Republic of Mining

UPDATE 2-Glencore seeks fresh start with $7.7 bln hit to Xstrata mines – by Clara Ferreira-Marques (Reuters India – August 20, 2013)

August 20, 2013

http://in.reuters.com/

LONDON, Aug 20 (Reuters) – Glencore Xstrata took a $7.7 billion hit on Xstrata’s mining assets on Tuesday, drastically reducing the value of early-stage projects after falling prices dragged down first-half profit.

The mining industry has been pummelled by billions of dollars in writedowns since the start of the year, with cooling prices and demand prospects denting the value of mining projects.

Glencore had been expected to follow suit once it completed the acquisition of Xstrata, and in its first post-takeover results on Tuesday it announced the figure alongside a 9 percent drop in core profit.

In absorbing the impact of a drop in commodity prices during the time it took to close the marathon takeover, Glencore wiped out all the goodwill value it had provisionally allocated to Xstrata’s mines at the time of the merger.

“We just had to value the business with a blank sheet of paper,” Chief Financial Officer Steven Kalmin said.

High-quality coal and house prices: A B.C. town’s second chance – by Brent Jang (Globe and Mail – August 20, 2013)

August 20, 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.

VANCOUVER — Tumbler Ridge Mayor Darwin Wren predicts that the quality of British Columbia coal will keep his northeastern B.C. community afloat.

In 2001, Mr. Wren moved from Fort Nelson to Tumbler Ridge, where he bought a house for $28,000, just months after the nearby Quintette coal mine closed amid depressed prices for the commodity. Hundreds of houses were auctioned off in the fall of 2000 as the closing of Quintette triggered fears that Tumbler Ridge would turn into a ghost town.

The town persevered, however, as new coal mines opened several years later. Houses like the one Mr. Wren bought 12 years ago are now worth at least $200,000, despite a slump in coal markets since 2011 that has reduced coal production in northeastern British Columbia.

It’s a recurring theme for Canada: Despite efforts to diversify economically, prosperity rises and falls on the back of demand for what miners can pull out of the ground. More often than not, prices for these products find a floor and rebound.

BHP delays $14 billion Canada potash push as profit drops – by Sonali Paul (Reuters U.K. – August 20, 2013)

August 20, 2013

http://uk.reuters.com/

MELBOURNE – (Reuters) – BHP Billiton’s new chief has put his stamp on the top global miner, mapping out a cautious approach to expanding into the potash market, which it sees as its next big growth business beyond 2020.

CEO Andrew Mackenzie outlined the low-risk course as he handed down his first results, reporting a 15 percent drop in half-year profit before one-offs, which missed forecasts largely due to Australian mining tax adjustments and other non-operational items.

BHP and Glencore Xstrata wrapped up the results season for the world’s big five miners, with BHP holding up slightly better than its peers as it stepped up output of iron ore, copper, coal and oil and slashed $2.7 billion in costs in the face of sliding commodity prices.

Major miners have come under pressure to rein in spending, sell off underperforming assets and tackle debt after years of rampant spending on new mines and acquisitions as commodity prices soared. Reflecting the austerity drive, BHP said it plans to invest $2.6 billion over the next four years digging shafts at the Jansen potash project, delaying production at least until 2020 from its original 2015 target, while inviting offers for stakes in the mine.

Sandy Winick: Alleged penny stock fraud kingpin arrested in Thailand – by Tony Van Alphen and Madhavi Acharya-Tom Yew(Toronto Star – August 20, 2013)

August 20, 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.

Police in Thailand say they have captured Sandy Winick, alleged Canadian kingpin of one of the biggest penny stock frauds ever.

Canadian fugitive Sandy Winick, accused of masterminding a massive international stock fraud, allegedly bragged that no one would ever catch up to him.

But less than five days after U.S. authorities charged the former Torontonian and eight other individuals, he is behind bars in Bangkok, Thailand, awaiting extradition proceedings.

The FBI confirmed Monday that the Royal Thai police had captured the elusive Winick, 55, in his room in the city’s Marriott Empire Place hotel during the weekend.

Police have now arrested eight of nine individuals in what the U.S. Justice Department calls one of the biggest international penny stock frauds and advance fee schemes “in history.”

Chilly Arctic history bodes ill for Energy East pipeline – by Earle Gray (Toronto Star – August 20, 2013)

August 20, 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.

Reserves of Canadian Arctic gas remain in the ground decades after their discovery

Winning approval to build TransCanada Corp.’s proposed $12-billion Energy East pipeline to move oil from Athabasca to the Atlantic could be the easiest part. Consider the four-decade history of government-approved plans of TransCanada and others to pipeline gas from the Arctic.

They were launched by the 1968 discovery of North America’s largest accumulations of both crude oil and natural gas. Most of the oil at the Prudhoe Bay field on Alaska’s northern Arctic coastal plain has now been produced, but Prudhoe Bay’s recoverable natural gas — equal to a third of all the known remaining recoverable gas in hundreds of fields in western Canada — remains frozen in place. So, too, do substantial gas and oil reserves in the Mackenzie River delta and Beaufort Sea, 600 kilometres east of Prudhoe Bay.

One year after the Prudhoe Bay discovery, TransCanada and two U.S. midwestern gas utilities began feasibility studies for a pipeline to move the Prudhoe Bay and Mackenzie delta gas to consumers across Canada and the United States.

NEWS RELEASE: Ryan trophy winners show safety performance gains over the decades

August 20, 2013

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.

Safety performances in Canada’s and Ontario’s mining industries have made steady progress over the decades. The John T. Ryan Safety Trophies recognition program has been a contributing component to that ongoing improvement since 1941.

Winning a Ryan trophy is not happenstance. It is the result of clear messages being given from senior management, a dedication to safety throughout the entire workforce, training, communications, workers knowing they matter – that they matter a lot — and the evolution of a safety culture. There are numerous mining operations in Canada, which have found a winning formula. They are leading the way in safety and providing best practice models not just for mining but for all industries.

A look back through some past committee minutes of this 72 year old program provides some insight. For the record, the 2012 John T. Ryan national winner in the metal mine category was Xstrata Copper Kidd Operations in Timmins, now Kidd Operations (Glencore). It had a reportable injury rate 0.16 per 200,000 hours worked. This mine, which started operations through predecessor companies in 1965, is the deepest base metal mine in the world. In 2012, the operation experienced no lost time injuries and two modified work injuries during more than 2.5 million hours worked.

Group fights for passenger trains – by PJ Wilson (North Bay Nugget – August 20, 2013)

August 20, 2013

http://www.nugget.ca/

Canada’s National Dream may have been derailed by politicians, but a grassroots organization is trying to get it back on track.

The Northern and Eastern Ontario Rail Network (NEORN) was launched at the Discovery North Bay Museum – the former CP Rail station – Monday in North Bay to not only unite rail supporters in the province, but to try to revive Ontario Northland’s Northlander passenger service.

“Rail service is in trouble in this country,” Peter Miasek, president of Transport Action Ontario, the umbrella organization, said to a small crowd of supporters.

In all the Group of Eight countries, Canada is the only nation that is not investing heavily in rail service, Miasek said. “Even in the United States, (President Barack) Obama is investing heavily in Amtrak” passenger train service, Miasek said.

The federal and provincial governments, he said, are trying to sink rail freight service through subsidies to the trucking industry, while “on the passenger rail side, the situation is even more dire.”

Northern Promise: Home of the world’s richest gold mine braces for coming headwinds – by Peter Koven (National Post – August 20, 2013)

August 20, 2013

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

Northern Promise is a six-part series that explores the pace and progress of development in Canada’s remote communities. In this second instalment Peter Koven visits the home of the world’s richest gold mine

Fifty-four hundred feet below the surface, roughly underneath the local airport, a massive drill is pounding out a path to Red Lake’s latest set of riches.

Workers stand back and protect their ears as the driller carefully targets the sheer rock wall up ahead and begins to break it apart. It is slow and careful work; the horizontal drill makes about 15 to 23 feet of progress per day, sometimes less. But it is closing in on the destination, which will be reached later this year after more than three years of work.

The end result will be a five-kilometre drift connecting Goldcorp Inc.’s existing operations here with the Bruce Channel, a high-grade discovery that will be a flagship of the company’s Red Lake operations for decades to come. The ore from Bruce Channel (or Cochenour) will be hauled back to Goldcorp’s Campbell mill via an underground tram system, which is already running and is being expanded as fast as the drillers up ahead can open up the drift.

Glencore expected to writedown billions – by Reuters/Star Staff (Sudbury Star – August 20, 2013)

August 20, 2013

http://www.thesudburystar.com/

Glencore Xstrata is expected to write down the value of assets inherited from Xstrata by as much as $7 billion when it reports first-half earnings on Tuesday — the first full set of results since the takeover that created the mining giant in May.

Glencore’s management, no strangers to Xstrata given the trader’s 34% stake in the miner, have been reviewing Xstrata’s assets as owners over the past three months and they had been expected to book a hit alongside maiden results.

Analysts and an industry source said the group writedown, mostly on the value of former Xstrata assets, would likely amount to $5 billion to $7 billion.

Nickel assets — including Xstrata’s $5 billion Koniambo operation in New Caledonia — are likely to take the brunt of the pain as nickel prices languish at less than a third of their 2007 highs and supply continues to exceed demand.

Glencore’s local operations, now officially known as the Sudbury Integrated Nickel Operations, include Fraser Mine and Nickel Rim South Mine, Strathcona Mill and the Sudbury smelter. Nickel and copper are its main products.

NEWS RELEASE: Lac Seul First Nation and Goldcorp Inc. Sign Collaboration Agreement

August 20, 2013

August 19, 2013

RED LAKE, ON, Aug. 19, 2013 /CNW/ – GOLDCORP INC. (NYSE: GG) (TSX: G) (“Goldcorp”) and Lac Seul First Nation have signed Obishikokaang Collaboration Agreement setting a framework for continued consultation and support for current and future operations of Red Lake Gold Mines and defining the long-term benefits for the First Nation. A signing ceremony was held Friday, August 16, in the Municipality of Red Lake, Ontario.

The agreement will bring recognition and economic benefits to Lac Seul First Nation, comprised of about 3,200 band members with significant historical ties to the development of the Red Lake gold camp. Many band members reside within the Municipality of Red Lake.

“Goldcorp’s commitment to working with First Nations is once again demonstrated with this agreement, ensuring both the sustainable development of the areas in which we operate and long-term economic benefits for communities,” said Chris Cormier, Mine General Manager at Goldcorp’s Red Lake Gold Mines. “We look forward to working in partnership with Lac Seul First Nation to foster continued dialogue and to implement the initiatives set out in the agreement.”

“This agreement demonstrates that Lac Seul First Nation can work successfully with industry,” said Chief Clifford Bull of Lac Seul First Nation.

BHP reveals corruption probes by U.S., Australian authorities – by Dorothy Kosich (Mineweb.com – August 19, 2013)

August 19, 2013

http://www.mineweb.com/

A slow-moving investigation of BHP Billiton’s business practices, which began in 2009, is heating up.

RENO (MINEWEB) – U.S. and Australian authorities are cooperating on an investigation into “possible corruption” within Australian über miner BHP Billiton, stepping up a probe that began four years ago concerning BHP’s Olympic sponsorship, hospitality and gifts given to top Chinese officials, and now reportedly involves the company’s attempts to secure a bauxite project in Cambodia.

The allegations are being investigated by the U.S. Department of Justice and the Australian Federal Police as well as the U.S. Securities and Exchange Commission.

In a statement released on Friday by BHP Billiton, the company disclosed it had commenced an internal investigation when it received a request for information in August 2009 from the SEC. “As a result, the Group commence an internal investigation and disclosed to relevant authorities including the U.S. Department of Justice (DOJ) evidence that it uncovered regarding possible violations of applicable anti-corruption laws involving interactions with foreign government officials,” the company said.

“As has been publicly reported, the Australian Federal Police has indicated that it has commenced an investigation,” the company confirmed.

Gold Bears Retreat as Prices Reach Two-Month High: Commodities – by Tony C. Dreibus (Bloomberg News – August 19, 2013)

August 19, 2013

http://www.bloomberg.com/

Speculators cut bullish and bearish bets on gold simultaneously for the first time in two months as prices advanced to the highest since mid-June on signs of strengthening physical demand.

The net-bullish position rose 18 percent to 56,604 futures and options by Aug. 13, as the 17 percent contraction in short bets exceeded the 3 percent drop in long wagers, U.S. Commodity Futures Trading Commission data show. Net-long holdings across 18 U.S.-traded commodities expanded 23 percent as the position in silver more than doubled and investors turned positive on copper for the first time since February.

Gold tumbled a record 23 percent last quarter as some investors lost faith in the metal as a store of value. The rout spurred losses for billionaire John Paulson, who joined George Soros in selling bullion holdings in three months ended June 30, government filings showed last week. Lower prices spurred demand in India and China, the top buyers, driving global coin and bar purchases to record in the second quarter and jewelry purchases to the highest since 2008, the World Gold Council said Aug. 15.

“People became more interested in holding gold as the price dropped,’ said Tom Stringfellow, the president of San Antonio-based Frost Investment Advisors LLC, which manages about $9 billion.

Harper heads north to promote resource development – by Steven Chase (Globe and Mail – August 19, 2013)

August 19, 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.

OTTAWA — Stephen Harper has kicked off his annual tour of Northern Canada with a focus on resource development and the jobs it brings for locals. But the Prime Minister arrives in Yukon just as controversy erupts over efforts to recruit foreign workers to the territory.

Yukon’s government recently launched a temporary foreign worker program to fill positions in tourism and mining, only weeks after 100 Yukon mine staff lost their jobs.

The territorial measure is billed as a response to chronic labour shortages but it contrasts starkly with Ottawa’s efforts in recent months to discourage the use of overseas workers wherever possible after public anger over a B.C. mining company’s plans to bring in up to 200 Chinese workers.

Mr. Harper didn’t mention the Yukon program by name as he kicked off his northern tour with a brief speech in Whitehorse. However, the Prime Minister made a point of noting his government wants economic projects in northern regions to benefit locals. “As Conservatives, we have pledged that northern development will mean northern prosperity,” he said.

COLUMN-Mongolia, Rio Tinto playing high stakes on copper mine – by Clyde Russell (Reuters U.S. – August 19, 2013)

August 19, 2013

http://www.reuters.com/

Aug 19 (Reuters) – Is Rio Tinto’s dispute with the Mongolian government over the expansion of the Oyu Tolgoi copper and gold mine the signal that the nation’s commodity boom is over, or is it just a hiccup?

Certainly, Mongolia’s reputation as a desirable investment destination and one of the few remaining countries ripe for developing natural resources has taken a battering recently.

Rio Tinto, the world’s second-largest mining company, said on Aug. 14 that it will cut 1,700 jobs at Oyu Tolgoi after a $5 billion expansion of the project was put on hold last month.

The dispute is over how the expansion gets financed, and the Mongolian parliament has been recalled from its summer recess for an emergency session to try and deal with the matter.

But the real issue is how long it will take for Mongolia to get significant amounts of money from the mine, which is slated to boost the economy by 35 percent by 2020.

Ontario’s power policies an example of what not to do – Gwyn Morgan (Globe and Mail – August 19, 2013)

August 19, 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.

The political firestorm raging in Ontario about the cost of cancelling two natural-gas-fired power plants reminds me of a conversation I had with then-premier Dalton McGuinty in 2005. At the time, I was head of Encana Corp. and we were co-chairing a Public Policy Forum event.

As we chatted privately before the dinner, he said: “As a gas producer, you must be happy we’re going to close our coal-fired power plants.” I replied: “Well, it’s not a big deal in the context of our North American gas markets, but you’d better make sure those gas power plants are built before you shut the coal plants.”

Eight years later, Ontario power consumers are stuck paying $585-million for two gas-fired plants that were never built. That’s just the tip of the iceberg. Mr. McGuinty’s decision to shutter the coal-fired plants was followed in 2010 by his government’s Green Energy and Economy Act, aimed at replacing some of the coal-fired power with highly subsidized wind and solar energy while, supposedly, turning Ontario into the green power capital of North America.

Ontario offered so-called feed-in rates almost four times the existing system rates for wind, and more than 10 times for solar power. Like bees to honey, wind and solar companies rushed to sign 20-year, rate-guaranteed contracts.