Republic of Mining

Kathleen Wynne’s reality: Ontario’s massive debt cannot be ignored – by Theresa Tedesco (National Post – June 13, 2014)

June 13, 2014

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

Now that voters have returned Kathleen Wynne to power, the premier will need to find a way to manage a debt load that is larger than California’s while continuing to keep the credit rating agencies mollified long enough to avoid a dreaded downgrade.

With a net debt of $267.5-billion that is growing at a faster rate than the economy, the challenge is just beginning for the party that emerged victorious from the provincial election. “They are still going to be facing pressures from the credit agencies to get the province’s fiscal finances in order,” said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. “There’s no way to avoid it. The reality is there and it can’t be wished away.”

Put simply, Ontario is increasingly dependent on tapping lines of credit because it spends more than it collects. Currently, the province pays $11-billion annually in interest payments to finance its debt — money that is not going toward paving roads, building public transit, hiring more teachers and shortening wait times in hospitals.

During the 40-day election campaign, which focused predominantly on the economy, the three main parties offered a stark choice: Conservative leader Tim Hudak vowed to cut 100,000 public-sector jobs over four years and lower corporate taxes to kick-start the creation of one million jobs in eight years while balancing the budget in two.

NEWS RELEASE: Commodity expert sees Ontario minerals ascending

June 13, 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.

Commodity expert Patricia Mohr told miners that global economic forces indicate improvement in markets for Ontario minerals. Ms Mohr, Scotiabank Vice President of Economics and Commodity Market Specialist, was the featured speaker at an OMA board of directors meeting held earlier this month. Her address was titled “Price Outlook for Base and Precious Metals 2014 – 2015.”

“Prices for base metals appear to be bottoming,” said Ms Mohr. “There are reasonable hopes for a rebound in the next two years.” Ms Mohr developed the Scotiabank Commodity Price Index, which was the first yardstick designed to measure price trends for Canadian commodities in export markets. It was introduced in 1987. The index is weighted approximately 40% for oil and gas, 30% for minerals, 15% for forest products and 15% for agriculture products.

“We think the U.S. economy is on the cusp of a stronger recovery based on the most recent job number reports, lower consumer debt and improving mortgage affordability,” she added. “However, China still gets the gold medal among countries for economic growth.”

Although China’s growth rate is slowing a bit from the hectic pace of 7.7% in 2013 and 2012, it is still predicted to be more than 7% in 2014 and throughout the balance of the decade. China is consuming key metals at four times the pace of the U.S.

Amcu leadership, mines agree on a wage deal [South Africa platinum strike] – by Carol Paton and Paul Vecchiatto (Business Day – June 12, 2014)

June 12, 2014

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

THE five-month platinum strike could end on Friday if workers accept a new offer which would see basic pay increase by R1,000 a month for the lowest paid.

The strongest sign of a deal is that this is the first time in two months that leaders of the Association of Mineworkers and Construction Union (Amcu) have taken an offer to workers for consideration.

A previous offer of an R800 a month increase was rejected by leaders who chose not to take it back to workers.

Lonmin, Anglo Platinum and Impala Platinum announced that “in principle” undertakings were reached with the leadership of the Amcu in respect of wages and conditions of employment. Amcu would be discussing these with its members to seek a mandate to accept the offers which, if given, would bring to an end the 21-week long strike.

The potential agreement sought to create “a sustainable future for the three platinum companies for the benefit of all stakeholders and to afford employees the best possible increase under the current financial circumstances”.

Amcu president Joseph Mathunjwa and treasurer Jimmy Gama began reporting back at mass meetings at noon on Thursday. Workers who took to the podium both criticised and supported the offer.

Aroland First Nation rejects proposed open pit mine near Geraldton, Ontario – by Rick Garrick (Wawatay News – June 12, 2014)

June 12, 2014

http://wawataynews.ca/

Aroland has rejected the open pit mine proposed by Premier Gold Mines Limited near Geraldton over environmental concerns, including destruction of a 16-acre lake.

“My First Nation is generally supportive of sustainable mining development,” said Aroland Chief Sonny Gagnon. “Premier Gold wants to destroy Begooch Zaagaigan, a lake that supports our Aboriginal fishery. They just put a number on this lake – A-322 – and tell us they’re going to fill it in with mine waste. This is one of the worst project proposals I’ve ever seen. They’re going to seriously impact our lands and resources. Such a large and destructive project should receive the maximum examination possible – but instead, very little is being done under provincial or federal environment assessment laws. And virtually nothing has been done to consult with and accommodate the many serious concerns of Aroland First Nation.”

Aroland called on the federal government to hold a Panel Study Environmental Assessment on the project and the provincial government to hold a full Individual Environmental Assessment.

“It is shocking to me how much damage Premier Gold intends to cause and what it seems to want to get away with by avoiding scrutiny from environmental laws and Aboriginal consultation,” Gagnon said. “It is unclear whether Ontario will require more. We urge the Ontario government to use its laws to protect the environment, the water and our rights.”

Vale, stewardship partnership supporting stream rehab – by Lindsay Kelly (Northern Ontario Business – June 11, 2014)

June 12, 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.

It’s been 15 years since a small group of volunteers decided to take on the rehabilitation of Sudbury’s Junction Creek. What started as a grassroots effort has resulted in a unique partnership with one of the world’s biggest mining companies.

Vale has been one of the Junction Creek Stewardship Committee’s most reliable and consistent industry partners since its inception in 1999, said Sarah Woods, the committee’s research manager and coordinator. The company has contributed both with financing and labour to rehabilitation efforts.

“We’ve had a (Vale) member on our board for a very long time, so they’ve been helpful not only with the financial and logistical components, but also as a source of information and expertise for the committee, which has been incredibly valuable,” Woods said.

Vale conducts the analysis of monthly water samples taken by the committee, while employees take part in annual creek cleanups.

Though much of what the committee does is hard to measure, fish studies conducted with the Co-operative Freshwater Ecology Unit in 2004 and 2008 show improved fish communities, which results from better water quality, Woods said.

India spy agency says Greenpeace endangers economic security – by Sanjeev Miglani (Reuters India – June 12, 2014)

June 12, 2014

http://in.reuters.com/

NEW DELHI – (Reuters) – India’s domestic spy service has accused Greenpeace and other lobby groups of hurting economic progress by campaigning against power projects, mining and genetically modified food, the most serious charge yet against foreign-funded organizations.

The leak of the Intelligence Bureau’s report comes as Prime Minister Narendra Modi’s new administration seeks way to restore economic growth that has fallen to below 5 percent, choking off investment and jobs for millions of youth entering the workforce.

Greenpeace denied it was trying to block economic expansion, saying the allegations were an attempt to silence dissent and that it stood for sustainable growth.

The government report is likely to intensify the debate over whether Asia’s third largest economy will pursue the path of fast growth under the Modi administration or try a more balanced strategy that the previous government sought.

It has also turned the spotlight on the role of foreign funded organizations, some of whom said they feared a crackdown by the new regime, seen as more friendly to business.

“A significant number of Indian NGOs funded by donors based in US, UK, Germany and Netherlands have been noticed to be using people-centric issues to create an environment, which lends itself to stalling development projects,” the Intelligence Bureau said.

Despite conflict minerals regulation success, gold smuggling rages on – by Dorothy Kosich (Mineweb.com – June 12, 2014)

June 12, 2014

http://www.mineweb.com/

Urgent reforms are needed for conflict gold, says a new study by a Washington D.C.-based human rights group.

RENO (MINEWEB) – A new report by the Enough Project, a Washington D.C.-based human rights group, says the Dodd-Frank conflict minerals legislation is partly responsible for forcing armed groups to cede control of two-thirds of tantalum, tin and tungsten mines surveyed by the Enough Project in the eastern Congo.

“However, artisanally mined gold continues to fund armed commanders,” said the report, The Impact of Dodd-Frank and Conflict Minerals Reforms on Eastern Congo’s Conflict. Gold mining “is still financing armed actors and business and political elites”.

“The U.N. Group of Experts estimated that 98% of artisanal gold (roughly 10-12 tonnes, worth between $380 and 500 million) was smuggled out of Congo in 2013,” said the report. “The army continues to be involved in illicit gold exploitation, with senior officers reaping the majority of profits.”

“The smuggling of gold is also fueled by the sector’s mismanagement and poor enforcement of the Congolese mining legislation. The gold trade must be thoroughly reformed, both through expanded, responsible development and formalization of the artisanal sector,” said Enough Project.

Government may delay decision on Enbridge Northern Gateway: Rickford – by Jenny Uechi (Vancouver Observer – June 11, 2014)

June 12, 2014

http://www.vancouverobserver.com/

The federal government may delay a decision on the controversial Enbridge Northern Gateway, Natural Resources Minister Greg Rickford said at an energy conference in New York. He said the Joint Review Panel’s report from December, which recommended approval with over 200 conditions, is still being considered.

“Obviously, this is an extensive report with 209 conditions, and the government obviously has the clear option of taking that on its face, or other options that would or could include delays,” Rickford said to reporters at the event, according to the Financial Post.

He added that the government was making “careful considerations” now and would respond to the report in the “not-too-distant future.” The government has until June 17 to announce a decision on the project.

The 1,177-kilometre pipeline would bring oil sands bitumen from Alberta to Kitimat, BC, for shipment to Asian and U.S. markets. It has been fiercely opposed by Northern BC residents and a coalition of over 130 First Nations.

“The fact that the Harper government is even considering a delay speaks volumes to how unpopular this project is,” said ForestEthics campaign director Ben West.

Peru Blows Up Gold Mine Machines in Bid to Legalize Activity – by John Quigley (Bloomberg News – June 12, 2014)

June 12, 2014

http://www.bloomberg.com/

Crisologo Quispe says he halted operations at his gold mine in the Peruvian jungle in April after police used dynamite to blow up $350,000 loaders at a nearby site.

Quispe fired 17 workers and moved machinery elsewhere on concern his concession in 428 hectares (1,057 acres) of jungle bordering the Madre de Dios region of southeast Peru will become embroiled in a government campaign against illegal mining.

“I’m not operating for safety reasons until things become clearer,” Quispe said last month in an interview in Cuzco, where he’s applying for a mining permit. “I’m not illegal but I’m worried that what’s happening to the illegal ones could happen to me. The raids don’t differentiate.”

Quispe owns one of 58,000 small mine operations that the government says have signed up for a process to operate legally and abide by environmental, labor and tax legislation. The crackdown on another 30,000 has fed a slump in gold exports from Latin America’s largest producer. The government needs to streamline the permit process and stop attacking mines operating in areas where previously it encouraged mining, or it will face social conflict, according to Miguel Santillana, an economist at Lima-based Universidad San Martin de Porres.

The Northern Minnesota [mining] political narrative: Real and Imagined – by Aaron Brown (Minneapolis Star Tribune – June 11, 2014)

June 12, 2014

http://www.startribune.com/

It’s an election year. Not just that, it’s another year fraught with continuing statewide debate over mining and environmental issues in northern Minnesota. This brings with it a combustable mix of political speculation, hammer-fisted rhetoric and economic obfuscation in a region populated by trees, deer and people (in that order).

I might not be the only political speculator in this state, but I might be the only one who can see two mines, a lake, a dirt road and the outskirts of a national forest from my roof. So off we go.

In the interest of shaking up the conversation, I’m presenting a contrast today: the real Northern Minnesota as contrasted with the imagined one often found in political speeches and media accounts. It’s not just a Cities vs. Up North thing: perceptions can be just as cloudy “up here” as they are “down there.” As we all should know by now, perception is not always reality.

The Imagined

Northern Minnesota is deeply split over copper and nickel mining, with the Iron Range being for it and Duluth against it. The DFL is split over the issue because of its environmental base, so Republicans’ full-throated support of mining threatens to shift this former DFL stronghold to the Republicans this year. After all, that’s what happened in 2010.

World’s largest asset manager rails against companies’ short-term thinking – by Boyd Erman (Globe and Mail – May 24, 2014)

June 12, 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.

Larry Fink is in an odd spot. He runs BlackRock Inc., the world’s biggest money manager. His New York-based company oversees assets greater than 20 times those of the mammoth Canada Pension Plan Investment Board. He should have more influence than just about anybody over how companies behave.

Yet he lacks the big stick that other fund managers have when they talk to chief executive officers. He can’t threaten to sell shares of a company when he doesn’t like its strategy.

Most of the more than $4-trillion (U.S.) that BlackRock oversees on behalf of clients is in index funds that passively track market benchmarks. Because it can’t sell individual stocks in index funds, BlackRock is, by necessity, in it for the long haul.

So instead of threatening, Mr. Fink cajoles. He writes letters. Very, very well-read letters. His latest went to the heads of all the biggest companies in the United States and Europe, hundreds of them, urging CEOs to think long term.

“As the largest index player in the world, we have to own companies, even if we hate ‘em,” Mr. Fink said in an interview on a recent visit to Toronto.

Corruption in Canadian organisations ‘disturbingly high’ – EY survey – by Henry Lazenby (MiningWeekly.com – June 11, 2014)

June 12, 2014

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

TORONTO (miningweekly.com) – One in five Canadian executives believe that bribery and corrupt practices take place widely in the country, advisory firm EY’s latest Global Fraud Survey has found.

“That’s disturbingly high,” EY partner and Canadian fraud investigation and dispute services leader Mike Savage said.

He noted that corruption interfered with fair competition for business and, to overcome that, companies needed to create a culture where ethical behaviour was at the core of their operations – not just at home in Canada, but also at their overseas operations.

“They also need to encourage people to speak up if they think something isn’t right,” Savage said. The survey found that while 74% of Canadian organisations had whistleblowing hotlines in place, this number was still much lower than countries such as the US (96%) and the UK (82%).

The head of corruption risk management at Canadian risk mitigation firm CKR Global Margaret Wilkinson recently told Mining Weekly Online that the resource extraction industry as a whole was at an extreme risk to bribery and corruption of officials, especially owing to the often isolated and foreign underdeveloped locations of the companies’ projects.

Solomon Islands nickel ore legal fight nears decision – by James Regan (Reuters India – June 12, 2014)

June 12, 2014

http://in.reuters.com/

SYDNEY, June 12 (Reuters) – A court ruling in the Solomon Islands may finally unlock a large nickel deposit that geologists have known about for half a century but have been unable to exploit because of ownership changes and legal wrangling.

Japanese giant Sumitomo Metal Mining and tiny Australian explorer Axiom Mining are fighting over the Isabel nickel laterite discovery and will submit final arguments to the Solomon Islands High Court on June 23, following a court case that has already run for 88 days.

A ruling is expected soon after and could lead to development of the deposit, at a time when nickel prices have soared following a ban in January on ore exports by Indonesia, the world’s biggest supplier.

Analysts estimate Isabel compares in size or grade to other large South Pacific nickel mines, such as Vale SA’s Goro mine in New Caledonia and the China-owned Ramu mine in Papua New Guinea.

Axiom, with a market value of just A$55 million ($52 million), would aim initially to ship unprocessed ore within two years to hungry Chinese buyers to make nickel pig iron.

Mackenzie forges BHP Billiton’s path with touch from the past – by James Wilson (Financial Times – June 10, 2014)

June 12, 2014

http://www.ft.com/home/us

For BHP Billiton, less is more. Diamonds from the edge of the Arctic, copper from Arizona’s desert and titanium from dunes by the Indian Ocean: all are assets that the world’s most valuable resources group accumulated and subsequently decided it could perfectly well live without.

To that list of assets, sold by the miner since 2012, can be added facilities from nickel plants in Australia to South African manganese mines. An array of BHP Billiton’s assets are up for potential divestment in what Andrew Mackenzie, chief executive, says is a retreat from complexity.

“The case for continued simplification of our portfolio is compelling,” he told investors last month. This could go beyond piecemeal sell-offs, with the miner looking at “structural options” – an allusion to a possible spin-off of assets into a separate vehicle.

What shape this could take is open to question. But if most assets deemed non-core are included it would in effect leave BHP without most of what it agreed to acquire when, in 2001, it announced its landmark merger with Billiton.
Then, the Billiton assets were “a sensational fit” with BHP, in the words of Paul Anderson, first chief executive of the combined group. Now, with a few exceptions they are fringe businesses.

Palladium futures hit highest level since 2001 amid South African mining strike – by Peter Koven (National Post – June 12, 2014)

June 12, 2014

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

Palladium futures have soared to their highest levels since early 2001. And with no end in sight to a key supply disruption, many experts predict there is still room for prices to run.

Prices for the silvery-white metal have jumped about 20% this year, with the key futures contract hitting a 13-year high on Wednesday of US$864.60 an ounce. The main reason is a strike in South Africa, which began in January and is now the longest mining strike in the country’s history.

Recent talks to end the dispute failed, and it is not clear when they will restart. South Africa accounts for nearly 40% of global palladium production, second only to Russia.

“It’s quite conceivable that palladium could really pop if the mines in South Africa don’t restart soon,” said Patricia Mohr, vice-president and commodity specialist at Scotiabank.

Not surprisingly, uncertainty about Russia is also causing jitters in the palladium market. There are some concerns that sanctions could be placed on Russian companies — including key palladium producer OAO Norilsk Nickel — in response to the seizure of Crimea.