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Next Ontario government will only have bad news to deliver as debt pile grows – by Jack M. Mintz (National Post – June 10, 2014)

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

No matter who wins the Ontario election, the newly elected government will be faced with a fiscal hole that gets only wider and deeper. If the province is to gets its fiscal situation under control, either revenues need to increase or spending restrained by billions. There are no quick and easy solutions.

Let me detail Ontario’s house of debt to understand the gravity of the situation. The 2014 Liberal budget projected gross debt is expected to increase from $296-billion in 2013-14 to $311-billion by 2014-15. After subtracting financial assets, net debt will rise from $269-billion in 2013-14 to $289-billion in 2014-15.

Ontario’s net financial liabilities will be $20,500 per person or $82,000 for a family of four. This mortgage is in addition to federal, local and household debt liabilities borne by Ontario residents. It does not include other unfunded liabilities such as health care and elderly benefits that will increase sharply as baby boomers retire.

The $20-billion increase in net debt this coming year is a good measure of the real Ontario deficit. The debt problem is a bigger issue than suggested by a recent “educational” analysis provided in the Globe and Mail, which focused on the $12.5-billion operational deficit of the province, ignoring net liabilities to finance broader government operations, including $10-billion in capital spending.

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UPDATE 1-Iron ore drops; stays below $100/tonne as glut weighs – by Manolo Serapio Jr (Reuters India – June 11, 2014)

http://in.reuters.com/

SINGAPORE, June 11 (Reuters) – Iron ore slipped and stayed close to its weakest level since September 2012 at below $100 a tonne as brisk supply and poor demand from Chinese mills for spot cargoes led to prices being cut by nearly a third this year.

Tighter access to lending in China, the world’s top importer of iron ore, also weighed on the market, traders said, as banks tidy up their financials with the end of the first half of the year approaching.

“Many buyers are not able to open letters of credit at this time and this liquidity issue is partly why we’re not seeing a lot of buying activity in the spot market,” said an iron ore trader in Shanghai.

“It’s not easy to do business right now.” Iron ore with 62 percent iron content for immediate delivery to China .IO62-CNI=SI fell 0.7 percent to $93.60 a tonne on Tuesday, according to data compiler Steel Index.

The steelmaking raw material fell below $100 a tonne on May 19 and has since stayed below that level, touching a bottom of $91.80 on May 30, its lowest in more than 20 months. Iron ore has dropped more than 30 percent this year.

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Hard rock mining: The battles for hearts and minds – Editorial (Thompson Citizen – June 11, 2014)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000.  editor@thompsoncitizen.net

Hard rock miners extracting nickel, gold, copper, zinc, diamonds and other minerals in the Northwest Territories, Nunavut, Northern Ontario or Northern Manitoba, as well as many other places in Canada and around the world, along with those working in milling, smelting and refining, know something about stoicism and steadfastness amidst the battles for hearts and minds.

Jeff Mcinnes puts it his way in his “Thompson Talk” column today in the space adjacent to this at left: “Thompson people are a certain sort of folk. We come from all walks of life here. Some were born here and always knew what this town was to them: a place to live, to work and to raise a family. You worked at the mine, day-in and day-out, trying to make a living to support your family. Early, dark mornings drinking coffee while your truck warmed up under a blanket of snow, trying to wake up for a dozen-hour workday that seemed insurmountable, a mountain of mining to be climbed every day.”

Two historic hard rock mining events back in the news – one connected to Sudbury, the other to Yellowknife – have their own connections to and resonance right here in Thompson.

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CAMESE studies impact of mining supply sector – by Jonathan Migneault (Northern Ontario Business – June 11, 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. 

The Canadian Association of Mining Equipment and Services for Export (CAMESE) has undertaken a study, funded by Ontario’s Ministry of Northern Development and Mines, to determine the province’s mining supply and service sector’s contributions to Canada’s gross domestic product.

“There have been various surveys done, but nothing with this depth of methodology,” said Jon Baird, CAMESE’s managing director.

The association has partnered with PricewaterhouseCoopers to analyze questionnaires 900 supply and service companies in the province have been asked to complete.

To measure the companies’ contribution to national GDP, the questionnaire is meant to determine the companies’ operating and capital expenses. Other surveys have measured revenues and employment numbers, but have never explored expenses and GDP contributions for the sector, he said.

Baird said the economic contributions of the mining supply and service sector have been hidden from view because many of the companies involved, such as the major banks, are involved with industries other than mining.

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Ring of Fire bigger than an election issue: Thomas – by Richard Gilbert (Daily Commercial News – June 11, 2014)

http://dcnonl.com/

A construction leader in northern Ontario says the Ring of Fire is too important to be reduced to a point on a political party’s platform.

“The Ring of Fire is not an election issue, because it is a far bigger endeavour than is warranted by an election platform,” said Rick Thomas, manager of the Sault Ste Marie Construction Association. “Whatever government is in power will generate a lot of money from this project.”

Liberal leader Kathleen Wynne launched her re-election platform on May 25 in Thunder Bay, which includes investing $1 billion for the construction of a road to the Ring of Fire region in northern Ontario.

During an election debate in Thunder Bay on May 25, Ontario NDP Leader Andrea Horwath said her party would also contribute $1 billion for Ring of Fire infrastructure development.

Progressive Conservative Leader Tim Hudak did not participate in the debate, but his party’s platform includes the repeal of the Far North Act, which involves the development of the Ring of Fire.

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San Gold Corp’s new chief Greg Gibson sees smaller mines as key to survival – by Peter Koven (National Post – June 11, 2014)

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

San Gold Corp.’s new chief executive faces a straightforward challenge: mine much less gold, and make it profitable.

Greg Gibson was named CEO of San Gold on Tuesday, a formerly high-flying company that has fallen into a cycle of losses and liquidity problems like many other small gold miners. He said in an interview that his mandate is to shrink output to where it should have been in the first place.

“I see a small producer that always had ambitions to be a big producer. And when you take small mines and try to make big mines out of them, they don’t work,” Mr. Gibson, 52, said.

Winnipeg-based San Gold is one of many small gold miners operating in Canada that emerged last decade, when gold prices were going up every single year. In order to attract investors and capitalize on rising prices, some of these firms set aggressive production targets. San planned to churn out more than 100,000 ounces a year from its Rice Lake mine in Manitoba.

“When you went to see the fund managers, the more ounces you could tell someone you were going to discover, the bigger the cheque you got,” Mr. Gibson said.

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Vancouver company pitches $10B oil sands refinery on the B.C. coast it says would be ‘world’s greenest’ – by Claudia Cattaneo (National Post – June 11, 2014)

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

CALGARY – For a province that likes natural gas a lot more than oil, British Columbia is attracting lots of oil plans to link growing production in Alberta with Asian markets.

The latest one is a $10-billion oil sands refinery on the northern coast headed by a Miami-based telecom executive for Mexico’s Groupo Salinas and using engineers from Italy.

Vancouver-based Pacific Future Energy Corp. said Tuesday the refinery, which could be sited in the Prince Rupert area, would be built in partnership with First Nations and be the world’s greenest by using advanced European refining technology.

It would take bitumen from Canada’s oil sands and process it into gasoline, diesel, kerosene and other products that would be less harmful to the environment if there is an accident. It would also capture and store greenhouse gases.

“This is a plan that absolutely must happen,” said Samer Salameh, chairman of Pacific Future Energy and head of telecommunications businesses for Groupo Salinas, a large conglomerate based in Mexico owned by billionaire Ricardo Salinas with more 100,000 employees and operations in 12 countries.

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 Latest breakdown bodes ill for SA platinum miners – by Lawrence Williams (Mineweb.com – June 10, 2014)

http://www.mineweb.com/

LONDON (MINEWEB) – As we reported here earlier, the latest round of government mediated talks between the Association of Mineworkers and Construction Union (AMCU) and the platinum miners running the mines which account for 30-40% of South Africa’s platinum output, broke down yesterday and the new South African Mines Minister, Ngoako Ramatlhodi, and his team have withdrawn from the negotiations – at least for now. However platinum exports are so key to the South African economy that one suspects further efforts will be forthcoming.

With the South African government mediators ditching recent platinum strike negotiations we look at potential outcome regardless of who wins or loses.

The principal mining companies involved – Anglo American Platinum (JSE:AMS), Impala Platinum (JSE: IMP) and Lonmin (LON:LMI) have thus released a joint statement to the effect that this latest round of negotiations ‘have been dissolved without an outcome’.

AMCU’s President, Jospeh Mathunjwa issued his own statement thus: “AMCU made many concessions. We actually moved twice to make employers move closer to us,” he said, but added that the union did not compromise its demand for a 12,500 rand ($1,200) a month basic wage, which excludes allowances. And it is these allowances, which in percentage terms are quite significant, which are the key here. The mining companies have moved to say they will meet the demands for a R12,500 minimum wage by 2017, but this would include these benefits and the union says this is unacceptable and has clung to its position no matter what. It has not given any significant ground in its demands right from the start.

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Ontario’s lost swagger: It’s now a have-not province with a don’t-want election – by Roy MacGregor (Globe and Mail – June 11, 2014)

A Place To Stand: The 1967 centennial theme for Ontario, Canada. A time when the mining sector was booming, well respected and an integral part of a booming economy, once of the most successful in the world. How did we let it slip away? – Stan Sudol

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.

Something happened to Canada’s largest province well before this June 12th election was even called.

Ontario lost its swagger.

One former provincial cabinet minister likens the mood to what Keith Spicer found more than 20 years ago when his Citizens’ Forum on Canada’s Future took the pulse of the nation and found it very weak indeed.

But this is no case – as was clearly the situation in Ontario back in 1990 – of taking such delight in kicking David Peterson’s Liberals out of office that no one considered that Bob Rae’s NDP government would thereby win a majority by default. Remember Mr. Rae’s line to the CBC when it was apparent he had won? “I’m having difficulty getting used to it.”

So, too, did those who kicked him into office, a sentiment repeated after they voted Mr. Rae out in 1995 and replaced him with the ideologically opposite Mike Harris. That may well explain why there seems such reticence among Ontario voters to act in any direction.

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Editorial: The NDP – for now – by Brian MacLeod (Sudbury Star – June 11, 2014)

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

“The NDP’s intention to force companies to process more minerals in Ontario is dubious, but
it hasn’t really been tried. The party wants to establish a stainless steel industry in the
province, something advocated by mining analyst Stan Sudol. It would be interesting to watch
them try, rather than allowing so much unprocessed material from the Ring of Fire to leave
the country.” Sudbury Star Editor – Brian MacLeod

Northern Ontario has factored large in both the Liberal and NDP campaigns.

Unfortunately, the Progressive Conservatives have ignored the region. Party Leader Tim Hudak never once ventured north, he skipped the leadership debate in Thunder Bay, and has taken no time to explain his party’s policies to northerners. There is a sense that the party’s policy of eliminating 100,000 civil servants jobs will hit some northern ridings hard – especially Sudbury and Nickel Belt’s health and education sectors. And Hudak has not properly explained what the party would do with the $100 million Northern Ontario Heritage Fund.

The Tories say they would finish four-laning Highway 69 – sometime. That doesn’t cut it.

Hudak’s focus on the deficit is commendable, but the speed at which he wants to eliminate it – one year faster than the other two major parties – is bound to have a significant impact on the North. A Hudak government would suppress Northern priorities to debt reduction.

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Over 1 million tonnes of iron ore leaves Port Hedland during single tide – by Vicky Validakis (Australian Mining – June 10, 2014)

 http://www.miningaustralia.com.au/home

Iron ore production is surging in the Pilbara, with Port Hedland recording a new tonnage record for the largest departure of ore on a single tide.

The new benchmark of 1,270,721 tonnes was achieved with seven capesize vessels departing on Saturday. This beat the previous record set in April by almost 160,000 tonnes.

Port Hedland Port Authority also said it was the first time seven capesize vessels have sailed on a single tide. The port, Australia’s biggest for iron ore, increased exports by 3.55 per cent between April and May, setting a monthly record of 36 million tonnes.

The news comes amid figures which show that a ramp up in iron ore production was partly to thank for a 1.1 per cent gain in Australia’s economy in the three months to March. Annual growth was a seasonally adjusted 3.5 per cent, the Australian Bureau of Statistics said.

The mining industry made up 80 per cent of this growth. The nation’s three largest iron ore miners BHP Billiton, Rio Tinto, Fortescue Metals Group have all added extra tonnages to their businesses.

It is this ramp up that is being blamed for an oversupply in seaborne supply, and a 31 per cent fall in the price of the commodity which last traded at $US94 a tonne.

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Outlook for mining is about the future of jobs – by Gavin Keeton (Business Day Live – June 9, 2014)

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

Keeton is with the economics department at Rhodes University.

THE platinum strike is in its fifth month. We learned last week that it has already caused a 0.6% annualised contraction of South Africa’s gross domestic product (GDP) in the first quarter. Mining production shrank a huge 25%. Manufacturing contracted, too, at an annualised 4.4%. Some of this is because manufacturers supplying the platinum mines are also being hurt by the strike. But it also reflects a deeper weakness in the economy as a whole, which was already causing great anxiety.

Since 1994, GDP has fallen in only four quarters. GDP declined for one quarter in 1998 and for three quarters in 2008-09. Both times the causes were external. This time, the contraction is entirely self-inflicted.

The social costs of the strike are huge. Religious leaders speak of hungry adults stealing from children at school feeding projects. HIV-positive mine workers on antiretrovirals have been denied access by strikers to the mine clinics where they receive these life-saving drugs. To survive, most strikers will have borrowed from money lenders at exorbitant interest rates.

Their debt repayments will swallow up any increase they gain in wages as part of a settlement. The indebtedness of the mining companies is also rising as without income, their obligations under existing loans escalate. This will reduce future profitability and so the Treasury will bear some of the long-term costs of the strike through reduced tax revenues.

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UK hits 30-year anniversary of miners’ strike – by Alasdair Soussi (Al Jazeera.com – March 6, 2014)

http://www.aljazeera.com/

The strike led to a humiliating and lasting defeat for the miners and a political triumph for Margaret Thatcher.

Glasgow, United Kingdom – Few confrontations in the history of modern Britain come close to the industrial dispute that gripped England, Scotland and Wales in March 1984. Fracturing communities, pitting workers against the forces of law and order and even causing lives to be lost, the bitter clash became one of the greatest trade union struggles since the British General Strike of 1926.

That struggle was the British miners’ strike and today marks 30 years since the head of Britain’s Coal Board, Ian MacGregor, announced plans to cut production – the equivalent of 20 pits or 20,000 jobs – leading to a year-long walkout that would see British Prime Minister Margaret Thatcher and National Union of Mineworkers (NUM) President Arthur Scargill come to blows and change the face of Great Britain forever.

“It was the longest industrial dispute in Britain in the 20th century and directly involved roughly 120,000-130,000 workers from March 1984 onwards,” Dr Jim Phillips, a senior lecturer of economic and social history at the University of Glasgow, told Al Jazeera.

“It might be seen as pivotal in the sense of Britain’s economic trajectory – moving out of an industrial economy into a more service, finance, and capital-related economy. Some of the 150 or so pits that operated in 1984 were, in narrow economic terms, loss-making and so required some degree of cross subsidy from more financially viable pits to remain in operation… The coal industry was also losing business during the recession of the early 1980s.”

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Meet the Russian CEO on a Mission to Guard Potash Prices – by Yuliya Fedorinova (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

OAO Uralkali Chief Executive Officer Dmitry Osipov favors stable potash prices as he considers how to manage output at the world’s biggest producer of the fertilizer.

That’s a relief for investors and peers after the company’s decision, under his predecessor, to end a venture with Belarus and ramp up production led to a price slump of about 30 percent.

“We are a responsible market player,” Osipov, 48, said in an interview in his Moscow office. “Market share is important for us, but we don’t want prices to fall. It’s too early to say what utilization rate we will have in the second half.”

Osipov, an academic researcher before rampant inflation in 1993 forced him to seek better paid work in industry, replaced Vladislav Baumgertner, 42, after the breakup of the marketing venture landed the then-CEO in a KGB jail in Belarus. While Uralkali has since stuck to a policy of higher output, running at near full capacity from about 70 percent previously, Osipov is keeping his options open for the second half of the year.

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Breakdown in platinum strike talks propels South Africa closer to recession – by Geoffrey York (Globe and Mail – June 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.

JOHANNESBURG — Wage talks have collapsed again in South Africa’s 20-week platinum strike, the latest ripple in a cascade of bad news that has pushed the country closer to recession and threatens to trigger a major restructuring of its platinum industry.

The strike has already inflicted huge damage on South Africa’s economy, the traditional African powerhouse and second biggest on the continent. The economy declined by 0.6 per cent in the first quarter of this year, its first contraction since 2009, and there are growing fears that the decline will continue in the next quarter.

The strike by 70,000 workers, the longest in South African mining history, was a key reason for the shrinking gross domestic product in the first quarter, since mining is still a huge contributor to the economy. Without a resolution to the strike, a recession is nearly inevitable, analysts say.

Equally inevitable are the closing of mine shafts and a shift toward mechanized mining in an industry that produces about 40 per cent of the world’s platinum output.

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