Republic of Mining

NEWS RELEASE: VALE’S EAST MINES RESCUE TEAM IMPRESSES AT INTERNATIONAL MINE RESCUE COMPETITION IN POLAND

October 3, 2014

Team photo at Opening Ceremonies in Poland: (Vale East Mines 1) L to R back row – Mike Johnson, Dennis Gosselin, Lorne Plouffe, Bruce Hall, Tim Maloney, Aime Gagne. (Vale East Mines 2) L to R front row – Perry Simon, Will Davies, Jean Yves Doiron, JustinWhitmore, Jon Hamilton.

For Immediate Release

SUDBURY, September 30, 2014 – Vale’s East Mines Rescue Team finished with impressive results at the 9th International Mine Rescue Competition in Katowice, Poland. Of 21 competing teams, representing more than 13 countries, the Vale team finished in the top five for the First Aid competition. The top four teams were from Poland, making Vale the best foreign team in this category.

The team finished 12th overall in the Mine Rescue Simulation Exercise, and was the top Canadian team in this competition. The simulation exercise was a coal mine scenario, something very new to a team that typically trains for underground hard rock emergencies.

“We could not be more proud of the team and all of the effort they put into preparing for this competition,” said Kelly Strong, Vice President of Vale’s Ontario & UK Operations.

“Our mine rescue teams have always been among the best in the world, and our team demonstrated that in spades this month in Poland.”

Diamond crunch: Exploration dries up – by Thomas Biesheuvel (Mineweb.com – October 3, 2014)

October 3, 2014

http://www.mineweb.com/

“You need deep pockets to find kimberlites,” one expert notes. Meanwhile money, efforts have dried up.

(BLOOMBERG) – Diamonds are so hard to find that explorers have pretty much given up trying.

More than $7 billion has been plowed into the hunt for the gem since 2000, according to top supplier De Beers, and the results have been meager, with no major finds. That’s led producers including BHP Billiton Ltd. to pack up their maps and drills and head for home. The amount spent looking for diamond- rich kimberlite formations underground has dropped by half since 2007, when exploration investment topped $1 billion.

The dearth of new projects is putting pressure on an industry where supplies of accessible diamonds near the surface are depleted and the cost of going deeper is rising. De Beers opened the Orapa mine in Botswana in 1971 and its Jwaneng project, the world’s largest diamond mine by production value, in 1982. Botswana, the top producer, saw output drop to 22.7 million carats last year from 33.6 million carats in 2007.

“The odds of finding an economic kimberlite are extremely against you,” said Johan Dippenaar, chief executive officer of Petra Diamonds Ltd., which spent just $2.1 million looking for new mines last year and has abandoned prospective projects in Angola and Sierra Leone. “Exploration, for the foreseeable future, will remain something that we will be involved in, but it won’t command very much of our cash flows.”

No rebound in copper till after 2016 – by Rowan Callick (The Australian – October 2, 2014)

October 3, 2014

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

THE falling copper price — which has held its value much better this year than its metal peers, down just 8 per cent so far — will not bounce back any time soon, due to a series of one-off developments in China, which consumes 40 per cent of the world’s production.

That is the verdict of Michael Komesaroff, a leading Australian expert on China’s mining industry — a former Rio Tinto executive in Asia, who then worked for a major Chinese resource corporation — writing in new analysis for China-based GavekalDragonomics.

Over the past 10 years, he says, China’s consumption of refined copper has almost trebled, while consumption in the rest of the world has contracted by 6 per cent.

The metal’s high value to density ratio and the ease with which it can be stored for long periods has resulted in its widespread use as collateral in China, being pledged against relatively low interest hard currency loans.

This practice was driven by the People’s Bank of China raising in 2010 the reserve requirement for the commercial banks, effectively tightening domestic credit.

Mr Komesaroff says: “Speculators, mainly small and medium-sized companies with access to copper, pledged their stocks as collateral against US-denominated letters of credit issued by the domestic banks.

Mining deals are keeping lawyers humming – by Paul Brent (National Post – October 2, 2014)

October 3, 2014

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

With global commodity prices in a downward spin, it’s been a tough time to be in the mining game. The economics of big-budget projects have been thrown into question, forcing industry giants to abandon, downsize or sell prized assets.

A multitude of assets on the block and a lack of financial injections from investors have set the stage for a resurgence of acquisition activity for mining this year, dealmakers say.

“There is only one song playing on the jukebox and that is the M&A song,” said Paul Stein, a partner with Cassels Brock & Blackwell LLP in Toronto. “There is little if any financing and unfortunately there are companies that simply will not survive and we have started to see that as well.”

Mr. Stein cited base metals miner Mercator Minerals, which filed for protection from creditors last month, as an example of a casualty of the commodity price crunch.

Size is providing no immunity. Earlier this month diversified mining heavyweight Anglo American PLC said it would entertain takeover offers if the price was right. It is looking to sell assets, just like competitors BHP Billiton PLC and Rio Tinto PLC. Last April rivals Barrick Gold Corp. and Newmont Mining Corp. did the merger dance before a messy and public breakup.

Rio $5.4 Billion Copper Project Mired as Deadline Missed – by Simon Casey and David Stringer (Bloomberg News – October 3, 2014)

October 3, 2014

http://www.bloomberg.com/

Rio Tinto Group (RIO) and the Mongolian government broke another deadline set by lenders for the $5.4 billion expansion of their Oyu Tolgoi project, raising concerns over the earnings outlook for Rio’s copper business and the strength of the Mongolian economy.

Commitments from project finance lenders expired Sept. 30, Rio’s unit in Canada, Turquoise Hill Resources Ltd. (TRQ), said in a statement yesterday. Oyu Tolgoi’s shareholders haven’t asked for those commitments to be extended, although “engagement” with lenders continues, it said.

“With iron ore in decline, the market is looking for Rio’s other businesses to fill the gap,” said David Radclyffe, a Sydney-based analyst at CLSA Asia-Pacific Markets. “The market is concerned from the point of view that Rio needs to do the expansion to give its copper business relevance.”

Underground development at Oyu Tolgoi, the largest foreign investment in Mongolia, has been held up for more than 18 months on disputes between London-based Rio and the government over taxes due and cost overruns, among other issues. Copper accounted for 11 percent of Rio’s revenue in the 2013 fiscal year, behind iron ore and aluminum.

An Oyu Tolgoi board meeting was scheduled yesterday, according to Mongolia’s mining ministry. Three Mongolian members of the board didn’t respond to phone calls after the meeting. A call and e-mail to the government’s cabinet secretary Saikhanbileg Chimed went unanswered.

Four months on, fallout from Chinese scandal drives up nickel stocks – by Melanie Burton (Reuters U.K. – October 3, 2014)

October 3, 2014

http://uk.reuters.com/

SYDNEY, Oct 3 (Reuters) – A commodity fraud at China’s Qingdao port has hit bank financing of metal deals, sparking a surprise jump in nickel exports and pushing back expectations of a global supply shortage of the metal used mainly in stainless steel.

The Chinese exports have helped global stockpiles hit record highs, confounding expectations of a deficit as soon as next year that drove a spike in nickel prices after Indonesia enforced a ban on ore exports in January.

That was part of Indonesia’s ambition to retain more of its mineral wealth by building a processing industry. Investors bet that Chinese stainless steel mills would run out of feed before Indonesia’s industry reached full swing, putting a rocket under prices.

“The market got quite bullish. The reason they got bullish is still there. But now they are looking at all this metal coming out of financing deals,” said analyst Lachlan Shaw of Commonwealth Bank of Australia in Melbourne.

“It doesn’t change the reasons for the deficit next year -essentially the ferronickel sector in China not being able to access the ore because of Indonesia’s export ban,” he said. China is the world’s biggest consumer of nickel.

Its stainless steel mills relied on Indonesian ore to make nickel pig iron (NPI), a cheaper substitute for refined nickel, and the result of the export ban was a 50 percent jump in nickel prices by May.

Smacked by Ebola, low prices, West Africa iron mining faces reshape – by Silvia Antonioli and Karen Rebelo (Reuters Africa – September 29, 2014)

October 3, 2014

http://af.reuters.com/

LONDON/BANGALORE, Sept 29 (Reuters) – Plunging prices and the spread of Ebola are reshaping the iron ore mining sector in West Africa where some companies risk sinking if they cannot find new partners, lenders or owners.

West African iron ore miners already are in a critical situation due to a 40 percent plummet in prices this year which is making most mines unprofitable and projects hard to finance.

Costs are also rising, partly due to measures to fend off the Ebola epidemic that has so far killed about 3,000 people in the region. The virus is also making it difficult to move workers and goods and threatens to disrupt logistics.

Shares of companies such as Sierra Leone-focused African Minerals and London Mining have plummeted by 89 and 91 percent respectively, versus a 4 percent fall of the UK-listed mining sector this year.

“It’s pretty devastating. The perception of West African mining has completely changed. At the moment we don’t see any upside,” said Ed Bowie, director of Altus Capital, a fund focused on medium and small mining companies. Altus has exited its investments in West Africa iron ore in the last two months due to concerns about Ebola and low prices.

Sudbury bees enhancing biodiversity on [Vale] slag piles – by Carol Mulligan (Sudbury Star – October 3, 2014)

October 3, 2014

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

Vale Ltd. has spent $10 million since 2006, revegetating mountains of ugly black slag, the waste from its Copper Cliff smelting operations, turning them into verdant hills along Big Nickel Road. It’s now up to one of nature’s smallest creatures to keeps those rolling hills green and to help enhance biodiversity.

Vale’s environmental team has started a program using honey bees to pollinate wildflowers planted as part of the company’s slag revegetation efforts. About 350,000 of the insects are living in seven hives contained inside a repurposed surplus trailer to protect them from the winter elements and from predators such as bears.

During three seasons, the honey bees leave the hives to forage on nectar and pollen, helping to keep the flowers planted on the hillsides thriving.

Glen Watson, Vale’s superintendent of decommissioning and reclamation, said the idea to use bees to continue the work started by people came to his team when it saw hills of slag blooming with wildflowers planted from seed.

It didn’t happen overnight. Revegetating the slag piles first involved breaking up hardened material that was molten when poured.

Supply a critical issue for suitors of Nickel West – by Tess Ingram (sydney Morning Herald – October 3, 2014)

October 2, 2014

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

Possible buyers for BHP Billiton’s Nickel West business are scrutinising the sector’s junior miners as they weigh up the potential for long-term supply for one of its key assets, the Kalgoorlie smelter.

The sale of the Nickel West business has been under way for some months and industry sources suggest interested buyers have been narrowed down to resources giants Glencore and Jinchuan Group.

Any buyer of the West Australian assets would have to work with local nickel producers to secure supply for the smelter, which has run about 10 per cent under capacity and at a high cost for BHP, with industry suggesting that either a secure offtake agreement or an acquisition of a local player is highly likely.

Fingers appear to be pointing towards both Western Areas and Sirius Resources due to the quality of their nickel concentrate and their relative freedom to sign a deal.

Western Areas managing director Dan Lougher confirmed that the company had been in talks with prospective buyers, including Glencore and Jinchuan, but had not yet been approached in regards to an acquisition.

Canadian coal mine Grande Cache sold for US$2 amid plunging bulk commodities demand – by Peter Koven (National Post – October 2, 2014)

October 2, 2014

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

The value destruction in the bulk commodities business has been astounding in the last few years and no one knows it better than Asian commodity traders Marubeni Corp. and Winsway Enterprises Holdings Ltd.

Back in 2011, they teamed up to buy Canadian miner Grande Cache Coal Corp. for $1-billion. Grande Cache was the only pure-play coal producer left in Western Canada, and the buyers saw an opportunity to secure a big source of supply in a mining-friendly country.

It turns out not to have been such a wise decision. Marubeni and Winsway are now planning to sell their Grande Cache stakes to an Asian coal firm called Up Energy. Unfortunately for their shareholders, the proposed sale price is a bit less than they paid: US$1. Each.

In a coal market as bad as this one, US$2 may not be such a bargain given the problems the buyer is inheriting.

“When you buy a coal company today, the cash outflows don’t stop when you close the deal,” said George Dethlefsen, chief executive of Corsa Coal Corp. “Even if the buyer is paying a dollar, they may need a good amount of money in reserve to sustain the company over the next 12 to 24 months.”

In depressed platinum market, Amplats struggles to go solo – by Clara Denina and Silvia Antonioli (Reuters U.K. – October 1, 2014)

October 2, 2014

http://uk.reuters.com/

LONDON, Oct 1 (Reuters) – Less than a year after tearing up a $57 million annual supply contract with its main buyer, Anglo American Platinum is struggling to implement a new strategy of selling directly to end-users against a backdrop of weak prices, sources say.

The world’s top platinum producer, known as Amplats , late last year ended a long-standing deal through which it had sold the bulk of its output at a discount to refiner Johnson Matthey, in exchange for marketing.

The idea was to make more money by cutting out the middleman, going direct to traders and carmakers and seizing profit opportunities by financing or lending metal and arbitraging different locations and grades.

To achieve that, the company, which mines platinum in South Africa and Zimbabwe, expanded marketing and sales teams in London and Singapore.

Amplats’ parent company Anglo American, whose portfolio spans iron ore, thermal coal, nickel and copper, is also undergoing a big overhaul as it tries to improve returns after years of underperformance compared with its peers. It has made a series of high-ranking personnel changes within its wider commercial department, hoping to boost the division’s earnings by $400 million by 2016.

Stainless Steel and the Ring of Fire – by Rick Millette (Northern Policy Institute – October 1, 2014)

October 2, 2014

http://northernpolicy.wordpress.com/

It would be hard to find an adult in Northern Ontario who hasn’t heard of the Ring of Fire or doesn’t know what it promises for the North’s future. Most believe that long term prosperity for workers, industry and First Nations people is at their doorstep.

That dream extends beyond the basics. Many northerners suffer a sense of loss with every trainload of raw ore they see heading down the tracks and out of Northern Ontario. There’s a long-held belief that full value is not being retained for those resources.

With the discovery of chromite in the Ring of Fire several years ago, it didn’t take long for the value-added dream to be dreamt again. The North now has all the ingredients in their backyard to make stainless steel, a uniqueness not found anywhere else in the world. How incredulous would it be for Canada to be the only G8 country not to have a stainless steel industry when the chromite, nickel and iron are all in one place?

Although the timeline for the eventual development of the Ring of Fire may be unknown, few would believe that $60-billion of known mineral wealth will stay in the ground for very long.

One way to accelerate that extraction and to start generating wealth on three fronts, would be for our governments to invest in the development of a stainless steel industry.

Arizona judge recommends Curis’ Florence aquifer permit be rescinded – by Henry Lazenby (MiningWeekly.com – October 1, 2014)

October 2, 2014

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

TORONTO (miningweekly.com) – Despite explicitly stating facts to the contrary, Arizona administrative law judge Diane Milhasky on Wednesday recommended that the Arizona Department of Water Quality (ADEQ) rescind a temporary individual aquifer protection permit (APP) granted to Florence Copper, the proponent of the in-situ copper recovery, solvent extraction and electrowinning (SX-EW) Florence copper project.

The judge made a nonbinding recommendation in the appeal of ADEQ’s decision to issue an APP to Florence Copper during July last year, which would be submitted to the Water Quality Appeals Board (WQAB) to make the final determination on the permit.

The town of Florence, legal representatives, Johnson Utilities and Pulte Home Corporation filed an amended notice of appeal with the WQAB to appeal the ADEQ’s issuing of the temporary APP to Florence Copper’s parent, Curis Resources.

In her recommendation, Judge Milhasky noted that Florence Copper’s proposed production test facility (PTF) would not have any impact on the drinking water wells in Florence, nor would it impact the wells owned and operated by Johnson Utilities located north-west of the project.

Judge upholds 20-yr Grand Canyon mining ban – by Dorothy Kosich (Mineweb.com – October 2, 2014)

October 2, 2014

http://www.mineweb.com/

U.S. District Judge David Campbell says no legal authority exists to overturn 1 million-acre land withdrawal near the Grand Canyon.

RENO (MINEWEB) – U.S. District Judge David Campbell has upheld the U.S. Department of Interior’s 20 year-ban on exploration and development of uranium mining claims on 1 million acres near the Grand Canyon National Park.

The withdrawn land includes a north parcel of 550,000 acres, an east parcel of 135,000 acres, and a south parcel of 322,000 acres. Only the mining of a few existing claims will be permitted.

Plaintiffs in the case included the National Mining Association and the Nuclear Energy Institute, the Arizona-Utah Local Economic Coalition, Quaterra Resources, and an individual, Gregory Yount, with interests in uranium mining. Motions for summary judgment were filed by Plaintiffs American Exploration & Mining Association and Yount.

Defendants included the U.S. government, the Center for Biological Diversity, the Grand Canyon Trust, Havasupai Tribe, National Parks Conservation Association and the Sierra Club.

Minister defends record on Ring of Fire – Letter to the Editor (Sudbury Star – October 2, 2014)

October 2, 2014

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

Re: “’Nothing done on Ring” and “Ontarians have had it with Liberal inaction in Ring of Fire: Horwath,” Sudbury Star/Sun News, Sept 29, 2014

It is troubling to hear a leader of a major political party in Ontario speak with such a lack of understanding of the steps required in developing the Ring of Fire. What is specifically troubling, is that (NDP leader Andrea) Horwath does not seem to understand the complexity of this major economic opportunity for our province or respect the important work we have undertaken before ore extraction can actually begin.

Our government is leading the way to drive development in the Ring of Fire. There is no question that over the past year, significant progress has been made. We have provided a $1-billion commitment to develop transportation infrastructure in the region; established a Ring of Fire Infrastructure Development Corporation within 60 days of forming our new government; and reached a historic agreement with the Chiefs of the Matawa Tribal Council that lays the groundwork for future discussions. Our government is proud of the work that we have accomplished so far.

Let me be clear, Ontario Liberals have been — and remain — committed to developing the Ring of Fire and working with First Nation communities as partners, to ensure they have the opportunity to shape and provide input as development moves forward.