Republic of Mining

Mining’s short-term pain turning to long-term gain – by Henry Lazenby (MiningWeekly – February 26, 2014)

February 27, 2014

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

TORONTO (miningweekly.com) – Despite 2013 being one of the worst years for mergers and acquisitions (M&A) in recent history, mining activity was expected to rise in the coming months with developed economies beginning to stabilise and miners looking to add assets in a strategic manner, professional services firm PwC’s latest ‘Global Mining Deals’ report has found.

With the volume of deals last year falling to its lowest level since 2005, miners were expected to continue to move away from diversification and focus on core assets and commodities.

PwC global mining leader and Canadian mining leader John Gravelle said that many companies interested in buying were looking at similar commodities in familiar regions, where they were already operating.

“Overall, the mining sector has experienced short-term pain for what could be longer-term gain. To once again create shareholder value and extend mine life, miners will need to continue to acquire assets,” he said. The top five deals last year pointed to the changing nature of M&A in the current environment.

UPDATE 2-Vale quarterly loss more than doubles after tax payment – by Jeb Blount (Reuters U.S. – February 27, 2014)

February 27, 2014

http://www.reuters.com/

Feb 26 (Reuters) – Vale SA, the world’s No. 3 mining company by market value, said on Wednesday its net loss more than doubled in the fourth quarter after it took a $6.5 billion charge for an income-tax settlement with the Brazilian government and wrote off part of a failed potash investment.

Vale lost $6.45 billion in the three months ended Dec. 31 compared with a loss of $2.62 billion in the fourth quarter of 2012. The loss was well above the $3.83 billion average loss forecast of seven analysts in a Reuters poll and its worst quarterly since at least 1997 when Brazil’s government sold the company to private investors.

Vale’s full-year profit was $584 million in 2013, the worst annual result in more than a decade.

While the tax settlement resulted in one of the company’s worst ever losses, Vale continues to dispute the payments, which it considers double taxation of its overseas operations. By making the payment in November it was able to cut its potential liability in half. If a protest against the charges prevails in Brazil’s Supreme Court, the company has said it expects a rebate.

National corporatism making a big comeback – Terence Corcoran (National Post – February 27, 2014)

February 27, 2014

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

Quebec’s Michael Sabia joins the global revival of economic ‘dirigisme’ as it spreads from China to France, from corporations to state pension plans

National corporatism, from the outright control exercised by China’s Communist regime to the escalating corporate interventions of lesser states from Quebec to France and India, appears to be gaining more and more support. The interventions take many forms, but all are designed to thwart free markets.

Some are explicit. Last week France’s minister of industry, Arnaud Montebourg, announced plans for a $1-billion state investment in France’s money-losing carmaker, Peugeot Citroen. Then Mr. Montebourg said the government would invest $500-million in a new state-owned global mining company — as if the world had a shortage of global mining companies with long-term views.

Dirigisme is back in fashion, said Mr. Montebourg , citing a concept coined by Jean-Baptiste Colbert, France’s 17th century finance minister under Louis XIV and a major advocate of mercantilism. “Colbertism is coming back,” said Mr. Montebourt, “and this is good.”

Caisse CEO Michael Sabia says short-term focus on corporate investments must change – by Nicolas Van Praet (National Post – February 27, 2014)

February 27, 2014

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

MONTREAL – Canada and other world economies cannot continue to treat companies like commodities that can be bought and sold at a whim, says the head of the country’s second-largest pension fund.

In perhaps his strongest language yet on the subject of modern market capitalism, Michael Sabia, chief executive of the Caisse de dépôt et placement du Québec, said the model has to be changed – away from the short-term focus of money-making and towards a greater focus on long-term investment and company building.

“It’s not logical to determine the future of a company with only a perspective of maximizing its price in the short term,” Mr. Sabia told reporters after the Caisse reported a 13.1% return for 2013 on the back of soaring equity markets. “We cannot continue to treat companies like a commodity that can be bought and sold. We have to differentiate [investment] tourists from citizens.”

For six years after the 2008 financial crisis, a growing concert of key investors has been calling for a shift away from the focus on so-called quarterly capitalism.

Goldcorp prepared to walk away from Osisko bid, CEO says – by Rachelle Younglai and Sophie Cousineau (Globe and Mail – February 26, 2014)

February 26, 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.

Goldcorp Inc.’s chief executive says he is prepared to kill his hostile bid for Canadian rival Osisko Mining Corp. if it becomes too complicated or expensive.

“This is not the only opportunity in the world,” Goldcorp CEO Chuck Jeannes said in an interview Wednesday. “It may be the case that if this becomes too complicated that we go look at something else. That would be a very bad day for Osisko shareholders. They would probably see their stock drop by 20 per cent overnight,” he said.

Mr. Jeannes would not provide detail on his company’s other options. The unsolicited cash and stock bid is currently on hold because Osisko sued Goldcorp for allegedly breaching a confidentiality agreement between the two Canadian miners. A Quebec court will make a decision on the lawsuit next week, which could further delay Goldcorp’s bid.

For more than five years, Mr. Jeannes has tried to acquire Osisko for its massive Canadian Malartic mine in Quebec. The mine would add an additional 10 million ounces of gold reserves to Goldcorp’s portfolio of mines and projects in the Americas and Mexico.

EDITORIAL: Mining bosses find their voice at last (Business Day – February 26, 2014)

February 26, 2014

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

TOP executives at South Africa’s mining companies may at last be “finding their collective backbone” — as an investor once pointedly suggested they do — judging by recent public statements by Sibanye Gold CEO Neal Froneman and Northam Platinum CEO Glyn Lewis.

Mr Lewis got stuck into the government, citing “dysfunctional legislation” and an “overregulated environment”. Mr Froneman raised the possibility of clashes over the Mining Charter ending up in the Constitutional Court.

Such comments stand out because they are so unusual. Over the past five years or so only two mining executives spring to mind as having been prepared to openly challenge government utterances “on the record”. First was former Anglo American CEO Cynthia Carroll, who pulled no punches in her opposition to nationalisation proposals being bandied about.

New Anglo CEO Mark Cutifani followed suit. Addressing a dinner at last year’s mining lekgotla, he commented: “We must remove uncertainty and that means the state must stop threatening ownership.”

The norm for mining executives has been to keep quiet despite repeated provocation from government ministers and bureaucrats — some of it blatantly incorrect.

Cameco Welcomes Nuclear Commitment in Japan Draft Policy – by Liezel Hill and Christopher Donville (Bloomberg News – February 26, 2014)

February 26, 2014

http://www.bloomberg.com/

Cameco Corp. (CCO), Canada’s largest uranium producer, welcomed a commitment by Japan to nuclear power almost three years after the meltdown of three reactors at the Fukushima Dai-Ichi nuclear power plant.

As Prime Minister Shinzo Abe seeks the restart of the nation’s 48 reactors, all of which are idled for safety checks, the government yesterday presented its draft energy policy showing nuclear as an important component in the nation’s future energy mix. Cameco rose the most in more than three years in Toronto and other uranium stocks soared. Paladin Energy Ltd. (PDN) surged 21 percent in Sydney trading today, its biggest one-day gain in more than nine years.

“To put it out now in black and white is very encouraging,” Cameco Chief Executive Officer Tim Gitzel said yesterday in an interview. “The process is unfolding as we thought it would, it’s just taking longer” than expected.

Uranium prices have slumped 47 percent since the March 2011 earthquake and tsunami that crippled Tokyo Electric Power Co.’s nuclear power plant. The disaster led to Japan suspending its fleet of reactors. Some of those plants will come back online this summer, Takayuki Sumita, director-general for oil, gas and mineral resources at Japan’s ministry of economy, trade and industry, told a Singapore conference yesterday.

Gold market breaches ‘covered up’ – by Andy Verity (BBC Newsnight – February 25, 2014)

February 26, 2014

http://www.bbc.com/news/

Dubai’s biggest gold refiner committed serious breaches of the rules designed to stop gold mined in conflict zones from entering the global supply chain, a whistleblower has revealed.

Amjad Rihan led an Ernst & Young team that audited Kaloti and found it was failing to carry out the proper checks. But after he told the Dubai regulator, it changed its audit procedures. He said that allowed details of the most serious findings to be covered up, with Ernst & Young turning a blind eye.

The regulator, Ernst & Young and Kaloti all say they acted properly. Mr Rihan told BBC Newsnight: “The risk of conflict gold entering Dubai and entering the global supply chain is extremely high.”

The audit team, which visited Kaloti last year, alerted the Dubai Multi Commodities Centre (DMCC) and also urged superiors at Ernst & Young to notify other regulators and the gold-buying public.

In May the DMCC’s guidance required the audit team’s initial findings to be made public but by November that requirement had disappeared.

Time to make some big decisions [Ring of Fire] – by Rob Learn (North Bay Nipissing News – February 26, 2014)

February 26, 2014

http://www.northbaynipissing.com/northbaynipissing/

NIPISSING – Minister of Northern Development and Mines Michael Gravelle knows he has work to do.

“We need to make some decisions on infrastructure,” said Gravelle in an interview with the News about the Ring of Fire mining find in the remote James Bay region of Northern Ontario.

Once touted as the biggest mining find of the century in the province, the development has stalled over the past year with drilling activity almost stopping completely and global mining giant Cliffs Natural Resources saying it’s pulling out of the region.

But Gravelle says work is still being done around the Ring of Fire and the most important ingredient is getting it right. “We’re all eager to see the project move forward, but we’re also eager to see that we do it in the right way,” said Gravelle.

At the moment the Ring of Fire project is in the bureaucratic wash cycle simultaneously going through consultations/negotiations with First Nations, and environmental assessment and the number crunching analysis of how to get the ore from a remote challenging terrain to market.

NEWS RELEASE: The comeback kid for 2014: Mining’s short-term pain turning to long-term gain

February 26, 2014

Miners face a slow revival in the coming year – PwC Mining Deals Report

For more information on the 2014 Mining Deals Report, please visit http://www.pwc.com/ca/miningdeals.

TORONTO, February 26, 2014 – Despite 2013 being one of the worst years for M&A in recent history, mining activity is expected to increase in the coming months with developed economies beginning to stabilize and miners looking to add assets in a strategic manner, according to PwC’s latest Global Mining Deals Report.

With volume of deals in 2013 falling to its lowest level since 2005, miners will continue to move away from diversification and focus on core assets and commodities. PwC Global Mining Leader and Canadian Mining Leader, John Gravelle, says, “Many companies looking to buy are eyeing similar commodities in familiar regions where they are already operating. “

Gravelle adds, “Overall, the mining sector has experienced short-term pain for what could be longer-term gain. To once again create shareholder value and extend mine life, miners will need to continue to acquire assets.”

2014 mining expectations

The top five deals last year show the changing nature of M&A in the current environment. According to the Global Mining Deals Report, instead of outright takeovers, companies are buying and selling smaller portions, which is what lead to the drop in overall deal value in 2013. Deal trends to look for in 2014 include:

Prospectors Say Drought Has Created California’s 2nd Gold Rush – by Art Barron (CBS Los Angeles – February 24, 2014) February 24, 2014

February 26, 2014

http://losangeles.cbslocal.com/

LYTLE CREEK (CBSLA.com) — Is 2014 a repeat of the great Gold Rush of 1849?

Prospectors in Southern California are heading to the hills, saying the severe drought has exposed gold that has never been touched by human hands. As water levels continue to drop more nooks and crannies are easier for these gold hunters to access.

“A lot of time you would just see a husband. Now you’re seeing the whole family out,” said Kevin Hoagland, of the Gold Prospectors Association of America.

Prospectors at Lytle Creek, 60 miles from Los Angeles in San Bernardino County, pan for gold, using metal detectors and sluice boxes. CBS2/KCAL9 reporter Art Barron witnessed veteran prospector Jack Barber pull up large pieces of the precious metal.

UPDATE 1-Australia’s Rinehart nears $7.8 bln mine finance deal – sources – by Sharon Klyne, Joyce Lee and Prakash Chakravarti (Reuters India – February 26, 2014)

February 26, 2014

http://in.reuters.com/

Feb 26 (Reuters) – Australian billionaire Gina Rinehart’s Roy Hill iron ore project is close to finalising a $7.8 billion financing deal, sources said, a vital step towards an end-2015 start for the giant mine in Western Australia’s iron-rich Pilbara district.

The 55-million tonnes-a-year project, which would make Roy Hill Australia’s fourth-largest iron ore producer, will add to hefty new supplies coming on line from Rio Tinto, BHP Billiton and Fortescue Metals Group.

It could also add to the wealth of mining magnate Rinehart, already Australia’s richest person with a $17.7 billion fortune, according to Forbes. Roy Hill is likely, however, to be the last new project of this scale to get off the ground, given worries over shaky underlying demand for iron ore in China, the world’s biggest consumer of the steel-making raw material.

Other miners are rethinking expansion and cutting costs as iron ore prices drop. At just below $120 a tonne .IO62-CNI=SI on Wednesday, prices have fallen more than 11 percent so far this year and are down almost 40 percent from a record high of $200 reached in February 2011.

Catholic Church opposition to mining a myth – Cedron – by Dorothy Kosich (Mineweb.com – February 26, 2014)

February 26, 2014

http://www.mineweb.com/

“The industry needs a new and better approach to the Church,” says Professor Mario Cedron, ‘The visit of a delegation of mining executives to the Vatican last September is a start.”

SALT LAKE CITY (MINEWEB) – In a presentation to the Society of Mining, Metallurgy and Exploration Wednesday, Professor Mario Cedron of the Catholic University of Peru said the supposition that the Catholic Church opposes mining is based in myth and has no substance.

Some members of the clergy may express personal positions that are opposed to mining, Cedron advised, but no popes in modern memory have expressed anti-mining sentiments.

In fact, Pope John Paul II, a former coal miner, condemned the Liberation Theology political movement, which interprets the teachings of Jesus Christ in relation to liberation from unjust economic, political or social conditions. Cedron observed, “Many people call it Christianized Marxism.”

Ottawa’s responsible mining review awaited by NGOs – by Trinh Theresa Do (CBC News Politics – February 26, 2014)

February 26, 2014

http://www.cbc.ca/news/politics

Review of Canada’s corporate social responsibility strategy likely won’t recommend mining ombudsman

The federal government’s five-year review of Canada’s corporate social responsibility strategy for the mining, oil and gas industry is expected to be released as early as next week.

But documents obtained by CBC News suggest the long-anticipated report is unlikely to recommend the creation of a legislated ombudsman who would investigate complaints and oversee the activities of the extractive sector.

It’s something non-governmental organizations have been calling for since 2007, without success. The international trade minister’s office would not provide any details as to what the review, which began last September, would entail, saying only that it is “ongoing.”

The government has made it clear, however, it prefers voluntary initiatives over mandatory mechanisms. In a letter contained in documents obtained through an Access to Information request, International Trade Minister Ed Fast responds to a call for an industry ombudsman by emphasizing “the government’s support for voluntary mechanisms for dispute resolution.”

Canadian aid for mining projects concerns NGOs – by Trinh Theresa Do (CBC News Politics – February 26, 2014)

February 26, 2014

http://www.cbc.ca/news/politics

Corporate social responsibility strategy lets trade trump poverty alleviation, critics say

Canadian non-governmental organizations are on their toes as they wait for the five-year federal review of Canada’s corporate social responsibility strategy for the mining, oil and gas industry, set to come as early as next week.

Some NGOs are concerned about the very purpose of the strategy (dubbed Building the Canadian Advantage), which is to help Canadian mining, oil and gas companies improve their competitiveness abroad “by enhancing their ability to manage social and environmental risks.”

One of the government’s key commitments is helping host countries benefit from their natural resources by ensuring long-term development in areas where Canadian companies are operating. That has meant doling out aid dollars through Canada’s development agency, formerly known as CIDA, the Canadian International Development Agency.

But World Vision is apprehensive about that approach, especially in framing the strategy around “Building the Canadian Advantage,” which links foreign aid to benefits for Canadian companies.