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BHP BILLITON NEWS RELEASE: BUILDING ON AUSTRALIA’S COMPARATIVE ADVANTAGE

3 October 2013

BHP Billiton today further outlined its productivity agenda to capitalise on the next phase of the Asian growth cycle.

Speaking at the Australian National Conference on Resources and Energy, BHP Billiton President, HSEC, Marketing and Technology, Mike Henry, said the commodities that would feed future China growth would require Australia’s resources industry to continue to improve its competitiveness.

“We see moderation in the rate of GDP growth in China, and a reduction in manufacturing and investment share over time, but it is really important to note that there is still an incredibly large opportunity to be captured from a commodity demand perspective.

“Commodity demand growth will remain robust as the fundamentals of wealth creation, demographics and urbanisation continue to drive demand for resources. However the shifting dynamics of economic growth will challenge Australia’s traditional understanding of core ‘commodities’.

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SA situation the biggest risk to platinum prices — Natixis – by Allan Seccombe (Business Day – October 3, 2013)

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

THE direction of the platinum price — and to some extent the palladium price — will be determined by developments in South Africa over the next two years, Natixis has said in a Metals Review.

Natixis, a Paris-based investment banker, said tensions between workers and platinum mining companies were likely to remain high next year. “For the next two years, the situation in South Africa will remain the biggest risk to platinum prices,” Natixis said in its second-half review. South Africa is the world’s single largest source of platinum, making up about 80% of supply.

“Adverse government decisions, a protracted power outage and most importantly a serious escalation in labour unrest could lead to a significant shortage and higher platinum prices,” it said.

“The South African government seems to be unable to solve the root of the problem facing the mining companies. We are still years behind the completion of a reliable national power supply, and the government has been unable to resolve the core economic issues facing the population and the country,” it said.

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Tracing the Chinese gold rush – by Jan Skoyles (Mineweb.com – October 1, 2013)

http://www.mineweb.com/

According to Jan Skoyles, 2013 will be remembered by the gold market as the year of China, but the Asian giant’s domination, while quick hasn’t happened overnight.

LONDON (THE REAL ASSET COMPANY) – The year 2013 in the gold investment market will be remembered as the year of China, so we’ve produced a stunning infographic detailing China’s great golden rise to power.

In just a few months the world’s largest country will overtake India as the biggest consumer of gold and its gold market continues to break records.

A country that already mines over 400 tonnes of gold a year, China still demands more physical gold no matter the price. Between January and July this year the Shanghai Gold Exchange delivered more than 1,333 tonnes to gold investors.

In the last 100 years China’s gold mine productivity has climbed from just 4 tons of gold in 1949 to an expected 440 tons this year, none of which is exported. Hong Kong imports have been over 600 tonnes this year alone, but still more gold is demanded.

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NEWS RELEASE: Unresolved Aboriginal land claims and government land-use policies deterring mining investment in BC

 OCTOBER 3, 2013

Click here for full report: http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/BC-mining-policy-performance.pdf

VANCOUVER, BC—Uncertainty about disputed land claims and government land-use policies make British Columbia too risky for many mining investors, concludes a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The study, British Columbia’s Mining Policy Performance, found that uncertainty in land and resource ownership was a prime deterrent of mining investment and that in some instances mining companies are dealing with several aboriginal groups with overlapping and differing claims in a single area.

“Miners must have confidence in the stability, predictability, and transparency of the policy environment in which they operate,” said Kenneth P. Green, senior director of the Fraser Institute’s Centre for Natural Resources.

“If BC’s government wants to attract mining investment to the province, it should push ahead to settle land and resource ownership disputes in a timely manner.”

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Editorial: KWG-Cliffs ruling – No appeasement on the easement – by John Cumming (Northern Miner – October 2, 2013)

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

One of the more significant events for Ontario mineral explorers in September took place in the halls of the province’s bureaucracy, with Cliffs Natural Resources losing its application for easement (surface access right-of-way) across mining claims held by KWG Resources in the Ring of Fire chromite camp of northern Ontario.

The precedent-setting ruling by the province’s Mining and Lands Commissioner (MLC) was a win for the “little guy,” in that it strongly affirmed the rights of existing mining-claim holders in the face of an aggressive major company with a competing development plan for the area.

If you recall, KWG Resources and Spider Resources discovered the Big Daddy chromite deposit in the McFaulds Lake area in 2008, and a year later KWG approached Cliffs about becoming a shareholder to help with Big Daddy’s development.

With Cliffs’ approval, KWG staked a series of claims through its subsidiary Canada Chrome Corp. (CCC) along a string of sand ridges leading away from Big Daddy, with the intention of securing land for a future railway that would connect the remote Big Daddy property with infrastructure to the south.

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Iamgold CEO committed to low-grade gold – by Allison Martell (Reuters U.S. – October 3, 2013)

http://www.reuters.com/

Oct 2 (Reuters) – Stephen Letwin is a man of conviction. The chief executive of mid-tier gold miner Iamgold Corp believes low-grade deposits are the future, whether the industry is ready or not.

With prices down and higher costs cutting into margins – already slim at many low-grade mines – explorers that once boasted about the size of their deposits are now wooing investors with tales of high-grade zones.

But Letwin, who was touting low-grade gold last year, before spot prices dropped more than 20 percent, sees no reason to change his tune. “I don’t care who you are – we are all migrating to lower grade,” he said in an interview. “It’s just a fact of life.”

Iamgold’s operations in Africa and South America have relatively low concentrations of gold. At the Rosebel mine in Suriname, for example, the reserve grade is one gram per tonne.

That is not far off the average reserve grades of the senior producers, but unlike some of those companies’ mines, Rosebel and Iamgold’s Essakane mine in Burkina Faso do not produce silver, copper or other valuable minerals that are often recovered with gold.

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Alaska’s Zombie Gold Mine to Nowhere – by James Greiff (Bloomberg News – October 1, 2013)

http://www.bloomberg.com/

James Greiff is a Bloomberg View editorial board member.

What happens when the main financial backer pulls out of a project? The answer is usually clear: The deal fails, which is what the foes of a gigantic gold and copper mine in Alaska are counting on. But in this case the mine has only been dealt a setback and is far from dead.

That about sums up the state of play after last month’s announcement by Anglo American Plc that it would pull out of a partnership that planned to build what’s known as Pebble Mine, proposed for the Bristol Bay region of southwest Alaska. If the mine were developed, it would be the biggest of its type in North America — and located on the headwaters of rivers flowing into the world’s most productive salmon fishery.

Environmentalists, the commercial salmon industry and local indigenous tribes were ecstatic, as one might expect. They had argued — no doubt correctly — that the mine couldn’t be safely developed without damaging the salmon fishery, and they waged a savvy campaign that no doubt raised the stakes for Anglo American.

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NEWS RELEASE: Timmins Kidd Operations’ outstanding safety performance recognized — again

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.

Ontario Mining Association member Kidd Operations, a Glencore Company, has been presented with the President’s Award for being the top safety performer by Workplace Safety North (WSN). The honour was bestowed at WSN’s inaugural workplace excellence awards and this honour recognizes continuous improvement in occupational health and safety.

“Everyone is really proud of the win,” said Tom Semadeni, General Manager for Kidd Operations, a Glencore Company. “It is really icing on the cake because earlier this year, we won the John T. Ryan award for the best safety performance for a Canadian metal mine. So it is further reinforcement that we’re on the right track.”

“I think it is great to promote success,” added Mr. Semadeni. “A lot of times businesses have a tendency to notice and follow up on things when they are going badly, or wrong, but you need to recognize success. We need to do that internally for our own business but also out in the public. Just having an award like this demonstrates to the public that there is a good commitment to improving.”

In May of 2013, the Kidd Operations in Timmins was presented with the John T. Ryan national safety trophy in the metal mine category for having the best reportable injury rate of all metal mines in Canada.

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Rio Replacing Train Drivers Paid Like U.S. Surgeons – by Elisabeth Behrmann (Bloomberg News – October 3, 2013)

http://www.bloomberg.com/

Train drivers employed by Rio Tinto Group to haul iron ore across Australia’s outback make about the same money as surgeons in the U.S. It’s little wonder the mining company will replace them with robot locomotives.

The 400-plus workers in the remote Pilbara region who earn about A$240,000 ($224,000) a year probably are the highest-paid train drivers in the world, according to U.K.-based transport historian Christian Wolmar. Australia’s decade-long mining boom has sucked up skilled workers, raising wages for engineers to drivers at Rio, the second-largest exporter of the mineral, and its closest competitors, Vale SA (VALE) and BHP Billiton Ltd.

he three companies that control about 59 percent of the $145 billion-a-year global iron ore trade are automating to bolster margins and squeeze out extra capacity as they boost supply to a record to feed steel mills in China, the biggest buyer. The push by Rio (RIO), which aims to move about 290 million metric tons on its rail network by next year, is expected to be the biggest driver for cost cuts in its iron ore unit after currency swings, according to Deutsche Bank AG.

“All producers are chasing better margins and stronger returns,” said Chris Drew, an analyst in Sydney with Royal Bank of Canada.

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The X factor – how well timed is Davis’ return to mining? – by Lawrence Williams (Mineweb.com – October 3, 2013)

http://www.mineweb.com/

Former Xstrata CEO, Mick Davis, has raised $1 billion towards what appears to be his aim of creating a new major diversified mining company from scratch.

LONDON (MINEWEB) – Given the low commodity prices currently facing the sector, Mick Davis, former highly successful dealmaking CEO of Xstrata, could well have picked the perfect time to start a new company.

On Monday, Davis announced his return and, importantly, that he has already raised $1 billion with which he hopes to become a major player in the diversified mining sector – in short birthing another Xstrata (he has even named his new company X2 Resources). Buying when prices are depressed would seem to be the ideal time for a well-funded entity to enter the market, provided prices don’t fall too much further.

But even if commodity prices do fall further, the downside is probably relatively low given the extent of the fall to date, which has left companies really focusing on savings and cost cutting which should leave them in a far better position to weather any continuing storm. And in setting up a new major mining company you don’t invest for the short term anyway, but look for long term growth – and the depths of a market downturn are obviously the best time to do this.

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[Ontario] PC’s conclusions inaccurate: Fraser Institute – by Jonathan Migneault (Sudbury Star – October 3, 2013)

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

The Tories said Ontario fell from the top mining jurisdiction in the world in 2000 to 17th in 2012, but that information isn’t accurate, according to the right-wing think tank that authored the survey the PCs cited.

In its white paper report on Northern jobs and resources, the Conservatives cited findings from the Fraser Institute’s Survey of Mining Companies 2012-13 to make the assessment of Ontario’s global status in mining. But Ken Green, the Fraser Institute’s senior director of natural resources studies, said in an email the Conservative white paper report “does not conform to the findings of our survey.”

The Fraser Institute survey contained two main indices: the Policy Potential Index and the Current Mineral Potential Index. It did not include an overall global mining ranking, as was implied in the Conservative white paper.

Norm Miller, Conservative MPP for Parry-Sound Muskoka, and the party’s critic for Northern Development and Mines, confirmed the party’s report was referring specifically to the Fraser Report’s Current Mineral Potential Index. Ontario was the first of 35 jurisdictions in the index in 2000, but fell to 17th out of 96 jurisdictions in 2012.

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$100bn in private equity stalking mining assets – by Frik Els (Mining.com – October 2, 2013)

http://www.mining.com/

It may be too early for private equity players to gobble up juniors or put together mega-deals, but mid-tier miners may have new investors knocking on their doors. The $1 billion injection for former Xstrata chief executive Mick Davis’ new venture X2 Resources may be just the start of wave of new private equity investments in the mining industry.

According to one estimate cash raised for investment funds dedicated to mining and oil has reached a decade high of $24 billion this year. The 2013 year to date record haul brings the total close to $100 billion accumulated for resource investments over the past six years.

Philip Heywood, director for transaction services at consultants PwC in Vancouver, says although there hasn’t been that many big deals announced, interest in mining from private equity players is strong and picking up.

“There has always been a niche interest from private equity in mining, but now larger players are entering the market,” says Heywood, adding that private equity players are seeing opportunity in the sector now that valuations have come down, sellers expectations are diminished and competition for good assets are much less.

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Cameco seeks longer mine licences – by Jeremy Warren and Scott Larson (Saskatoon StarPhoenix – October 2, 2013)

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

The Canadian Nuclear Safety Commission added a third day to its agenda before it even started public hearings on Cameco’s licence renewals applications for three uranium mines in northern Saskatchewan.

The increased interest in the hearings, which started Tuesday night in La Ronge, meant the commission needed an extra day to accommodate the wide range of arguments it will hear about Cameco’s mining and milling operations at the Key Lake, McArthur River and Rabbit Lake facilities.

The company’s biggest request is for a longer licence period – an increase to 10 years from the current five years – for all three sites. It deserves the increase due to its excellent safety and environmental record, Cameco communications director Gord Struthers said.

“Given the excellent performance of our operations, this is completely appropriate,” he said. “(The commission) is on a trend of granting longer licences.” Struthers said the company would not face less regulatory oversight with an 10-year licence period, but he declined to say how the company might benefit from a longer licence period.

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Minister says MPP spouts ‘unhelpful rhetoric’ – by Michael Gravelle (Timmins Daily Press – October 2, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Over the past five months I have worked with my Minister’s Advisory Committee and we have gained a better appreciation for the current operations of each ONTC business line and the realities of the public sector working in a competitive marketplace.

We have had a number of important discussions to date and our work is ongoing. I am convinced, as are members of the committee, that the status quo is no longer an option. It is disappointing that Mr. Fedeli (MPP Vic Fedeli, PC — Nipissing) continues to claim costs to taxpayers when in fact no decisions have been made on the future of this important asset.

It is in the interests of his constituents, ONTC employees, and all Northerners that Mr. Fedeli move away from his unhelpful rhetoric and actually make a useful contribution to this conversation.

In order to provide an accurate representation, the ONTC business case reviewed all of the financial issues facing the ONTC. The numbers shared by Mr. Fedeli would see absolutely no job retention and shows no consideration for the socio-economic development needs of the region.

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Appetite for Destruction – by Damien Ma and William Adams (Foreign Policy Magazine – October 1, 2013)

http://www.foreignpolicy.com/

Why feeding China’s 1.3 billion people could leave the rest of the world hungry.

On Aug. 20, the Australian mining giant BHP Billiton announced that it will pump nearly $3 billion into developing a deposit of Canadian potash, a mineral used in the manufacture of fertilizer destined for farms fields across the world. And in late September, Chinese pork producer Shuanghui officially purchased Smithfield Foods in the largest Chinese acquisition ever made in the United States. The companies’ investments are both decisions that speak to a vote of confidence in global food consumption growth over the next decade — and nowhere will bellies be filling up faster than in China.

For three decades, resource-intensive manufacturing fueled China’s spectacular economic rise. By 2012, the country was consuming nearly half of the world’s coal and producing 46 percent of its steel, 43 percent of its aluminum, and about 60 percent of its cement. The Chinese economy has slowed in 2013 in part because of the government’s recognition that such a resource-intensive growth model has become unsustainable.

As a result, Beijing is trying to rebalance away from exports and investments and toward domestic consumption. Companies like BHP Billiton are betting that China’s rebalancing will spur rapid growth in demand for food and the inputs needed to produce it.

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