Republic of Mining

Africa’s local banks offer mining lifeline where others fear to tread – by Stephen Eisenhammer (Reuters India – December 12, 2013)

December 12, 2013

http://in.reuters.com/

LONDON, Dec 12 (Reuters) – African banks are playing an increasingly significant role in the continent’s new generation of mines, providing cash for projects considered too risky or expensive for rattled markets and cautious international lenders.

Central and West Africa is home to some of the world’s largest untapped deposits of gold, iron ore and other minerals, but the promising mine projects often require billions of dollars to be spent on bridges, roads, railways and ports.

That level of investment, combined with the perceived risks of corruption and political uncertainty in Africa, is proving too much for under-pressure equity and debt markets and twitchy overseas banks undergoing enforced belt-tightening since the financial crisis.

A solution, however, appears to be on the mining companies’ own doorsteps, with recent deals suggesting that local banks could provide a lifeline for the region’s junior miners.

In West Africa, banks such as Togo-based Ecobank and Ivory Coast’s Banque Atlantique are moving in on mining projects, emboldened by the expert local knowledge gained from their extensive branch networks.

Editorial: The two lions of Southern Africa – by Northern Miner (December 11, 2013)

December 12, 2013

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

The mining community in Canada probably has more connections to South Africa than any other group in the country, and so the death of Nelson Mandela on Dec. 5 provided many miners here with time to reflect on the man’s leadership, as well as the tortuous history and unsettled future of South Africa, with a natural focus on the fate of the country’s tremendous mineral endowment.

For readers of a certain age, two of the biggest lifetime geopolitical surprises have been the rapid fall of the Soviet Union and the transition of South Africa from an apartheid state to a relatively well-functioning democratic free market — without having passed through a payback-fuelled civil war in between. As has been discussed at length around the world, the latter is largely due to Mandela’s moderate policies and conciliatory leadership once he assumed the South African presidency in 1994.

In order to maintain social peace and keep foreign investment flowing, once they were voted into power, Mandela and the African National Congress did not nationalize South Africa’s mines, and that decision had a profound effect on the careers and life choices of so many in the mining community, both inside and outside South Africa.

Miners warned about Indonesia, Brazil, India and South Africa investments – by Cecilia Jamasmie (Mining.com – December 12, 2013)

December 12, 2013

http://www.mining.com/

A significant increase in conflict, terrorism and regime instability in the Middle East and North Africa, along with deepened global political violence and resource nationalism, are the main risks mining investors will face in 2014, according to a report published Thursday by UK-based risk consultancy Maplecroft.

In its sixth annual Political Risk Atlas (PRA) the analysts tell investors to pay special attention to possible populist moves in Indonesia, Brazil, India and South Africa as national elections in these countries will likely boost resource nationalist rhetoric and policies.

According to Maplecroft close to 10% of the countries studied have shown a significant increase in their risks levels, with foreign investors facing more political violence, resource nationalism and expropriations.

In the last year alone, says the report, the risk of resource nationalism has increased 15% as a consequence of governments attempts to offset the risk of societal unrest through tax increases, tougher regulations or outright expropriation.

The Rise of the Resource Curse – by William Pesek (Bloomberg News – December 12, 2013)

December 12, 2013

http://www.bloomberg.com/

In many ways Mongolia is an outlier — an exotic tourist destination filled with windswept deserts, nomads and yurts. It might also be a vision of the world’s future.

With a tiny $10 billion economy and less than 3 million people, Mongolia is fantastically resource-rich. And with borders touching China, Russia and Central Asia, the landlocked nation seems to have won a geographic lottery ticket. It doesn’t need to go far to find enthusiastic customers for its immense endowment of copper, gold and other minerals.

That also means that Mongolia sits on the precipice of the so-called resources curse, in which citizens in countries such as Nigeria and Indonesia have not prospered from the treasure sitting under their land and seas. As politicians and cronies make millions, there’s little incentive to create other industries to employ the masses.

Mongolia’s challenge will soon be the world’s. That’s the upshot of a new report from Richard Dobbs and his team at McKinsey, in which they predict a $17 trillion investment bonanza by 2030 to keep up with demand for oil, gas and other materials. That’s an amount greater than the annual output of the U.S. economy and more than four times Germany’s. It’s not just the kind of money that changes people or even nations. It’s the kind that changes the world — and probably not for the better.

B.C. First Nations eye LNG equity stakes – by Shawn McCarthy (Globe and Mail – December 12, 2013)

December 12, 2013

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.

GATINEAU, QUE. — First Nations leaders in British Columbia are seeking multibillion-dollar loan guarantees from the federal government to enable them to take ownership stakes in various liquefied natural gas projects being planned in the province, and have also travelled to China and Japan looking for backers.

The bid to raise financing comes as the Assembly of First Nations launches an effort to forge an aboriginal national energy strategy, which would be based on treaty rights, sustainable development and the need for impoverished communities to benefit from the massive resource development that Canada expects over the next decade.

“What is absolutely clear is that unless First Nations are included as full partners in development, the prospects for projects proceeding are negligible,” said Dave Porter, chief executive of British Columbia First Nations Energy and Mining Council.

He said aboriginal communities will resort to the courts if Ottawa presses ahead over their objections with pipeline projects such as Enbridge Inc.’s Northern Gateway.

How long does Ontario need to turn around OPG? – by Konrad Yakabuski (Globe and Mail – December 12, 2013)

December 12, 2013

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.

How long should it take to turn the Titanic around? Is five years a reasonable amount of time to allow for the transformation of a bloated and poorly run government-owned utility into a disciplined, high-performing one? Surely 10 years should be enough?

A decade ago, Ontario’s newly appointed energy minister promised to fix the mess at Ontario Power Generation. Dwight Duncan vowed to end to the years of “indecision and ideology” that had hamstrung electricity policy under the Progressive Conservatives and New Democrats. Job One was ending the excesses at OPG.

Mr. Duncan hired a bank chairman and two former federal cabinet ministers to examine the utility that managed a motley stable of publicly owned energy assets, including the Adam Beck hydroelectric station at Niagara Falls that once made Ontario an energy leader and the problem-plagued fleet of nuclear reactors, which had become the bane of Mr. Duncan’s predecessors and saddled power consumers with the utility’s atomic-sized debt.

The group led by former Liberal minister John Manley, former Tory minister Jake Epp and Bank of Nova Scotia chairman Peter Godsoe, sized up their task:

Corporate excess tops radioactive waste at OPG – by Martin Regg Cohn (Toronto Star – December 12, 2013)

December 12, 2013

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Why did OPG bosses overpay themselves while overcharging electricity ratepayers and impoverishing OPG’s sole shareholder — us?

Sweetheart hirings, obscene pensions, bloated bonuses, skyrocketing salaries: You don’t need to be a rocket scientist — or an auditor — to know the numbers don’t add up at OPG.

Surely a nuclear engineer could do the math? Like Tom Mitchell, the handsomely paid CEO of Ontario Power Generation?
Mitchell’s a smart guy who doesn’t count with his fingers, but it’s hard to wag your finger at overpaid staff when you’re pocketing $1.7 million in a good year.

But where was OPG’s board of directors, who are supposed to oversee work flow, supervise cash flow and superimpose core values? You don’t have to be a right-thinking, God-fearing apostle to know something smelled rotten in the boardroom.

Surely an old Tory, proud of his Mennonite heritage, could see through the lack of thrift? Like Jake Epp, the chairman of the board at OPG?

COLUMN-Investors may be buying BHP, Rio cost-cutting story – by Clyde Russell (Reuters India – December 11, 2013)

December 11, 2013

http://in.reuters.com/

Dec 11 (Reuters) – It’s taken some time but there are signs that the cost-cutting efforts by major commodity producers such as BHP Billiton and Rio Tinto are starting to convince investors.

“My principle aim is to create value and free cash flow,” Andrew Mackenzie, the chief executive of BHP , said at an investor briefing on Dec. 10.

To this end he confirmed that capital expenditure at the world’s largest mining company has been too high in recent years, with the $23.3 billion spent last year poised to shrink by 25 percent in the 2013 fiscal year, and again in subsequent years. The presentation slides anticipate capital expenditure for major projects being a quarter of the 2013 level by 2016.

Rio Tinto , the world’s second-biggest miner, is also slashing spending, announcing plans to halve capital expenditure and slash debt.

Rio Tinto said on Dec. 3 that it will cut spending to $11 billion in 2014 from just under $14 billion this year, and sees capital spending at $8 billion in 2015, which would be less than half what it was in 2012.

Return of fourth player shakes EU stainless steel recovery hopes – by Silvia Antonioli, Maytaal Angel and Tom Käckenhoff (Reuters U.S. – December 11, 2013)

December 11, 2013

http://www.reuters.com/

LONDON/DUESSELDORF, Dec 11 (Reuters) – Just as long-awaited consolidation in Europe’s stainless steel sector seemed to offer hope of recovery in prices and profits, Finnish producer Outokumpu’s surprise sale of two plants back to ThyssenKrupp threatens to undo such gains.

Outokumpu last month announced the sale of large Italian stainless steel mill Acciai Speciali Terni and of specialty high-performance alloy unit VDM to ThyssenKrupp , their previous owner.

The deal, part of a package of measures dictated mostly by Outokumpu’s financial needs, partially reverses its acquisition of Thyssenkrupp’s stainless steel business Inoxum in 2012, a move that gave a fillip to all major European producers’ shares.

It raises the number of major European players in the loss-making industry back to four from three, which is likely to create an even tougher market environment for them as they face low prices, heavy overcapacity and competition from determined Asian exporters.

While a big player like Outokumpu can cut capacity or mothball the least efficient of several operations, ThyssenKrupp, with only two plants in the stainless sector, is likely to make use of them to keep its foothold in the market.

NEWS RELEASE: Golden Band To Suspend Mining Operations at La Ronge

December 11, 2013

Saskatoon, Saskatchewan, December 9, 2013 – Golden Band Resources Inc. (“Golden Band” or the “Company”) (TSX.V-GBN; OTCQX-GBRIF) reports that its mining operations, including its operations at the Roy Lloyd and Golden Heart mines and the Jolu mill, will be suspended for an indefinite time beginning January 1, 2014.

Further to the Company’s news release dated August 7, 2013 wherein the Company announced recommencement of operations having completed certain upgrades of infrastructure; and despite restructuring operations and significant cost cutting, declining gold prices and lower than anticipated ore grades from both the Roy Lloyd underground mine and the Golden Heart surface mine have hindered the Company’s ability to return to profitability. At the present time, the Company anticipates the shutdown period will be approximately 6 months although there is no assurance when mining operations may resume.

In order to preserve cash, the Company will place the operation into care and maintenance mode and mining and milling operations will be shut down in a systematic manner so that they are available for start-up in as short a time as possible. During the shutdown, the Company will be evaluating all of its options to return the mining operations to profitability. In order to improve our economic performance, the Company intends to engage external consultants with the necessary expertise to develop more effective mining plans. Engineering plans will focus on priority targets, specifically Decade, Komis, Golden Heart and Greywacke.

Indonesia’s president to weigh into mineral export confusion (Reuters U.S. – December 11, 2013)

December 11, 2013

http://www.reuters.com/

JAKARTA – Dec 11 (Reuters) – Indonesia’s president will make the final decision in a furious debate over next month’s scheduled ban on the export of unprocessed metal ore, an issue that pits nationalist-minded lawmakers against officials desperate not to lose revenue.

From next month, mining companies must process their ore before shipping it overseas, in a measure that aims to boost the value of exports from Indonesia, the world’s top exporter of nickel ore, thermal coal and refined tin. But smelting capacity is nowhere near ready, which means much of Indonesia’s output of metal ore will grind to a halt unless the processing requirements are relaxed.

And the law is kicking in just as a yawning current account deficit, exacerbated by waning global demand for commodities, is undermining investor confidence, leading to a drop this year of nearly a quarter in the rupiah’s value against the dollar.

“The president will decide it,” Trade Minister Gita Wirjawan told reporters on Wednesday, noting that Yudhoyono would make an announcement after consultations with the chief economic minister, the energy and mineral resources minister, the trade minister, the industry minister and parliament.

B.C. mines minister to lobby for New Prosperity project – by Derrick Penner (Vancouver Sun – December 10, 2013)

December 11, 2013

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

Environmental review found long list of concerns, but Bill Bennett says B.C. economy needs the mine

Mines Minister Bill Bennett is heading to Ottawa to support the contentious New Prosperity mine proposal in the Cariboo, the minister said Tuesday.

Bennett, speaking to project boosters brought together by the B.C. Chamber of Commerce in Vancouver, said he will go to the national capital Thursday to tell his federal counterparts that the province considers the $1.5-billion New Prosperity mine an important piece in its economic plan.

“I’m going to seek to influence the decision, of course,” Bennett said to reporters. “I want them to say yes because they can say yes. I want to make sure they have all the information to do that.”

A decision on whether the open-pit copper-gold mine goes ahead rests with federal Environment Minister Leona Aglukkaq. She is studying a second review by the Canadian Environmental Assessment Agency, which concluded the mine would have significant environmental impacts. Taseko Mines Ltd. is disputing a major element that went into that conclusion.

Companies Need to Step Up to Meet New Conflict-Minerals Reporting Rule – by Robert Bowman (Forbes Magazine – December 10, 2013)

December 11, 2013

http://www.forbes.com/

Time is running out for manufacturers to begin reporting on the presence of conflict minerals from the Democratic Republic of the Congo in their supply chains.

Beginning May 31, 2014, publicly traded companies will be required to declare to the U.S. Securities & Exchange Commission whether or not their products or components contain tin, tungsten, tantalum or gold — dubbed “3TG” materials — from mines in the DRC that are engaged in human rights abuses.

The requirement was included in the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July of 2010. It has taken nearly four years, however, for the SEC to gather public comments and clarify the rule. And the May 31 deadline is just the beginning of a two-year phase-in.

Nevertheless, many businesses have been dragging their feet on preparations for complying. According to a survey conducted by PricewaterhouseCoopers LLC in the spring of 2013, at least a third of executives were still unsure as to whether it applied to their operations.

Ontario’s Ring of Fire a national opportunity – Ottawa Citizen Editorial (December 10, 2013)

December 11, 2013

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

It would be quite an understatement to say that the Ring of Fire mineral project in northern Ontario is the most significant economic development opportunity for Ontario First Nations the province has ever seen.

The huge chromite mining project, whose importance federal cabinet minister Tony Clement likened to the Alberta’s oilsands, would bring between $60 billion and $120 billion in economic benefits to Ontario, and particularly some of the poorest areas of the province. Clement called it a “once-in-a-life” opportunity to generate long-term prosperity for not only for the First Nations, but the province and the nation. The file has now passed to Clement’s colleague, Minister of State Greg Rickford.

“It has the potential to transform what was hitherto a very poor, underdeveloped area of Ontario and give people who live there, particularly First Nations people, a chance for a decent life,” Clement said in a media interview.

That is why Ontario Premier Kathleen Wynne is calling for federal government help to pay for the infrastructure to get the project off the ground.