Republic of Mining

Canadian miners’ glory days are behind them – by Scott Barlow (Globe and Mail – January 27, 2014)

January 28, 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.

Emerging markets currencies endured an evil beating Friday as global markets adopted a decidedly “risk-off” tone. There were many causes of the sell-off, but weak economic data from China played an important role.

For Canadian investors, the apparent end of emerging markets outperformance has huge implications. Specifically, investors in the domestic mining sector should cherish their memories of the 2009 to 2010 boom, because it’s unlikely things will ever be that good again.

The chart shows how, in hindsight, the Canadian mining sector was easy money in mid 2009. Mining stocks were cheap, which made for a lucrative jump off point. But the big catalyst for the sector was an aggressive monetary policy in China. The Chinese government made a determined, sustained effort to restore economic growth by fully opening the spigots on credit.

It took about 12 months for the Canadian mining sector to feel the positive effects from Chinese policy. Under direct orders from the federal government, Chinese banks beginning in early 2009 started handing out loans to any local businessperson that asked.

Editorial: Shockwaves from Indonesia’s unprocessed minerals export ban – by John Cumming (Northern Miner – January 22, 2014)

January 28, 2014

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists. jcumming@northernminer.com

The crisis for miners in Indonesia that quietly built up over late December has exploded in the new year, as miners active there grapple with sweeping new restrictions on exports of raw concentrates from the country.

Indonesia’s unprocessed minerals export ban was proposed in 2009, but only came into force on Jan. 12. Importantly, not all commodities are treated equally and, thanks to some last-minute manoeuvering, the ban is not structured in the way it was first proposed.

On the part of miners, the broad attitude of denial — that the Indonesian government was playing chicken with concentrate exporters — is now giving way to more sober assessments of how to work under the new rules.

There are already mineral concentrates that have been exempted from the export ban and can still be exported: copper, lead, zinc, iron ore, iron sands and manganese.

Rio Tinto in talks to sell Quebec aluminum plant – by Josephine Mason (Reuters U.S. – January 27, 2014)

January 28, 2014

http://www.reuters.com/

NEW YORK – Jan 27 (Reuters) – A small Canadian aluminum producer is in talks to take over Rio Tinto Alcan’s aluminum casthouse in Shawinigan, Quebec, rescuing the plant from closure at the end of this year, the fund’s project leader told Reuters on Monday.

Sotrem, a company based in Saguenay, Quebec, that makes aluminum foundry alloys and deox, a type of aluminum used to remove oxygen in steel production, is leading the deal to buy the plant, said Yvon D’Anjou, who is in charge of the project.

“We expect to come to a consensus in the next few months,” said D’Anjou. He is familiar with the plant, having worked as head of business development at Alcan until 2008, he said. A spokesman for Rio Tinto confirmed in an email that the company has entered exclusive negotiations for the sale of the casthouse, but did not give any further details.

Under a plan drawn up by Sotrem, the casthouse would produce 35,000-40,000 tonnes per year of small-diameter extrusion billet, a niche product used to make gas cylinders and scuba diving tanks, D’Anjou said.

That capacity could increase to 60,000 tonnes in the next two years if there was demand. The smelter on site, which Alcan shut towards the end of last year, is not included in the deal, he said.

Mine safety review begins Tuesday – by Jonathan Migneault (Sudbury Northern Life – January 27, 2014)

January 28, 2014

http://www.northernlife.ca/

The first meeting of the provincial government’s review of mine safety will take place in Sudbury Tuesday, Jan. 28.

After a campaign from the United Steelworkers and the Mining Inquiry Needs Everyone’s Support (MINES) Committee for a mine safety inquiry, the government agreed to instead begin a tripartite review of the mining industry, chaired by public representatives, union leaders and industry representatives.

The MINES Committee was formed in reaction to the mining deaths of Jordan Fram and Jason Chenier, who were were killed in a run of muck at the 3,000-foot level of Vale’s Stobbie Mine in Sudbury on June 8, 2011.

On Feb. 29, 2012, the United Steelworkers released a comprehensive report with 165 recommendations to ensure other miners would not face the same dangerous conditions that killed Fram and Chenier the year before.

One of the report’s main recommendations was for the Ontario government to initiate a detailed mine safety inquiry. The last inquiry of the sort was conducted in 1981, and the Steelworkers argued changes in technology and mining practices necessitated a fresh look at the industry.

Well-regulated sulfide mining can be done effectively – by Rolf Westgard (Minn Post.com – January 27, 2014)

January 28, 2014

http://www.minnpost.com/

Rolf Westgard is a professional member of the Geological Society of America and is guest faculty on energy subjects for the University of Minnesota’s Lifelong Learning program. His 2013 fall-quarter class was “Minnesota’s Volcanic Geologic History; from Mountain Building to Minerals.”

The dispute over mining Minnesota’s world-class mineral deposits is drawing big crowds to the public hearings on the new Supplemental Draft Environmental Impact Statement (SDEIS ) on the proposed NorthMet Project. All those minerals — including copper, nickel, cobalt, gold and platinum — lie in a band, meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range.

They arrived a billion years ago in the magma during northern Minnesota’s active volcanic history. They are concentrated out of the magma by liquid sulfur, which acts as a “collector,” because these elements prefer the sulphide liquid to the magma by a factor of 1,000 times more.

One of the proposed Minnesota mining ventures is by PolyMet Mining Corp. of Canada. PolyMet’s group includes Swiss commodity and mining giant Glencore, which now owns 18 percent of PolyMet shares.

How Caterpillar’s weak results reflect mining industry’s huge slowdown – by Peter Koven (National Post – January 28, 2014)

January 28, 2014

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

TORONTO – Year-end earnings from Caterpillar Inc. paint a grim portrait of the mining industry for both 2013 and the year ahead, but the company sees spending activity picking up across the sector in the not-too-distant future.

Caterpillar is the world’s largest heavy equipment maker, so its earnings are a useful bellwether for global mining activity. Not surprisingly, the indicators in the fourth quarter were very poor as far as mining is concerned. The Illinois-based company said that revenue from its resource industries segment (which is primarily mining) plunged 48% year-over-year to US$3-billion, with the steepest declines coming in Australia and emerging markets.

The outlook remains very weak for 2014, as Caterpillar expects resource sales to fall another 10% from 2013 levels. “We continue to be cautious about the mining industry,” Mike DeWalt, head of Caterpillar’s strategic services segment, said on a conference call.

The drop in sales reflects the fact that mining companies have made aggressive capital spending cuts over the past year in order to preserve their balance sheets at lower commodity prices. Every significant mining company has cut or deferred some spending plans (especially on new projects), so the impact on Caterpillar was not a shock.

UPDATE 1-Indonesia to limit exports of processed minerals – by Fergus Jensen and Wilda Asmarini (Reuters India – January 28, 2014)

January 28, 2014

http://in.reuters.com/

JAKARTA, Jan 28 (Reuters) – Indonesia will issue export quotas for processed minerals and concentrates soon, a senior mines ministry official said, the latest policy step tied to controversial government efforts to take greater control over shipments of its natural resources.

The government is trying to force miners to process mineral ores in the country, as part of plans to transform Southeast Asia’s biggest economy into a producer of finished goods, rather than simply a supplier of raw materials.

But the new policies, which include a ban on unprocessed mineral ore shipments and export taxes on mineral concentrates, have led to widespread confusion, forcing miners to halt exports until there was more clarity.

Hersonyo Wibowo, chief of mineral production supervision at the mines and energy ministry, said the export quotas could be issued within the next few days. “We have to control mineral exports. We are also worried that once purification facilities (smelters) are ready there may be no (ore) reserves left,” Wibowo said at an industry conference.

Transition Metals announces new platinum discovery near Thunder Bay – by Henry Lazenby (MiningWeekly.com – January 27, 2014)

January 28, 2014

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

TORONTO (miningweekly.com) – Project generator Transition Metals on Monday announced that a recent drilling campaign in partnership with South Africa’s Impala Platinum Holdings, at its 50%-owned Sunday Lake project, near Thunder Bay, Ontario, has confirmed platinum-group metals mineralisation.

TSX-V-listed Transition said that of the six diamond drill holes completed, for a total of 2 546 m, four returned intersections containing significant platinum-rich mineralisation, including hole SL-13-002, which intersected 20.2 m containing 3.22 g/t of combined precious metals platinum, palladium and gold (PGMs).

Transition president and CEO Scott McLean told Mining Weekly Online from the sidelines of the Mineral Exploration Roundup 2014, being held in Vancouver, that the company had found a large intrusion similar to other intrusions in the area that were known to be mineralised.

Those intrusions included Panoramic Resources’ nearby Thunder Bay North PGM project, Rio Tinto’s Tamarack, in Minnesota, and Lundin Mining’s Eagle mine, in Michigan, to which the Sunday Lake project had shown similarities.

KGHM International to cut back at Sudbury mine – by Carol Mulligan (Sudbury Star – January 28, 2014)

January 28, 2014

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

Employees at KGHM International’s McCreedy West Mine are waiting to learn their fate after hearing from company officials last week that as many as 70 of 100 members of United Steelworkers Local 2020 could be laid off Feb. 16.

Local 2020 members were told Jan. 17 that Glencore Xstrata’s Sudbury Integrated Nickel Operations was exercising the 30-day cancellation clause in its commercial contract with KGHM to process McCreedy West nickel ore. KGHM spokeswoman Kristina Howe said Glencore indicated that its processing facilities are at capacity and that it has a surface capacity, so it didn’t require additional custom feed ores for its mill.

“This has been a positive working relationship with Glencore, and the commercial arrangement, which has been in place since 2011, has allowed McCreedy to continue to mine nickel,” Howe said in an email. As a result, KGHM will have to figure out “the economics of continuing with the mine … if we can’t have our ore processed,” she said.

USW area co-ordinator Myles Sullivan said Local 2020 members were told that a large portion of McCreedy West was going to be closed and that a small zone would continue to operate with a reduced number of workers.

First Nations, conservationists file lawsuit over protection of Yukon watershed – by Dene Moore (Canadian Press/Edmonton Journal – January 27, 2014)

January 28, 2014

http://www.edmontonjournal.com/index.html

VANCOUVER – A coalition of First Nations and conservation groups is suing the Yukon government over its decision to open a vast region of the Canadian North to mining and industrial development.

The group says the decision ignores a land-use plan seven years in the making. A lawsuit was filed Monday in Yukon Supreme Court by the Nacho Nyak Dun, the Tr’ondek Hwech’in, the Canadian Parks and Wilderness Society Yukon and the Yukon Conservation Society.

They say the plan released a week ago in Whitehorse violates the land-use planning provisions of a land claims agreement the territory signed with First Nations.

“It’s a lawsuit that nobody wanted to bring,” said their lawyer Thomas Berger, who headed the landmark Mackenzie Valley Pipeline Commission in the territory almost 37 years ago.

“But the government of Yukon has forced these plaintiffs … to go to court not only in defence of First Nations rights and environmental values in Yukon, but also to uphold principles entrenched in the Constitution.”

Little-known federal office to oversee natural resource projects secretive, heavy-handed: NDP – by Jason Fekete (Calagary Herald – January 26, 2014)

January 27, 2014

http://www.calgaryherald.com/index.html

OTTAWA — A little-known federal office of barely two dozen people is charged with overseeing $230 billion worth of proposed natural resource projects across Canada and helping get aboriginal groups onside, but it’s facing criticism of being too heavy-handed and secretive.

The Major Projects Management Office is responsible for overarching management of federal environmental and regulatory reviews of what are currently 76 projects representing approximately $231 billion in potential new resource development investment across Canada.

The MPMO also organizes Ottawa’s broader consultation with Aboriginal Peoples on these major projects, including the Northern Gateway oilsands pipeline that has been conditionally approved by a National Energy Board panel and is currently under review by the Conservative government.

Yet, this small but critically important office — it has approximately 25 staff — continues to function with a very low profile within Natural Resources Canada. The official Opposition NDP says the MPMO, like the Prime Minister’s Office, is too secretive and is trying to force through projects without sufficient consultation.

B.C. to review environment assessment process – by Vivian Luk (Canadian Press/Global Toronto – January 27, 2014)

January 27, 2014

http://globalnews.ca/toronto/

VANCOUVER – British Columbia Premier Christy Clark has ordered a review of the province’s environmental assessment process, saying the current system has become too cumbersome.

However, Clark revealed few details about the evaluation project she’s handed over to Environment Minister Mary Polak to undertake.

The premier made the announcement at a mineral exploration convention in Vancouver on Monday, in the middle of a speech about extending a $10-million tax credit program to B.C.’s mining industry for another year.

She said environmental reviews of major projects are crucial, and while the current process is rigorous and transparent, the province’s environmental assessment office can “do better.”

“In my view, it is better to do the hard and rigorous work at the front end and get it right, than to endure decades of questions and debate in acrimony about why and how it was done,” Clark said.

Ontario serves up miner with Statement of Defence – Ian Ross (Northern Ontario Business – January 27, 2014)

January 27, 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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

The Ontario government says it’s not liable for any damages incurred by a Sudbury-based junior miner after a dispute between the company and First Nation forced it to abandon exploration work in northwestern Ontario.

The province submitted its Statement of Defence with the Ontario Superior Court of Justice on Jan. 21 in response to a $110-million lawsuit filed against the Crown last October by Northern Superior Resources (NSR).

The company accuses the government of failing in its legal duty to consult with the Sachigo Lake First Nation after a series of disagreements with the band caused the company to suspend exploration on a promising gold property in late 2011.

In an 18-page document outlining its position and version of the chain of events, the government calls the company’s claims for compensation “exaggerated, excessive, remote” and said they should be dismissed.

Boutique investment dealers in Canada struggle to survive – by Barbara Secter (Ottawa Citizen – January 27, 2014)

January 27, 2014

http://www.ottawacitizen.com/index.html

Mid-sized investment dealers were riding high in 2007, feasting on healthy markets and booming commodity prices that drove underwriting, trading and acquisitions.

But today, the approximately 180 smaller or boutique firms in Canada are struggling with chronic weak business conditions in an increasingly tough competitive landscape.

The Investment Industry Association of Canada and other industry watchers have been warning for a couple of years that many of Canada’s smaller firms are on precarious ground and many could cease to exist without a significant recovery in the small-cap trading and underwriting business.

“The traditional model of the independent firms relying on trading and corporate finance is broken, at least for the moment,” says John Turner, a partner who heads to global mining practice at Toronto law firm Fasken Martineau DuMoulin LLP. On Monday, Stonecap Securities Inc. was swallowed up by Edgecrest Capital, a relatively new player in the industry.