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Potash news a wake-up call for government: NDP – by Scott Larson (Saskatoon StarPhoenix – August 1, 2013)

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

The jolt experienced in the potash industry should be a wake-up call for the provincial government, NDP Opposition Leader Cam Broten says.

“A wake-up call that shows that we need long-term savings, that we need investments in infrastructure while we can, and a wakeup call to this government that we need to diversify the economy,” Broten said.

Shares in potash companies like Saskatoon-based PotashCorp, Mosaic and Agrium have plunged over the last couple of days after Russia’s potash giant OAO Uralkali said it would exit the export marketing group Belarusian Potash Co. and increase output to full capacity.

Experts say potash prices could fall by 25 per cent, which would impact the royalties the province takes in from the industry. “(That) has the potential to be significant, if you look at the contributions it makes to the provincial coffers as well as the thousands of jobs, the homes that are purchased and the spinoff industries,” Broten said.

“What we’ve seen with this government is an approach to have all of the eggs in one basket.

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Saskatchewan potash can be billed as the Porsche of fertilizers – by Les Mapcherson (Saskatoon StarPhoenix – August 3, 2013)

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

There was a time not so long ago when the Russians threatened us with nuclear annihilation. That they now are only threatening our potash revenues is a big improvement. This, we can handle.

Stuck with piles of surplus potash, the Russians have withdrawn from an international producers’ cartel that helped stabilize prices. They now will unload their potash for a lower price, compelling producers elsewhere to do likewise.

In Saskatchewan, it’s a swift kick right in the potash revenues. The precipitous drop in share prices for Saskatchewan potash producers could foretell the future for provincial royalties.

Potash Corp. of Saskatchewan shares fell overnight by 25 per cent, Mosaic shares, likewise. If provincial potash revenues are similarly reduced, we’ll have to turn in our New Saskatchewanembroidered silk underwear and go back to the old, cotton flour bags with the corners cut off for our legs to go through. Good thing we saved them.

Don’t panic, counsels Premier Brad Wall. Of course, urging us not to panic is the premier’s job. When the time does come for panic, Wall still will be saying don’t panic.

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Falling profits for Vale – by Reuters and Star Staff (August 6, 2013)

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

Battered by falling iron ore and nickel prices, Vale on Wednesday is expected to report a 30% drop in second-quarter profit to $1.85 billion US from a year earlier, analysts are predicting. If so, it would be Vale’s eighth consecutive quarterly profit fall, according to the average preliminary estimates of seven analysts surveyed by Reuters.

Most of the decline is due to a 12% drop in average iron ore prices and a 38% decline in nickel prices, more than offset-t ing increases in volumes shipped by the world’s No. 1 iron ore miner and No. 2 nickel producer.

Its shares have been the worst performer among the world’s big five mining companies, down 27% this year, despite a rally from nearly four-year lows in July. Of the big five, Rio Tinto, Brazil’s Vale, Glencore Xstrata and Anglo American are expected to report sharp drops in profit.

They have been slammed by weaker copper, iron ore and coal prices as they struggle to sell off assets. Anglo — the first of the diversified majors to publish results — said last week underlying operating profit fell in the six months to $3.3 billion, ahead of a consensus estimate of $3.12 billion.

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Miners won’t get a leg-up from state – by Malavika Santhebennur (Mining Australia – August 5, 2013)

http://www.miningaustralia.com.au/home

Gold and nickel miners will not get a lifeline from West Australian premier Colin Barnett, who said he will not be handing out royalty assistance to those affected by falling commodity prices.

Barnett argued modifying royalties due to price variation was not a good idea, saying the cyclical nature of the mining industry is a well known fact. “I know this is a tough time and some of the high-cost producers struggle. [But] at the end of the day the state government owns the minerals and companies pay the equivalent of 10 per cent of the value of the mineral. I think that’s a pretty good price.”

Miners, small and large, have had to cut the fat from their companies as commodity prices fall. They have been curtailing capital expenditure, cutting jobs and slashing operational costs.

BHP recently slashed 100 jobs across its six Nickel West operations in WA in May. The company said many operational roles will feel the brunt. The company also flagged in July it will move service contracts in-house in the Pilbara as it looks to cut contractors to cut costs.

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Queen’s Park: First Nations have iron grip on Ontario’s economy – by Ian Harvey (Law Times News – August 5, 2013)

http://www.lawtimesnews.com/index.php

Ian Harvey has been a journalist for 35 years writing about a diverse range of issues including legal and political affairs. His e-mail address is ianharvey@rogers.com

Ontario’s economic future is in the hands of First Nations who effectively control all resource development. Moving forward, there will be no oil flowing in a pipeline nor will there be any copper, gold, nickel, uranium or chromite pulled from the earth unless a First Nation has approved and is getting its cut.

It’s the result of years of neglect coming to fruition, says Bill Gallagher, a Waterloo, Ont.-area lawyer whose book, Resource Rulers: Fortune and Folly on Canada’s Road to Resources, is turning heads.

“Natives have amassed an unprecedented legal winning streak in the last decade, 185 wins almost in a row, across the resources sector,” says Gallagher, who spent 30 years negotiating deals in the resource sector, including at Voisey’s Bay, N.L., where he sees parallels with Ontario’s Ring of Fire mines. “Ontario is behind in dealing with this.”

The province is also the target of a $100-million lawsuit brought by Solid Gold Resources Corp. this year. The northern gold-mining explorer staked a claim in 2007, but before exploratory drilling, it was advised by the province, following direction in Haida Nation v. British Columbia (Minister of Forests), to consult with the local Wahgoshig First Nation.

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Speaker’s Corner: Piercing of corporate veil in Hudbay case may send Canadian companies elsewhere – by Megan Lem (Law Times News – August 5, 2013)

http://www.lawtimesnews.com/index.php

Compañía Guatemalteca de Níquel (Guatemala Nickel) owns and operates the Fenix nickel mine in Guatemala. Between 2007 and 2009, there were some unfortunate security incidents at the mine when protesters clashed with police and private security details working for a security contractor that had been retained by Guatemala Nickel. These clashes allegedly led to the death of one man, the serious injury to another man, and the rape of several women.

The alleged victims of this violence in Guatemala, rather than suing Guatemala Nickel domestically in that country, brought three separate actions in Canada against Hudbay Minerals Inc., the parent company of Guatemala Nickel, for an aggregate of approximately $67 million in damages. Hudbay, in response, brought a motion in Ontario’s Superior Court to dismiss the Guatemalan claims, asserting that the proper place for a trial, if any, was in Guatemala, and that the proper party that should be responsible for whatever happened in Guatemala, if any, was Guatemala Nickel.

On July 22, Superior Court Justice Carole Brown denied Hudbay’s motion to dismiss the case in Canada, allowing the Guatemalans to continue their lawsuit against Hudbay in Canada. This precedent-setting decision is, according to Murray Klippenstein, counsel for the plaintiffs, “the first time that a Canadian court has ruled that a claim can be made against a Canadian parent corporation for negligently failing to prevent human rights abuses at its foreign mining project.”

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Indonesia’s consumer and natural resources boom falters – by Ben Bland (Financial Post – August 2, 2013)

http://www.ft.com/home/us

Jakarta – Mitra Adiperkasa, the retail group that operates Burger King, Zara and a host of other international food and fashion brands in Indonesia, has ridden the wave of middle-class consumption that transformed Southeast Asia’s biggest economy into one of the world’s hottest emerging markets.

But the group is scaling back its expansion plans and capital expenditure next year, for the first time since 2009, as Indonesian companies contend with problems including rising inflation and slowing Chinese growth.

“The main challenge for us is rising costs,” says Fetty Kwartati, head of investor relations at Mitra Adiperkasa, with salary and rental expenses increasing more quickly than sales. The company plans to open 60,000-70,000 square metres of new space next year, down from 90,000 square metres this year. Rising consumer spending has been one of the two pillars of Indonesia’s exuberant growth in recent years, alongside burgeoning natural resource exports.

But the latter has been badly affected by the slowdown in China, a major buyer of Indonesia’s coal, palm oil and rubber.

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A Shuffle of Aluminum, but to Banks, Pure Gold – by David Kocieniewski (New York Times – July 20, 2013)

http://www.nytimes.com/

MOUNT CLEMENS, Mich. — Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”

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Ring of Fire talks off to ‘productive’ start, Bob Rae says (CBC News Power and Politics – August 2, 2013)

 

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

Northern Ontario mining negotiations a chance to ‘do development differently’

Former Liberal MP Bob Rae said negotiations between Ontario and First Nations over mining in the Ring of Fire region are off to a good start and mark an opportunity to “do development differently.”

Rae was named chief negotiator for the Matawa Tribal Council, representing nine First Nations communities in northern Ontario, in May while he was still the MP for Toronto Centre. In mid-June he announced he was quitting politics in order to focus on the Ring of Fire job.

The Ring of Fire area, about 540 kilometres northeast of Thunder Bay, has one of North America’s biggest deposits of chromite, used in stainless steel. It’s also rich in nickel, copper and platinum. The federal government estimates the mineral content is worth $30 billion to $50 billion and will create up to 5,000 direct and indirect jobs.

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The ‘new world order’ of mining isn’t pretty – by John Shmuel (National Post – August 3, 2013)

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

If there was a stock market discount bin, it would be overflowing right now with mining stocks of all shapes and market caps.

The TSX materials sector is down more than 30% so far this year, with gold miners being particularly clobbered, having lost 38% of their value since January. It’s been the worst year for global mining stocks since the financial crisis.

The last bastion of safety for mining investors — potash stocks — collapsed this week to join their digging and drilling brethren in the basement. The break-up of a Belarusian-Russian cartel that was responsible for 43% of global potash exports is to blame. Its demise led to a potash price collapse, resulting in a sharp pullback for fertilizer stocks such as Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc.

The bad news didn’t stop there. A day later, Barrick Gold Corp. revealed the second-worst loss in Canadian corporate history. The miner announced it lost US$8.56-billion in the second quarter, after a massive US$9.3-billion writedown at its Pascua-Lama development in Chile.

All of that ensures Canadian mining stocks are well on their way to posting a third-straight annual decline. It’s no wonder many fund managers, despite seeing a lot of value in the sector, are proceeding cautiously.

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Lament for Sudbury’s golden age: City was transformed in the early 1980s through collective vision and drive – by Narasim Katary (Sudbury Star – August 3, 2013)

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

The golden age of Sudbury was from 1973 through 1985 — a period during which a mining town became a mind-full town.

A good definition of golden age is a period when there are notable peak activities. The transformative activity of any city consists of innovation for constant reinvention. During the golden age, the area that became Greater Sudbury excelled in innovation in a spectrum of fields.

The lament for the loss of creativity and confidence is an ancient art form: Veterans full of memories are aghast at the society that they think is behaving like a herd. A singular cohort often has a tendency to romanticize the period when they were active. People who know me well can attest to the fact I am notoriously resistant to the siren songs of Arcadian Romanticism. If anything, I am known to be in the tradition of English self-flagellation.

I title the period as the golden age because I was fortunat e to be a participant, observer and witness at close quarters to the performance of institutions in the city before the golden age and the functioning of the city after that period. In that sense, I am an equal opportunity offender. Knowledgeable people will point out the period commenced before I arrived on the scene and ended before I left the arena, thus absolving me of any contribution to its lustre.

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[Hammond Reef] Gold project hampered by prices – by Bryan Meadows (Thunder Bay Chronicle-Journal – August 3, 2013)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Lower gold prices are impacting Osisko Mining Corp.’s plans for its Hammond Reef Gold Project near Atikokan.
In its second quarter report released Thursday, the company said that the Hammond Reef project requires higher gold prices to justify the investment on construction of a new mine there.

In addition, the company determined following a review of the project, that an impairment charge — a reduction on a company’s balance sheet that adjusts the value of a company’s goodwill — of $487.8 million was necessary. Accordingly, the project’s value recorded on the company’s books was reduced to nil, the report said.

Osisko acquired the Hammond Reef gold project, about 25 kilometres north of Atikokan in 2010, through the acquisition of publicly-traded Brett Resources Inc. for $375 million.

Hammond Reef is a large and growing development project with potential to become a substantial open-pit mine.
During the second quarter of 2013, Osisko invested $2.2 million, including working capital, on the property and focused efforts on the preparation of the feasibility study and the publication of the environmental assessment report.

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Nickel producers fend off output cuts as losses mount – by Melanie Burton and James Regan (Reuters U.S. – August 2, 2013)

http://www.reuters.com/

SINGAPORE/SYDNEY Aug 2 (Reuters) – Nickel miners are clinging to plans to maintain production, despite a growing supply glut and prices around four-year lows, raising the risk of more writedowns and losses being unveiled in the current financial reporting season.

France’s Eramet this week reported a first-half operating loss and warned the second half would be worse due to weak nickel prices, while other top producers such as Vale SA , Glencore Xstrata and BHP Billiton report in the next few weeks.

Between a quarter to a half of the nickel sector could be running at a loss, according to industry estimates, hit by weak demand from China, the world’s top producer and consumer of stainless steel. Nickel is a key component of stainless steel.

Nonetheless, few miners have yet made deep cuts in output and the trend is set to put more pressure on depressed prices.

“It’s a staring contest, no one wants to be the first to take the pain,” said Robin Bhar, an analyst at Societe Generale in London.

Three month nickel on the London Metal Exchange hit $13,205 a tonne on July 9, the lowest since May 2009 and down from nearly $19,000 in February. Nickel is the worst performer on the exchange so far this year, down nearly 20 percent.

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Disquiet in Québec as govt proposes tax, mining law changes – by Simon Rees (MiningWeekly.com – August 2, 2013)

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

TORONTO (miningweekly.com) – Like others across Canada, exploration and mining companies operating in Québec are suffering fierce economic headwinds and depressed metal prices, particularly so for gold. However, the gloom is doubly deep as concern mounts over the province’s newly proposed mining tax and Mining Act, both unveiled in May.

Under the current system, mining operations pay a 16% tax on net profits. The rate was pushed up from 12% during the previous Liberal government’s tenure. But for the Parti Québécois (PQ), led by Premier Pauline Marois, the increase was not extensive enough – it went on to call for a 5% tax on all mining activity and a 30% supertax on companies achieving profit margins over 8%.

“I think the PQ was looking towards the Australian model of increasing taxes on the mining sector, reasoning it could be applied to Québec . . . But most of our mines are smaller-scale operations. While some might have made good money, almost all reinvested profits into upgrading or expanding existing operations,” Institut de la statistique de Québec mining and natural resources specialist Raymond Beullac tells Mining Weekly.

“KPMG fairly recently released a report on Québec’s mining sector, highlighting the number of small-scale mines in production but unable to produce a taxable profit under the current mining tax regime,” Norton Rose Fulbright partner with specialist knowledge of the mining, oil and gas sectors Jean-Philippe Buteau tells Mining Weekly.

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Tanzania: Kabanga Nickel Project – Light At the End of Long Tunnel – by Meddy Mulisa (All Africa.com – August 2, 2013)

http://allafrica.com/

Bukoba — THE much-awaited Kabanga Nickel Project will soon start its operations, bringing fresh hopes to many in terms of labour and employment, according to President Jakaya Kikwete during his recent tour of Kagera Region.

Kabanga Nickel is an active mine exploration project 130 kms south west of Lake Victoria in Ngara District, Kagera Region. The project is a joint venture between Barrick Gold and Xstrata Nickel.

The Minister for Energy and Minerals, Prof Sospeter Muhongo said the government would buy shares which would later be sold to wananchi. He also appealed to Tanzanians to grab the opportunity for their wellbeing. He said a total of 80 megawatts would be produced at Rusumo Falls to generate power at Kabanga Nickel.

“This is a joint project between three countries -Tanzania, Burundi and Rwanda with each country taking 27 megawatts. Kabanga’s 58 million tonne nickel resource is regarded as one of the best undeveloped greenfield nickel sulphide deposits in the world. Since 2005, there has been continued progress made in the development of the Kabanga Nickel Project with a significant investment to date of over US$205 million in drilling and evaluation studies.

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