 per cent since early September, but let’s try to remember that this was after rising 23 per cent in the 12 months prior. This is normal and manageable. A standard-order correction in stocks, even if it’s a sudden and dramatic one, is not likely to undermine Canada’s economic recovery.

But oil just might.

The undisputed champion of fossil fuels is falling like a skydiver with an anvil parachute; down 15 per cent in a little over two weeks, nearly 25 per cent in the past four months. The statement that makes about the spiralling gloom over the global economy is bad enough in itself.