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Nickel price to weaken further as pig iron sector cuts costs (Reuters/Economic Times – June 19, 2013)

http://economictimes.indiatimes.com/

SINGAPORE/LONDON: China’s nickel pig iron producers are turning in droves to a new technology that allows them to survive at lower prices, a move that suggests nickel prices, already mired at four-year lows, could fall further.

As nickel prices near $14,000 a tonne, however, output cuts by loss-making producers with higher costs could steady the market, analysts said.

Nickel, mainly used to make stainless steel, is down 17 percent this year. It is the worst performer of a industrial metals complex hit hard by China’s slowing growth. Fed by a commodity boom, prices peaked above $50,000 a tonne in 2007.

Production of nickel pig iron in China, a cheaper substitute for pure nickel used as feedstock by stainless steel mills, has more than quadrupled to an estimated 400,000 tonnes this year from 89,000 tonnes in 2008, according to Macquarie.

At the same time, technical innovations have slashed costs, which has in turn lowered the floor for nickel prices.

The break-even cost for nickel pig iron produced by rotary kiln electric furnace (RKEF) technology is now as low as $12,500 a tonne and its market share has soared, said Dennis Zamora, senior vice president for marketing and strategic planning at Nickel Asia Corp.

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Ibris Group plans $1.8 bln Indonesian nickel smelter – by Fergus Jensen (Reuters U.S. – June 19, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Ibris Group, a Singapore-based miner, announced plans to build a $1.8 billion nickel pig iron plant in Sulawesi, the latest in a series of smelter projects after Indonesia began tightening controls on ore exports.

Indonesia, the world’s top nickel ore exporter, has been pushing for greater returns from its resource wealth. In 2009, it imposed a ban on unprocessed ore exports after January 2014.

The government, which has faced widespread criticism from miners and metal importers over the rules, has indicated it may relax the ore export ban for companies with smelter projects, however.

Singapore-based Ibris, which expects to export around 3 million tonnes of nickel ore this year, triple its 2011 level, plans to build the Rotary Kiln Electric Furnace smelter in two stages, with a total budget of around $1.8 billion.

“We will draw on our own funds as well as external investment. We have agreed with a consortium of financial investors to take a share of the project finance,” Ibris Group Chief Executive Arwan Ahimsa told reporters in Jakarta. Ibris would hold a 51 percent stake in the project.

“We have the engineering and basic design, and we are adjusting this to suit the site conditions, infrastructure requirements and support material,” Ahimsa said.

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Surviving the bear market – a practical guide – by Simon Rees (MiningWeekly.com – June 19, 2013)

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

TORONTO (miningweekly.com) – Few companies in the Canadian mining sector have had much to celebrate so far this year; the bear market lumbers on, while liquidity remains in the doldrums.

Compounding matters is the uncertainty surrounding metal prices, which has “turned investors risk averse, leading to a challenging market for capital access”, Ernst & Young said in its Canadian Mining Eye for the first quarter of this year.

The country’s junior mining sector is suffering particularly hard. In late May, at the Cambridge House Vancouver Resource Investor Conference, head of Kaiser Research Online (KRO), John Kaiser, noted that 740 companies of the 1 800 junior miners tracked by KRO currently had only $200 000 in reserve.

Unsurprisingly, many companies are now solely focused on keeping afloat, Norton Rose Fulbright partner Robert Mason told Mining Weekly Online in a recent interview. Mason represents issuers and underwriters on corporate finance transactions and mergers and acquisitions (M&A), specialising in the mining and natural resources sectors.

Mason outlined three core survival strategies, starting with expenditure cuts. “All noncore work should cease, while non-integral projects should be put on care and maintenance. Exploration can be cut too; only elements essential to a key project should continue. Anything you might label ‘wouldn’t it be nice’ can be got rid of,” he advised.

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Mining equipment makers rise to efficiency challenge – by Maria Sheahan and Niklas Pollard (Reuters U.S. – June 20, 2013)

http://www.reuters.com/

FRANKFURT/STOCKHOLM – (Reuters) – Mining equipment manufacturers are making improvements to machinery that they hope will deliver productivity gains for customers and counter falling orders.

Under pressure from investors for higher returns, miners want to get the most out of every shovel, grinder and truck to help maintain margins which are being squeezed by high labour and energy costs and cooling commodity prices.

At an industry dinner this month, the new boss of the world’s largest miner, BHP Billiton, compared the sector’s search for efficiency to that of motor racing teams.

Thanks to tiny changes, he said, the Formula One pitstop – the time when cars are stationary for tyres to be changed – has gone from just under 4 seconds in 2010 to just over 2 seconds this year. “If we look at our industry, the prize is significant,” BHP Chief Executive Andrew Mackenzie told his audience.

“For us, every 1 per cent improvement in productivity translates to a $170 million saving.” Half of BHP’s operating costs are labour and contractors.

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First Nations delighted to have Bob Rae negotiating for them on mining development (Vancouver Sun – June 19, 2013)

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

The negotiating power of northern Ontario’s First Nations just got a huge boost. When former interim Liberal leader Bob Rae announced that he was resigning as a member of Parliament, he said it was in order to focus on his other job: chief negotiator for the Matawa First Nations communities as they lock swords with the Ontario government over resource development on lands traditionally used by aboriginal people.

“It’s good news for us,” said Allan Towegishig, chief of the Long Lake #58 First Nation. “If he’s going to be a part-time parliamentarian he’ll have lots of work over there and with him resigning he’ll have more time to focus on our issues.”

Rae officially took the new position in May and has spent the last few weeks juggling both jobs. But in an official statement released Wednesday, he said “the full scope of the negotiator’s job is no longer compatible” with his MP responsibilities.

With a single job now as a negotiator, Rae represents nine First Nation groups in discussions with the Ontario government about ongoing mineral development in the resource-rich area known as the “Ring of Fire,” about 500 kilometres north of Thunder Bay. Two proposed projects – the Black Thor chromite mine being undertaken by Cliffs Natural Resources, and the Eagle’s Nest nickel and copper mine being undertaken by Noront resources – are in the early stages of development. That means now is the time for First Nations groups to try to influence how the projects proceed.

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NEWS RELEASE: First woman to take the helm of the Mining Association of Canada

Zoë Yujnovich of the Iron Ore Company of Canada elected as Chair of MAC

OTTAWA, June 19, 2013 – The Mining Association of Canada (MAC) is pleased to announce that Zoë Yujnovich, President and CEOof Canada’s largest iron ore producer,the Iron Ore Company of Canada (IOC), has been elected as Chair of MAC for a two-year term. She isthe association’s firstfemale Chair in its 78-year history.

Effective today, Ms. Yujnovich replaces Ian Pearce, former CEO of Xstrata Nickel, who served as Chair from June 2012 until his resignation fromXstrata Nickel in May 2013.

“Our association has had increasing female representation on the MAC Board of Directorsfor many years, but Zoë’s appointment to Chair is an important milestone and signifiesthe growing leadership role of women in mining,” said Pierre Gratton, MAC’s President and CEO. “We would like to thank Ian for his leadership over the years as both Chair and a long-time Board member, and we welcome Zoë to her new role.”

Ms. Yujnovich has been an active member of the MAC Board of Directors and Executive Committee since 2010 as First Vice-Chair. In this capacity, she helped guide the association’s activities and supported the industry’s progress in many areas.

“It is a privilege to be elected by my industry peers as Chair of the Mining Association of Canada,” said Ms. Yujnovich.

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Excerpt: From Meteorite Impact to Constellation City: A Historical Geography of Greater Sudbury – by Oiva W. Saarinen

To order a copy of “From Meteorite Impact to Constellation City”, please click here: http://www.wlupress.wlu.ca/Catalog/saarinen-meteorite.shtml

Sudbury: A Union Town? (Part 3 of 5)

The 1958 Inco Strike

The first action in what was to become the “year of the strike” was taken by Inco, when it announced on March 15, 1958, that due to the economic recession, it was reducing production and laying off 1 000 employees in Sudbury, and 300 in Port Colborne. This was followed on May 23 by a further layoff of 300 men. On June 17, Inco placed all of its remaining hourly rated workers on a 32-hour week. The fact that the latter two layoffs took place during the negotiating process for a new contract added fuel to the fire. By this time it was clear that Inco, with its substantial stockpile of inventory during a period of reduced demand for nickel, was in a stronger bargaining position; as well, the company had no fear of a production shutdown, as this would allow it time to develop new domestic markets for nickel to replace decreasing military demands.

While negotiations were taking place, a number of wildcat provocations occurred at several plants and mines. Since Local 598 had advocated to its members that they should continue working, suspicions were raised that dissidents within the union were deliberately using these tactics to force Mine Mill into a questionable strike. When further meetings with the company proved unsuccessful, conciliation talks were held. The conciliation board favoured the company position and recommended a one-year contract. Not satisfied with this response, the union went on strike on September 24. For the first time since the chimneys in Copper Cliff were built, the smoke plumes were absent. Thus began a series of mining-related events that were to haunt the Sudbury area for the rest of the century.

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Gold plunges again: unleashes perfect storm for the bears – by Lawrence Williams (Mineweb.com – June 20, 2013)

http://www.mineweb.com/

Ben Bernanke’s latest statements on QE hit the gold market hard, driving prices down below the $1300 level in this morning’s trading. There could still be worse to come for the gold bulls!

FUNCHAL, MADEIRA (MINEWEB) – Some heavy selling following Ben Bernanke’s upbeat statement suggesting a cutting back of QE later this year, and a possible end next, hit gold hard overnight with the bullion price falling back close to $1300 before making a small recovery – and then falling back again in London to breach the $1300 level on the downside in a very volatile market. There were renewed sales from the big SPDR gold ETF, GLD, taking it down below 1,000 tonnes for the first time since February 2009.

SocGen’s analyst Michael Haigh was predicting a fourth quarter gold price average of only $1200 while Nouriel Roubini would have been smiling given his recent prediction that gold would fall back to $1,000. The U.S. dollar surged, seemingly yet another nail in gold’s coffin. All in all something of a perfect storm for gold bears. Could the downturn be turning into a rout?

It hard to tell through all this volatility but some of the attacks on gold are misguided. There appears to be a general belief that gold protects against inflation, thus if inflation is taken out of the equation, gold must fall. But long term research doesn’t necessarily show this to be accurate. Gold does tend to rise on fears of inflation, but some of its best performances in the past have been in recessionary periods – and most notably during the years of the Great Depression of 1929 and thereafter. We’re not saying that we are heading for a repeat of this, but the dangers that we could be falling into another such period are far from over.

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Editorial: Dousing the Ring of Fire – by John Cumming (Northern Miner – June 19, 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

In these times of economic and political turmoil, boring has become the new exciting.

One of the surprises of the year that in some ways isn’t such a big shocker is Cliffs Natural Resources’ announcement this past week that it is suspending work at its $3.3-billion Black Thor chromite project in northern Ontario’s Ring of Fire camp.

The Cleveland-based iron ore and met-coal giant says it’s suspending environmental assessment (EA) activities for the project “due to delays related to the environmental assessment process, land surface rights and negotiations with the Province of Ontario.”

Cliffs goes out of its way to point out that it believes support for the project is somewhat lacking in the province, stating that “certain critical elements of the project’s future are not solely within our control and require the active support and participation by other interested parties.”

The sticking points the company lists are: delayed approval of the terms of reference for the provincial EA process; uncertainty regarding the federal EA process due to a judicial challenge by impacted First Nations; unresolved surface rights issues following a February 2013 Mining and Lands Commissioner hearing; and unfinished agreements with the Ontario government.

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Glencore Loan Wins Banks on Future Business: Corporate Finance – by Stephen Morris (Bloomberg News – June 19, 2013)

http://www.businessweek.com/

Glencore Xstrata Plc (GLEN) raised the biggest loan on record for a commodity trader at interest rates below those offered to competitors as the 80 banks backing the deal count on winning future business from the company.

The world’s biggest publicly-traded commodity supplier signed $17.3 billion of revolving credit facilities last week, paying a margin of 90 basis points more than benchmark rates for a three-year portion, according to data compiled by Bloomberg. That’s 47.5 basis points less than Vitol Group, the largest independent oil trader, pays on its main $5 billion credit line, and 100 basis points less than Trafigura Beheer BV’s $2.9 billion deal, the data show.

“Banks have fallen over themselves to provide credit as they see Glencore Xstrata as an active and attractive counterparty, which has a big trading book,” said Jeff Largey, head of European metals and mining equity research at Macquarie Group Ltd. (MQG) in London. “Glencore Xstrata is seen as a growth company, it’s been acquisitive in the past and it will remain so. If you’re seen as extending credit to them, that potentially opens up other business opportunities.”

Glencore, which generated revenue of $214 billion last year trading commodities including coal, oil and corn, awards relationship banks ancillary business in trade financing, currency hedging, and acquisitions, according to David Mannarino, a Brussels-based corporate banker for Fifth Third Bancorp, which lends to the company.

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NEWS RELEASE: Norton Rose Fulbright named Mining Law Firm of the Year for second consecutive year

Awarded by 2013 Who’s Who Legal Awards – June 14, 2013

Global legal practice Norton Rose Fulbright has been named Mining Law Firm of the Year in the 2013 Who’s Who Legal Awards, for a second consecutive year.

Who’s Who Legal is the official research partner of the International Bar Association. It names the leading lawyers in each field of law, based exclusively on the findings of an independent six-month research process that encompasses feedback from clients, private practitioners and other experts in the sector.

During the course of their research, more Norton Rose Fulbright lawyers were selected for inclusion in the mining category than any other legal practice.

Martin McCann, head of infrastructure, mining and commodities at Norton Rose Fulbright, commented: “Winning this award for the second year in a row is especially gratifying, particularly as these awards are based on the views of key players in the market.”

“Our international footprint continues to grow and this award is recognition for the strength of our practice in all the key mining hubs and our experience in advising on mining transactions in every major mining region in the world.

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‘Huge opportunities’ for Canadian mining industry to work in developing countries – by Kim MacKrael (Globe and Mail – June 19, 2013)

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 — Canada’s international co-operation minister says there are “huge opportunities” for the country’s mining industry to work with the Canadian government in developing countries.

Speaking at the annual board of directors’ meeting for the Mining Association of Canada, Julian Fantino said the extractive industry can play an important role in Canada’s international development efforts.

“There is huge, huge opportunities, I believe, for your industry,” Mr. Fantino said. He said mining companies are already working successfully with the Canadian government and NGOs, adding, “I encourage you to stay tuned.”

The Conservative government views the mining sector as an important player in its international development efforts as it works to increase partnerships with the private sector. Earlier this month, Prime Minister Stephen Harper announced that Canada would work with Tanzania and Peru on governance issues in the extractive industry. Canadian mining companies will also have to meet new requirements on disclosing payments to governments, Mr. Harper said.

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UPDATE 2-Brazil mine bill proposes royalty hike – by By Jeb Blount (Reuters U.S. – June 18, 2013)

http://www.reuters.com/

RIO DE JANEIRO, June 18 (Reuters) – Brazil, the world’s second-largest producer of iron ore, unveiled a long-awaited bill to reform the country’s 46-year-old mining code on Tuesday, proposing royalties of up to 4 percent, double the current rate.

Murilo Ferreira, chief executive of Vale SA, the world’s largest iron ore exporter, said the bill would hit miners hard. He estimated the government’s total take from royalties would rise to $4.2 billion reais ($1.93 billion) from $1.7 billion reais.

Even so, provisions of the bill are less onerous than the mining industry had feared when the discussion of reforms began
nearly four years ago. The top rate under the proposal is only one-third of basic royalties charged in Australia, for example.

Brazil is getting ready to enact the reforms at a time when the mining industry is experiencing a sharp slowdown. When the
bill was first proposed in 2009, the industry was in one of its most prosperous periods ever. Vale’s preferred shares, the Rio de Janeiro-based company’s most-active class of stock, rose 1.8 percent in early afternoon trading in Sao Paulo.

The legislation will test the government’s efforts to reduce tensions with investors, many of whom have criticized President Dilma Rousseff’s economic polices as erratic and her attitude toward business “heavy handed.”

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The value of mining in Arizona – by Jonathan DuHamel (Tucson Citizen – June 18, 2013)

http://tucsoncitizen.com/

Without minerals, we would not have electricity, food, or shelter. Minerals make today’s technology-based life possible, but that’s something many of us take for granted. We want the benefits from those minerals, but some want mining of minerals to be in somebody else’s neighborhood. The importance of mining has long been recognized:

If we remove metals from the service of man, all methods of protecting and sustaining health and more carefully preserving the course of life are done away with. If there were no metals, men would pass a horrible and wretched existence in the midst of wild beasts… -Georgius Agricola, in De Re Metallica, 1556.

For Arizona, it is not just metals. Arizona produces sand and gravel, limestone for cement production, coal for electrical generation, and a variety of industrial minerals which contribute almost $2 billion to Arizona’s economy.

Arizona has a long history of mining. There is archeological evidence that cinnabar, coal, turquoise, clay, pigments, and other minerals were mined in Arizona beginning at least 3,000 years ago.

According to the Arizona Mining Association, Arizona currently produces 68% of domestically mined copper. With that copper production comes by-product molybdenum, gold, silver, platinum, and rhenium.

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Bob Rae quits as MP in ‘very emotional’ decision [Ring of Fire First Nations negotiator] – CBC News Sudbury (June 19, 2013)

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

The former interim Liberal leader says he wants to devote his time to First Nations issues

Bob Rae, who served as interim Liberal leader following the party’s disastrous showing in the 2011 election, is stepping down as an MP, CBC News has learned.

Rae told his Liberal colleagues of his decision during Wednesday’s party caucus meeting, an announcement that was met with tears and applause, according to sources.

Rae recently accepted the role of chief negotiator for First Nations in talks with the Ontario government about development of the Ring of Fire, and is to tour the nine Matawa communities in the mining and resource-rich area of Northern Ontario this summer. Rae is a former NDP premier of the province.

At a news conference with Liberal Leader Justin Trudeau in the foyer of the House of Commons, Rae said that work as a lawyer and mediator was taking more and more of his time and he felt he needed to focus on his role with the First Nations. He didn’t say when his resignation would be effective.

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