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A Canadian Mining Economic Powerhouse – by Ross Gallinger (August 1, 2013)

 

(L to R) PDAC Executive Director Ross Gallinger being interviewed by Paul Bagnell on BNN

http://www.pdac.ca/

Ross Gallinger is the Executive Director of the Prospectors and Developers Association of Canada (PDAC).

Canada has long established itself as an international hub for financing as well as business leadership in mineral exploration and mining. Our expertise runs deep and investors around the world respect and value it. At home, mining has a substantial economic impact on our nation’s north and on Aboriginal communities. The mining sector is a powerhouse of Canada’s economy.

Of the world’s public mining companies, 58 per cent are listed in Canada. There are nearly 1,700 mining and junior mining companies listed on the Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV). Together they are responsible for approximately 90 per cent of the world’s mining equity financings by number and nearly 40 percent by value. With the state of equity markets steering away from the resource sector, the Harper government has the opportunity to renew key investments that spur private sector activity and create jobs, to ensure domestic growth and activity for future Canadians, as well as maintain global leadership.

In northern Canada, development and jobs depend heavily on mineral exploration and mining. The number of land development agreements between Aboriginal communities and private companies is proof positive. The Northwest Territories and Nunavut Chamber of Commerce estimates that the diamond mining industry alone contributed more than $100 million to aboriginal communities as well as investing in education and job training. Nationally, mineral exploration and mining contributes more than $36 billion to our GDP.

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Ring of Fire bogged down by politics – by Brian MacLeod (Sudbury Star – August 1, 2013)

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

Can dousing the Ring of Fire with politicians rekindle the spark? All sides are betting it can.

The fate of the Ring of Fire, a 5,120-squarekilometre deposit rich in chromite (a metal hardener) and other minerals with a potential value of $100 billion and a lifespan of 30 or more years, has become murky during the last few months as falling chromite prices have dropped, shares prices of the lead developer — Cleveland-based Cliffs Natural Resources — have fallen, environmental and political processes have stalled and disputes among the mining companies developing the deposit remain unresolved.

Politicians have compared the Ring of Fire to Alberta’s oilsands, which highlights its wealth, but raises red flags among First Nations in northern Ontario about environmental issues.

It was always going to be a massively complicated deposit to develop. There was always too much money involved for this to go smoothly. Ontario stands to gain 1,200 jobs and millions in mining royalties, as well as billions of dollars in private investment to develop the area.

But in June, Cliffs announced it had halted its environmental assessment on its Black Thor deposit because nothing was happening on the political level.

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Gold’s slide takes $2.4-billion toll on Kinross – by Tim Kiladze (Globe and Mail – August 1, 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.

Kinross Gold Corp. announced a $2.4-billion impairment charge because of lower gold price assumptions and a previously announced loss on an Ecuadorian project that the miner abandoned a few months ago. The latest charge brings the company’s writedowns to $8-billion over the past year and a half, exceeding Kinross’s market capitalization of about $6.1-billion.

The company cancelled its next semi-annual dividend payment, and raised the possibility that it would scrap the dividend altogether, depending on factors such as market conditions and its balance sheet strength.

Kinross also said Wednesday that it would delay a decision on whether to proceed with the construction of a new mill that processes the ore it mines at its Tasiast project in West Africa. That decision follows a commitment made just three months ago to proceed with the next phase of its expansion.

Kinross’s woes are emblematic of a struggling industry hampered by a slew of multibillion-dollar writedowns, cost cuts and share price slumps. Kinross shares are now worth just $5.34 apiece, down 78 per cent from their post-crisis peak, while Barrick Gold Corp.’s have fallen to $17 each – a low that was, until very recently, last seen in 1992.

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Changing potash landscape a boon for China, India – by Brenda Bouw (Globe and Mail – August 1, 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.

China and India are poised to gain greater control over global potash pricing now that the oligopoly that controlled the majority of trade in the crop fertilizer, a key Canadian export, has been dismantled.

This week’s breakup of Belarus Potash Co. (BPC), a joint venture between Russia’s Uralkali and Belaruss’s Belaruskali, puts the world’s two most populous countries in a much stronger position after years of resistance to prices set by both BPC and Canada’s Canpotex Ltd.

Until now, the two groups controlled more than two-thirds of global potash sales. Saskatoon-based Canpotex is owned by Potash Corp. of Saskatchewan, Agrium Inc. and Mosaic Co.

The new landscape is expected to lower potash prices, which would increase demand and crop yields, particularly in high-demand countries such as China, India and Brazil. That in turn could help contribute to lower global food prices, which economists say are falling on expanded crop planting.

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Down with [potash] cartels, comrade – by William Watson (National Post – August 1, 2013)

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

The hungry of the world, who clearly would benefit from a 25% lower price of a key fertilizer, shouldn’t count their cheaper meals before they’re grown

Belarus’s President Alexander Lukashenko, Europe’s last remaining dictator, seems an unlikely devotee of Adam Smith. Yet his Decree Number 566 last December — decrees are a large part of his leadership style — is what so annoyed his Russian partners in the Eurasian half of the world potash cartel that they announced Tuesday they would be letting their exports rip, as they claim the Belarussians have already done in sales to China and India.

The other third of this Putin-Lukashenko troika is, ahem, us. We run the North American half of the cartel through Canpotex, the Saskatchewan potash export consortium formed in 1972, just about the time in fact that we were also putting together domestic cartels over milk, cheese, eggs and poultry. Trudeau times, recall, were managed-economy times.

The consensus view seems to be that this jolt of Smithian competition into the long-cartelized world market will bring potash prices down from above US$400/tonne to something more like US$300.

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Major new oil pipeline to Eastern Canada to get the go-ahead – by Shawn McCarthy and Jane Taber (Globe and Mail – August 1, 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 AND HALIFAX — TransCanada Corp. is expected to announce Thursday that it will push ahead with a major oil pipeline linking Western Canada with refineries and export terminals in the east, marking a significant step forward for Canada’s goal to tap new export markets.

The Energy East pipeline would deliver some 850,000 barrels of crude a day from Western Canada to Quebec and New Brunswick, serving the three refineries in the two provinces. The project – labelled a “nation builder” by New Brunswick Premier David Alward – has been endorsed by provincial and federal politicians, though Quebec Premier Pauline Marois said last week her province would have to study the proposal once TransCanada releases its detailed plans.

The planned pipeline is a strategic bid to open up new export opportunities for Canadian energy producers eager to diversify their markets beyond the oil-glutted U.S. Midwest. Alberta oil production is surging, but the province faces serious hurdles with other projects aimed at expanding crude-export capacity.

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Oil sands crisis strategy a work in progress – by Claudia Cattaneo (National Post – August 1, 2013)

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

More than two months after bitumen mixed with water started seeping from its Primrose oil sands project, Canadian Natural Resources Ltd. mobilized Wednesday to deal with the real out-of-control gusher — misinformation.

After saying little publicly about the incident, involving seepages that started on May 20, Canadian Natural issued an early morning news release, held an analyst call and then interviews with the media to confirm the leaks have been contained and the spill is being cleaned up.

No one got hurt, the company said, but 16 birds, seven small mammals and 38 amphibians were killed and that two beavers, two birds and two muskrats are being cared for prior to being returned to their natural environment. So far, 6,300 barrels of bitumen emulsion have been collected, while seepage from four locations has declined to fewer than 20 barrels per day.

Meanwhile, the company cut its forecast for 2014 production from the project to 100,000-110,000 barrels per day, about 10,000 b/d lower than targeted.

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Analysis: Poland to get dirtier as it leans towards lignite coal – by Agnieszka Barteczko and Henning Gloystein (Reuters India – July 31, 2013)

http://in.reuters.com/

WARSAW/LONDON – (Reuters) – Poland, one of the heaviest polluters in Europe, will become even dirtier now that its shale gas ambitions have faded and it turns to cheap domestic lignite coal to secure its energy supply.

Poland already relies on coal to produce more than 90 percent of its electricity and is home to the European installation that emits the most carbon dioxide – utility PGE’s lignite power plant in Belchatow.

Its choice of fuel now could determine its energy and environmental situation for decades to come, given that Poland needs to build new power stations to replace ageing plants and cope with future demand as its power system operates close to capacity.

The government and utilities, encouraged by firm popular support, are looking to domestic lignite reserves as a cheap way to fuel that new capacity and reduce imports of Russian gas.

“Looking at Poland’s limited reserves of gas and oil, lignite coal has to be perceived as the stabilizing factor for Poland’s energy safety,” Poland’s economy ministry said in an email, adding Poland’s lignite reserves will last for 200 to 300 years.

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UPDATE 2-African Barrick eyes more cost cuts as impairment hits H1 – by Clara Ferreira-Marques and Sarah Young (Reuters India – July 30, 2013)

http://in.reuters.com/

LONDON, July 30 (Reuters) – Miner African Barrick Gold , battling a plunge in the price of bullion, identified more cost cuts to help engineer a turnaround after sinking to a first-half loss on the back of a $727 million impairment charge.

African Barrick was under pressure even before a gold price rout began in April, hit by illegal mining, power generation problems and strikes, issues which forced it to warn in February that output would shrink for a fifth straight year.

The company on Tuesday posted a first half net loss of $701.2 million, against a profit for the year-ago period of $73.7 million, after a lower gold price and a review of its lower grade mines forced it to take the $727 million charge.

On a quarterly-basis, however, it beat consensus on a production and cost basis, helped by actions taken as part of a review.

The review identified $185 million of potential savings, with over $100 million of cuts seen in 2013. Initially prompted by a failed takeover attempt earlier this year, the process was given fresh impetus by a fall in the price of gold.

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Building facilities, building a work force, building a mine – by Anna Kurth (Hibbing Daily Tribune – July 30, 2013)

http://www.virginiamn.com/

Essar Steel Minnesota’s place in iron industry secure

NASHWAUK — For officials at Essar Steel, mining in Minnesota is all about location. Locating on the Iron Range provides immediate access to the rail lines and utilities necessary to mine and transport their product and employees with the skills they’re seeking.

Building a new plant also provides the advantage of mining next door to the facility, which allows Essar Steel to be in the first-quartile of low-cost producers, said Ken Kinsey, chief of operations. A large portion of mining costs come from mining operations — equipment and employees, he said. Essar Steel will start operations needing less of both.

Other mines first built their primary crusher right on the doorstep of the mine. But during decades of mining, operations have migrated and haul distances have increased. Now Essar will benefit from mining on its crusher’s doorstep.

“We’ve put our plant on the north side of the ore body so it doesn’t encumber any iron ore resources,” Kinsey said, adding that the plant is positioned so mining will start where stripping is lowest.

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[Minnesota] Mine study still a resource – by Charles Ramsay (Mesabi Daily News – July 30, 2013)

http://www.hibbingmn.com/

Document a framework for how future of industry might look

The update came out in early February. The main author, Jim Skurla, director of the Labovitz School of Business and Economics’ Bureau of Business and Economic Research at the University of Minnesota Duluth, noted in a recent phone interview from Duluth that while the worldwide economy and its need for steel “had slowed down a bit” recently, especially in China, it didn’t necessarily indicate a decline in demand for the metal.

“It really was red hot there for awhile,” he said of the world economy, but its steel demand has continued to be “cyclical.”

The study found, in the 2010 data, that Northeastern Minnesota’s mining industry made up 30 percent of the region’s economy, down from 33 percent found by the original study done with 2007 data. The newer iron mining operations, as well as the possibilities with the non-ferrous mining operations, project almost a doubling of workers and revenues in mining if all projects advance.

Iron mining had an impact of about $3 billion to the state’s economy in the 2010 data, with 3,900 employees directly involved and a total of 11,000 employees, including miners, directly or indirectly employed with suppliers or resulting from additional household spending. For every mining job in the industry, another 1.8 jobs are created directly or indirectly, the study found.

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All Minnesota has stake in mining debate – West Central Tribune Editorial (July 31, 2013)

http://www.wctrib.com/

Northeast Minnesota has a natural attraction of wild land and clear water that draws tourists from Duluth to Ely to Grand Marias. The region also contains valuable ore that created a mining industry that helped develop the region and Minnesota

More than a dozen companies are exploring northeastern Minnesota for copper, nickel, gold and other precious metals. Mining officials claim that hard rock mining can now be done safely and with little or no environmental impact. Many citizens are looking forward to a possible new mining industry and the resulting economic growth.

However, not everyone is enthusiastic about the prospect of this new mining. Mining critics point to similar operations in the western United States that have polluted many streams, rivers and lakes with acidic runoff. The mining issue is dividing communities in the region as the debate grows over mining potential and possible dangers.

All in Minnesota have an interest in the prospect of mining and the protection of natural resources in northeast Minnesota. Both the precious metal ores and other natural resources of the region are part of Minnesota’s legacy.

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Long view: Lundin Mining plans to be around for a while – by John Pepin (Marquette Mining Journal – July 31, 2013)

http://www.miningjournal.net/

HUMBOLDT – Lundin Mining Corp. President and CEO Paul Conibear said the company is looking to be a long-term success and pledged that high standards will be maintained for the Eagle Mine.

“Eagle Mine being successful – not just in the construction ahead of schedule or under budget – but to be able to look back in five, seven, eight, 10, 15 years and know this is an outstanding mine and being recognized in the international community that this is an outstanding mine and still being very welcomed by the community, those are our goals, factors for success,” Conibear said.

Conibear made the comments recently to a crowd of about 200 employees, government and business officials and residents who have supported the Eagle Mine. Those listeners were guests invited to a ceremony at the Humboldt Mill commemorating the transfer of the Eagle Mine project to Lundin.

In June, Lundin purchased the Eagle project from Rio Tinto for $325 million and the Toronto-based company will spend another $400 million through 2014 to get the mine and its Humboldt Mill into production by late 2014, earlier if possible. Full production is targeted for mid-2015 and is expected to last until 2022. Additional minerals to be extracted from the mine will include gold, cobalt, platinum and palladium by-products.

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Miner’s family still positive as Wynne refuses meeting – by Heidi Ulrichsen (Sudbury Northern Life – July 31, 2013)

http://www.northernlife.ca/

Province may launch review of mining safety

The sister of a local miner killed two years ago said her family is trying to remain “as positive as possible” despite Premier Kathleen Wynne’s recent refusal to meet with Steelworkers Local 6500 about a mining safety inquiry.

The union called for the inquiry last year in their report into the deaths of Jordan Fram, 26, and Jason Chenier, 35, who died at Vale’s Stobie Mine June 8, 2011 when they were buried by an uncontrolled run of muck. So far, though, the province has refused to launch such an inquiry.

The Fram and Chenier families, along with other citizens who want a mining inquiry, formed a group last year called Mining Inquiry Needs Everyone’s Support (MINES).

A postcard campaign advocating for a mining inquiry was also launched in April 2012 by Gerry Lougheed Jr., and sent thousands of cards to Queen’s Park. The campaign was taken up by the Steelworkers and the families of fallen workers.

Briana Fram said her mother, Wendy Fram — the co-chair of MINES — met with Labour Minister Yasir Naqvi and Northern Development and Mines Minister Michael Gravelle a few months ago.

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Steelworkers pledge to fight for mine safety inquest (CBC News Sudbury – July 31, 2013)

http://www.cbc.ca/sudbury/

Mining deaths are preventable, USW spokesperson says

The United Steelworkers Union says the premier has rejected its request for an inquiry into mine safety. The union started to push for an inquiry into mine safety after the deaths of two men at Vale’s Stobie mine in Sudbury in 2011, but the Ministry of Labour said it has already taken many steps to improve mine safety in the province.

Minister Yasir Naqvi said a council was struck in 2010 to make proactive suggestions on workplace safety — and one of its members is a mining subcontractor. “We should not be getting involved and engaged only after an unfortunate incident takes place,” he said.

“We need to make sure we are at the front end, making sure all the precautions are taking place, and everybody is trained.” As for safety measures, Naqvi pointed to the introduction of six new mining regulations in the past 10 years.

And there have been 10 mining safety blitzes since 2008, he said.

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