Republic of Mining

Miners Chopping $10 Billion Search Bodes Next Price Boom – by Elisabeth Behrmann and Rebecca Keenan (Bloomberg News – January 17, 2014)

January 17, 2014

http://www.businessweek.com/

Mining companies are extending massive cuts in exploration budgets for a second year, setting up the next price boom as China continues its relentless pursuit of metals and energy.

Exploration spending plunged by 30 percent or $10 billion last year, squeezing budgets to search for minerals and sustain supplies, according to MinEx Consulting Pty, whose clients include BHP Billiton Ltd. (BHP), the world’s biggest miner. Payments may drop another 10 percent this year for geologists, drilling exploratory holes and analyzing mineral specks to unearth the next copper, iron ore or gold El Dorado, MinEx said.

Investors in mining companies and metals may welcome the cuts because they’ll help propel a rebound in prices. Platinum, aluminum, silver, nickel, zinc, lead and uranium all are forecast to rise by 2017, according to the median of analyst estimates compiled Jan. 16 by Bloomberg. The losers will be buyers of cans, cars and all the goods made from metals.

Mining companies are extending massive cuts in exploration budgets for a second year, setting up the next price boom as China continues its relentless pursuit of metals and energy.

COLUMN-China moves to cut coal use look bearish for imports, may not be – by Clyde Russell (Reuters India – January 17, 2014)

January 17, 2014

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Jan 17 (Reuters) – Coal miners in Australia and Indonesia could be forgiven for feeling depressed, given the plethora of news coming out from top buyer China on how it intends to cut demand for the dirty fuel.

In the past few days China’s National Energy Administration has set a target of lowering coal’s share of energy use to below 65 percent in 2014 from last year’s 65.7 percent, three years ahead of initial plans. Beijing’s mayor has urged an “all-out effort” to tackle air pollution, pledging to cut coal use by 2.5 million tonnes a year in his polluted city.

In neighbouring Hebei province, the country’s biggest steel-making region, authorities have said they will block new projects, punish officials in areas of high pollution, and cut steel output and coal use by 15 million tonnes each this year.

This all sounds bearish for coal, and the gloom of miners that export to China could be deepened by signs that domestic supply in the biggest producer and user of the fuel is rising.

Canadian nickel producers hope to benefit from Indonesia’s export ban – by Rachelle Younglai (Globe and Mail – January 17, 2014)

January 17, 2014January 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.

Indonesia’s ban on raw mineral exports has the potential to rejuvenate a nickel industry that is suffering from a plunge in metal prices.

The ban, which started on Sunday, has pushed nickel prices up on fears that there will be a shortage of the silvery white metal used to make stainless steel. That would help Canadian producers Sherritt International Corp., Lundin Mining Corp. and First Quantum Minerals Ltd.

Toronto-based Sherritt, which runs the Moa nickel mine in Cuba and is developing a giant nickel mine in Madagascar, could see benefits immediately. “Any improvement in the nickel prices will go straight to our revenue,” said Sherritt’s chief executive officer David Pathe.

Shares of Sherritt and other producers gained about 5 per cent on Thursday. Shares of tiny Canadian nickel companies First Nickel Inc. and Royal Nickel Corp. also made gains.

Although nickel is trading at two-month highs of $6.50 (U.S.) a pound, the metal is down 70 per cent from its record high of $24 reached in 2007 when supplies were scarce.

Only Arctic nations should shape the North, Harper tells The Globe – by Steven Chase (Globe and Mail – January 17, 2014)

January 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.

OTTAWA — This is a prelude to The North, a Globe investigation launching this weekend that investigates the unprecedented change to the climate, culture and politics of Canada’s last frontier. Join the conversation at #GlobeNorth.

Stephen Harper says the Arctic should be the domain of countries with territory there and he would oppose efforts to grant influence to outsiders in a region attracting growing global attention amid climate change and the hunt for resource riches.

Canada is the current chair of the Arctic Council, an international forum for co-operation in the region that has taken on a fresh importance as countries jockey for position and economic opportunities in the North on everything from offshore petroleum deposits to faster shipping routes.

Mr. Harper said he has had misgivings about the rush of countries and other players to join the club as observers.

Is Goldcorp’s Osisko bid just the start of a gold M&A rush? – by Lawrence Williams (Mineweb.com – January 17, 2014)

January 17, 2014

http://www.mineweb.com/

While not the first recent takeover bid in the gold space, Goldcorp’s offer for Osisko suggests that the bigger players may now feel the decline in the gold price is near its end and could prompt others to follow.

LONDON (MINEWEB) – There has been considerable speculation as the gold price has fallen and previously profitable gold miners struggled to keep their heads above water that the predators with strong balance sheets are poised to strike and attempt to swallow up smaller – or just less well cashed up – miners in the gold space.

Goldcorp’s hostile bid for Osisko – the one time darling of the Canadian exploration and development sector, but now a mid-tier gold miner in its own right – could thus just be the start of a flood of M&A moves as the gold price looks to be nearing its bottom and gold stock valuations are seen as being close to their likely lows.

While there have already been other M&A moves in the space over the past year although mostly at a much lower level – Hecla’s ‘white knight’ acquisition of Aurizon, Centamin’s Ampella transaction and Asanko’s PMI takeover all immediately spring to mind. But none of these have had the impact of the Goldcorp bid given the sizes of the two companies involved.

US EPA publishes ‘final chapter in very sad story’ – Northern Dynasty – by Henry Lazenby (MiningWeekly.com – January 16, 2014)

January 17, 2014

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

TORONTO (miningweekly.com) – The proponent of one of the largest undeveloped minerals resources left in the world, on Thursday said the US Environmental Protection Agency’s (EPA’s) final version of its Bristol Bay Watershed Assessment (BBWA) was “really the final chapter in a very sad story”.

TSX-listed Northern Dynasty Minerals, which has high hopes for developing the Pebble copper/gold/molybdenum project, in Alaska, said that while it acknowledged the EPA’s final published version of the BBWA, it believed that the EPA set out to do a flawed analysis of the project.

“Publication of the final watershed assessment is really the final chapter in a very sad story,” Northern Dynasty president and CEO Ron Thiessen said.

The company said that the EPA released drafts of the watershed assessment in May 2012, and April 2013, to widespread criticism about the report’s flawed methodology and findings, including from the state of Alaska, Alaska Native groups and expert peer reviewers commissioned by the federal agency.

Neil Young’s oil sands rants get dose of reality from Western Canada – by Claudia Cattaneo (National Post – January 17, 2014)

January 17, 2014

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

The more Neil Young moves out West with his rants against the oil industry, the more he comes face to face with reality, and it’s not a pretty encounter.

The rock star may get away with comparing Fort McMurray to Hiroshima in places like Washington, far removed from oil operations. But in Saskatchewan and Alberta, where oil fields are part of the landscape and thousands of aboriginal peoples work and profit from the oil industry, his views are so out of touch they’re embarrassing.

Indeed, if Mr. Young’s intention was to raise awareness with his Honour the Treaties tour that there is opposition by some aboriginal groups to growing oil sands development, what he’s getting is a frosty snub. On the heels of Saskatchewan Premier Brad Wall calling the singer’s Hiroshima comparison “insensitive and ignorant of the facts,” the Calgary-based oil industry fired some low blows of its own Thursday.

“Every Canadian has the right to an opinion, and in the case of Mr. Young’s opinions on the oil sands, I would suggest that he has a democratic right to be wrong,” Dave Collyer, president of the Canadian Association of Petroleum Producers, said in a press conference in Calgary Thursday, displaying a new directness in addressing criticism unsupported by facts.

Cenovus CEO Brian Ferguson’s battle with rock stars and price differentials – by Yadullah Hussain (National Post – January 17, 2014)

January 17, 2014

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

Brian Ferguson is fed up with critics of the oil sands. Like his peers, the 56-year-old chief executive officer of Cenovus Energy Inc. has generally kept a relatively low profile over the years, more comfortable discussing technological innovations in the oil sands rather than taking on music and film celebrities with far greater name-recognition.

But the industry’s low-key strategy has emboldened opponents to paint the oil sands in the worst possible light, leaving oil executives to seethe privately at the insults, but maintain a congenial dialogue with their worst critics, at least in public. Mr. Ferguson says his company is looking to reach out to a broader audience to counter popular but false perceptions about the oil sands.

“I think there is a desire to better understand what is really happening,” told the Financial Post. “There are lot of sensational comments that are made which are not based in fact, and are factually incorrect.”

Mr. Ferguson admits that the industry could have done a better job of defending the oil sands in the past five years, but that might change. Mr. Ferguson has been at the helm of Cenovus since it was spun off from Encana Corp. in 2009.

Ring of Fire negotiations making good headway – by Laurel J. Campbell (North Bay Nipissing News – January 16, 2014)

January 17, 2014

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

NORTH BAY – Former Liberal leader Bob Rae says the Ring of Fire has high quality natural resources and shows great potential “but it’s how we take advantage of this potential that counts.”

Rae was in the city on Jan. 9 as the keynote speaker for the Northern Gateway Branch of the Canadian Institute of Mining’s annual meeting and luncheon held at the Davedi Club.

Rae is currently negotiating with the Province of Ontario for First Nations communities that will be impacted by the Ring of Fire development project, a contract he started last summer.

As such he represents nine different communities and says they have concluded discussions about the regional framework around the proposed Ring of Fire. “I can’t be more specific than that, but we are making really good progress.”

He told the mining company representatives at the meeting that First Nations communities, and others in the Ring of Fire area “should be able to benefit economically through resource revenue sharing.

De Beers starts environmental studies at Attawapiskat mine – (CBC News Sudbury – January 16, 2014)

January 17, 2014

http://www.cbc.ca/sudbury/

De Beers is moving ahead with environmental studies on expanding its diamond mine in Attawapiskat.

Company spokesman Tom Ormsby said this is still early days, but he said there have been preliminary discussions with the Cree community about what this project, called the “Tango” extension would mean.

“We’re committed to staying the course here with the community and hopefully extending this mine.” Ormsby said De Beers and Attawapiskat appear to have moved past tensions related to roadblocks of the existing Victor mine from last winter.

He says if the diamond mining company goes ahead with this new project, there could be a re-negotiating of the impact benefit agreement with the James Bay first nation.

“We’re not there yet. We hope to make this go, but there’s still some hurdles we need to accomplish to get various approvals and the final data to say ‘Yes, this is going to be economic’,” Ormsby said.

If all goes well, he said, mining at the Tango site near Attawapiskat would begin in 2018.

Rio Tinto Slashes Costs as Iron-Ore, Coal Output Hit Records – by David Stringer and Jesse Riseborough (Bloomberg News – January 16, 2014)

January 16, 2014

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second-largest mining company, beat its 2013 cost-cutting targets as fourth-quarter iron ore production advanced to a record on increased Chinese demand.

Output climbed 7 percent to 55.5 million metric tons last quarter from 52 million tons a year earlier, London-based Rio said today in a statement, in-line with the 55.7 million-ton median estimate of five analysts surveyed by Bloomberg.

Rio cut cash costs by more than $2 billion and halved exploration spending across its suite of commodities to $948 million last year, beating the targets set by Chief Executive Officer Sam Walsh after he replaced Tom Albanese in February following failed aluminum and coal deals. The cuts came even as production of iron ore, thermal coal and bauxite rose to records, Walsh said.

“What Rio is trying to articulate is that it’s delivering on its promises, it has a very solid business and it’s leveraged to the iron ore price,” said Peter Esho, chief market analyst at Invast Financial Services Pty. in Sydney.

Mining industry endorses ‘game-changer’ transparency rules – by Shawn McCarthy (Globe and Mail – January 16, 2014)

January 16, 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.

OTTAWA — Canada’s mining industry has endorsed a plan that would require mandatory reporting to provincial securities commissions of all project-related payments they make to governments, a move that global transparency groups are hailing as groundbreaking.

In a final report to be issued Thursday, the country’s two largest mining organizations joined with transparency advocates to urge governments to move quickly to implement the plan, which they said would allow citizens in mineral-rich countries to hold governments to account for the resource revenues they collect. The Mining Association of Canada and the Prospectors and Developers Association of Canada have launched a lobbying effort to persuade the Ontario Securities Commission and other provincial bodies to adopt the new rules.

Prime Minister Stephen Harper endorsed the idea of mandatory reporting for all resource companies at last year’s Group of Eight summit, and Natural Resources Canada is now consulting with provinces and industry on how to implement the policy for both mining and oil companies.

Detroit auto show: Ford unveils mostly aluminum F-150 (Associated Press/CBC News Business – January 13, 2014)

January 16, 2014

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

Some call it a game-changer. Some just shake their heads. Either way, Ford’s new aluminum-clad F-150 is such a radical departure from past pickup trucks that it dominated talk at the opening of the Detroit auto show.

Ford Motor Co. unveiled the 2015 F-150, whose body is 97 per cent aluminum, on Monday. The lighter material shaves as much as 300 kilograms off the 2,200-kilogram truck, a revolutionary change for a vehicle known for its heft and an industry still reliant on steel. No other vehicle on the market contains this much aluminum.

“It’s a landmark moment for the full-size pickup truck,” said Jack Nerad, editorial director for Kelley Blue Book. The change is Ford’s response to small-business owners’ desire for a more fuel-efficient and nimble truck.

“You’re either moving ahead and you’re improving and you’re making it more valuable and more useful to the customer or you’re not,” Chief Executive Alan Mulally told The Associated Press in a recent interview.

Is Silver Going Lower? – by Ryan Jordan (Silver News Blog.com – January 12, 2014)

January 16, 2014

http://silvernewsblog.com/

In both gold and silver, the New Year brings technical readings as oversold as those seen in the 1980-1982 bear market. Some technicians claim that they have never seen such oversold conditions in the mining equities- a pretty strong statement when you think about past bear markets in the mining stocks. In the gold market, ETF holdings, by some measures, are as low as early 2008—before the financial crisis.

Speculative positions on electronic futures platforms are also at lows not seen in over eight years. From the perspective of Wall Street, hedge funds, and other western commercial banks, it really looks as though the 2008 crisis is a distant memory. We can all just go back to making fortunes in the conventional stock markets and forget about the need for those barbarous, inconvenient, bulky hedges like gold and silver.

Yes, complacency reigns, as more and more people focus on the recovery (at least according to official data) here at home in the United States. This complacency has likewise triggered a parabolic move in the conventional stock market—although I admit that parabolic moves can last longer than anyone thinks possible. Yes, there is a longer term question as to whether or not we are seeing a secular bear market in gold and silver, coupled with a secular bull market in equities (think 1980s and 1990s). Still, the conventional stock market is seeing overbought technical readings consistent with prior market peaks (whether or not the longer term picture remains positive for equities.)

Quebec’s Osisko comes out fighting against Goldcorp bid (CBC News Business – January 15, 2014)

January 16, 2014

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

Calls $2.6B offer for gold miner too low and opportunistic

Osisko Mining Corp. is calling a hostile takeover bid for the company by Goldcorp Inc. “very low” and opportunistic. Company CEO Sean Roosen said Wednesday the Osisko board is continually seeks value for its shareholders.

“We’re shareholders of the company ourselves. We’re focused on shareholder value 365 days a year and seven days a week. We look at our valuations on a constant basis and so does our board,” Roosen said in an interview with CBC’s The Lang & O’Leary Exchange.

“Osisko’s board of directors noted that the 15 per cent premium to Osisko’s unaffected share price implied by Goldcorp’s offer is very low and the price opportunistic in light of Osisko’s proven high quality asset base,” the company said in a statement.

Osisko urged shareholders to hold off from accepting the $2.6-billion bid until the board, which has formed a special committee including five independent members to review the offer, makes a recommendation on the proposal.