Republic of Mining

Miners may take more hits from weak gold prices after Newcrest – by Reuters U.S. (June 10, 2013)

June 10, 2013

http://www.reuters.com/

SYDNEY/TORONTO – (Reuters) – The pain is not likely to be over for investors in mining shares after the steepest drop in gold prices in a generation led to a $6 billion asset writedown at Australia’s Newcrest Mining, fuelling speculation of more to come.

A $200 plunge in prices in two days in April heightened fears that gold’s 12-year rally may have topped out.

For nearly a month the price has languished around 1,400 an ounce, which could force more miners to write down the value of their reserves – calculated based on a higher price – and eroding the value of projects, some of which may no longer be profitable.

Gold miners were already struggling with the impact of soaring costs, including higher wages for workers and fuel prices, which have reduced margins and eaten into cash generation.

“We certainly expect we will see further writedowns from other producers as we … get closer to reporting season. It could be a trend,” said David Lennox, an analyst at Fat Prophets.

Newcrest, Australia’s biggest gold miner, said on Friday it would write down the value of mines in Australia, Papua New Guinea and Africa.

Allana in Ethiopia Snubs Potash Supply Concern: Corporate Canada – by Christopher Donville (Bloomberg News – June 10, 2013)

June 10, 2013

http://www.businessweek.com/

Allana Potash Corp. (AAA), the Canadian developer of a $642 million potash mine in Ethiopia, says predictions of a global oversupply of the crop nutrient are overblown because competing projects are being put on hold.

World potash production capacity will rise 38 percent to 96.5 million metric tons by 2017, while demand will increase 26 percent to 66 million tons, according to Green Markets, a fertilizer industry information provider.

Supply forecasts include mines that aren’t yet in production and may be shelved or canceled because of rising construction costs, said Farhad Abasov, Toronto-based Allana’s chief executive officer.

“On paper it seems like there is quite a bit of supply coming on line,” Abasov said in a May 28 telephone interview from London. “In reality only a handful of them will hit production.”

Soaring expenses are beginning to exact a toll on proposed potash mines around the world. Vale SA, the third-largest mining company, in March suspended its Rio Colorado project in Argentina after the estimated cost almost doubled to about $11 billion.

$3bn hit for WA’s biggest mine moguls – by Paul Garvey (The Australian – June 10, 2013)

June 10, 2013

http://www.theaustralian.com.au/business

ALMOST $3 billion has been wiped off the net worth of some of Perth’s most prominent mining executives this year, underscoring the pain being felt at the top end of a West Australian economy that appears to be cooling rapidly.

An analysis of data by The Australian has found that the average value of the shareholdings held by 10 of the biggest names in WA’s resources-dominated economy has fallen by more than 38 per cent from the peaks of the past six months.

The biggest fall in dollar terms has been felt by Andrew Forrest, whose major shareholding in Fortescue Metals Group has shed almost $2.1bn since the iron-ore miner reached its 2013 peak of $5.39 a share on Valentine’s Day.

In percentage terms, those hardest hit have come from the mining services sector.

Ron Sayers, the founder of drilling contractor Ausdrill, has seen his stake in the company plummet by 61.7 per cent in less than four months. Ausdrill stock has come under particular pressure in recent months, as investors bet on mining companies cutting back on discretionary spending on exploration drilling in an effort to rein in costs.

Fraser Mackenzie will likely be the first of many boutique brokerages to die – by Matthew McClearn (Canadian Business Magazine (June 10, 2013)

June 10, 2013

http://www.canadianbusiness.com/

Investment dealers fade away.

Having spent 33 years in the brokerage industry, Mark Polubiec was well acquainted with its often vicious cyclicality. Even so, the gathering clouds he saw late last fall left him fearful for Fraser Mackenzie, the small firm for which he served as chairman and CEO. Although it was well capitalized, he says, its revenues dwindled abruptly. After months of considering the options, Fraser Mackenzie’s 22 shareholders (most also employees) decided in April to wind the firm down. “We could have ridden it out for at least a couple of years,” Polubiec says. “But at the end of that, if nothing had changed, we’d have squandered our capital.”

Fraser Mackenzie’s closure is emblematic of the challenges facing Canada’s approximately 185 boutique investment dealers. Like many others, it derived much of its revenues from fees earned helping early-stage resource companies raise money on equity markets. That business has dried up. According to Ernst & Young, the proceeds to mining companies from initial public offerings last year fell 81%. It’s not that resource companies don’t need the money; a report prepared for the Prospectors and Developers Association of Canada warned many juniors have “perilously low” working capital balances. But investors’ aversion to risk left juniors almost wholly unable to raise money.

Fraser Mackenzie faced another challenge that sealed its fate. It served institutional clients, helping them buy and sell shares primarily on Canada’s largest exchanges. In recent years, those clients have gained access to new, lower-cost channels such as direct market access (DMA), electronic trading facilities that allow them to bypass intermediaries and execute their own trades.

OMA NEWS RELEASE: Vale’s Kelly Strong elected as the OMA’s 78th chairman

June 10, 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.

The Ontario Mining Association’s Board of Directors has appointed Kelly Strong as the new chairman of the industry organization. Mr. Strong is Vice President of Vale’s Ontario and U.K. Operations. The OMA, whose members are involved in various aspects of the environmentally responsible exploration, production and processing of mineral resources in Ontario, is one of the longest serving trade organizations in the country. This year, the OMA is celebrating its 93rd anniversary.

Mr. Strong becomes the 78th chairman of the OMA. He succeeds Marc Boissonneault, Xstrata Nickel’s Vice President for Sudbury Operations. Mr. Boissonneault served in this position for three years. We thank him for his leadership and his efforts as OMA Chairman on behalf of OMA members and the entire industry.

“We greatly appreciate the dedication and direction of Mr. Boissonneault during his tenure as OMA Chairman,” said OMA President Chris Hodgson.

“During his chairmanship, mining had a positive and important presence at Queen’s Park, the membership of the OMA expanded and many of the outreach and education efforts such as the So You Think You Know Mining high school video competition gained widespread acceptance and interest.”

Chinese gold miners’ hope for riches shattered by Ghana crackdown – by Kathrin Hille (Financial Times/Globe and Mail – June 9, 2013)

June 10, 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.

SHANGLIN, GUANGXI PROVINCE — When Wen Haijian left home on May 20 last year to dig gold in Ghana, he promised to bring back a fortune. Those hopes were shattered when an urn with his ashes returned last month.

“A gang of armed robbers came to his mine on April 16,” says his wife, sobbing in front of two framed pictures of Wen, a serious-looking, tall man with a square mustachioed face. “When he got up at night to check on the machinery, they shot him right in the head.”

In Shanglin, a poor county in the southwestern Chinese province of Guangxi with a population of 470,000 people, most of the inhabitants are old people, women or children because so many men have gone to Ghana. The county government estimates that 12,000 people from Shanglin are still in the west African country.

In Shuitai, Wen’s remote home village where almost everyone shares his surname, 100 of the 900 inhabitants are in Ghana. “On average, they go for three years,” says Wen Ruchun, a woman whose husband is in Ghana as well. “The first year, you build up the mine and earn your investment back, the second year you start making some money, and the third year you come home.”

BHP Billiton CEO ANDREW MACKENZIE – SPEECH TO THE MELBOURNE MINING CLUB

June 10, 2013

Above video from the Brisbane Times website: http://www.brisbanetimes.com.au/

BHP Billiton CEO ANDREW MACKENZIE – SPEECH TO THE MELBOURNE MINING CLUB

CHECK AGAINST DELIVERY

London – 6 June 2013

Tonight I amhere to talk about our global industry: where we have come from; where we are today; and where we are going.

Mining was a low-growth businessfor much of the 20th century so we were caught off-guard by the pace of China’s early-21st century urbanisation and industrialisation. It has changed our industry:

OPEC’s slipping grasp on the world’s oil market – by Shawn McCarthy and Jeffrey Jones (Globe and Mail – June 8, 2013)

June 10, 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 and CALGARY — OPEC ministers put on a brave face when pressed about one of a number of growing threats to the cartel’s influence over world crude oil markets – surging shale oil production in the United States.

At OPEC’s home base in Vienna last week, Saudi Arabia’s powerful oil minister, Ali al-Naimi, played down the impact of the light, sweet crude that is gushing in record volumes from beneath North Dakota’s bald prairie and the scrubby landscape of South Texas. “This is not the first time new sources of oil are discovered, don’t forget history,” he said. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”

Secretary-general Abdalla El-Badri was even more blunt: “OPEC will be around after shale oil finishes.” Despite the bluster from the biggest names in the 12-nation group that supplies a third of the world’s oil, however, it is clear the Organization of Petroleum Exporting Countries is getting nervous, and experts are questioning how long the cartel can act together to hold sway over global oil prices.

At the meeting, where the group kept its production ceiling of 30 million barrels a day, it also took the revealing step of forming a committee to study the impact of the hydraulic fracturing and horizontal drilling.

Learn from Alberta’s mistake – by Madelaine Drohan (Canadian Business Magazine – March 18, 2013)

June 10, 2013

http://www.canadianbusiness.com/

Provinces should save resources.

As they put together their 2013 budgets, the Canadian and Alberta governments complained mightily that lower-than-expected commodity prices were forcing them to make tough choices between spending and deficit reduction. Yet they wouldn’t be in this fix if they weren’t counting on volatile resource revenues to fund their spending plans in the first place.

What both governments should do instead—what every province in Canada should consider—is follow the lead of our global peers and treat non-renewable resource revenue as capital to be saved and invested, rather than income to be spent. In other words: establish sovereign wealth funds.

There have been feeble attempts to do this in Alberta and Quebec. British Columbia looks set to join them if the Liberal government lasts and follows through on its budget promise to set up a Prosperity Fund for natural gas revenues. And the Northwest Territories has put a structure in place for its own Heritage Fund.

Yet every government in Canada that collects significant revenues from oil, gas or minerals—in other words, nearly all of them—should have such a fund. And those that exist should be implemented with a great deal more rigour. This was, in fact, one of the International Monetary Fund’s recommendations in its latest review of the Canadian economy.

Contractors rush to Roy Hill as projects dwindle – by Andrew Burrell (The Australian – June 10, 2013)

June 10, 2013

http://www.theaustralian.com.au/business

GINA Rinehart’s $9.5 billion Roy Hill iron ore project has emerged as the potential saviour for scores of contractors and suppliers hit hard by the mining slowdown, with almost 2000 of them set to attend briefings this week to discuss opportunities from the huge development in Western Australia’s Pilbara region.

The turnout expected at meetings in Perth, Port Hedland and Newman starting today dwarfs the 800 who attended similar briefings just 10 months ago, before the deep anxiety over weaker commodity prices infected the sector.

The slump has forced mining companies to slash costs and defer or abandon some projects, leading to a string of profit downgrades by contractors including Transfield, WorleyParsons, Ausdrill, Calibre and Emeco.

Amid talk in WA that the state’s once-booming economy is headed for a recession, mining contractors desperate to fill their order books will clamour for work on Roy Hill, which is shaping up as one of the biggest mining projects in the west for several decades.

It is believed the main construction contractor, South Korean giant Samsung, will deliver contracts worth at least $4bn to local companies, providing a crucial injection into the economy.

WORLD VISION NEWS RELEASE: More Canadians would pay extra for products free of child labour, shows poll

June 10, 2013

Image with caption: "Mining is one of the worst forms of child labour. The heavy work can permanently damage a growing child's bones and muscles. Minerals mined are often hazardous and exposure to uranium and mercury can have profound health effects. Falling down open mine shafts, being trapped or injured by collapsing tunnels, or drowning while mining underwater are all serious threats. (CNW Group/World Vision Canada)". — “Mining is one of the worst forms of child labour. The heavy work can permanently damage a growing child’s bones and muscles. Minerals mined are often hazardous and exposure to uranium and mercury can have profound health effects. Falling down open mine shafts, being trapped or injured by collapsing tunnels, or drowning while mining underwater are all serious threats. (CNW Group/World Vision Canada)”.

June 10, 2013 – World Vision launches #nochildforsale campaign across Canada

MISSISSAUGA, ON, June 10, 2013 /CNW/ – Growing numbers of Canadians are willing to pay more for products that are free of child labour, according to a poll released just prior to the World Day Against Child Labour (June 12). Eighty-nine per cent of Canadians said they would pay more, up from 68 per cent last year. Canadians said they would pay on average 23 percent more to guarantee a purchase is child-labour free—this is double the amount they said a year ago.

International development organization World Vision commissioned the national Ipsos Reid poll a few weeks after the Bangladesh factory disaster which killed more than 1,100 textile workers. The incident sparked debate about retail supply chains and ethical consumerism.

Royalty hikes could dethrone Quebec’s mining sector – by Alana Wilson and Dr. Kenneth P. Green (Mining Facts.org – June 3, 2013)

June 10, 2013

http://www.miningfacts.org/

Canada is a king among mining nations, and until recently Quebec was the brightest jewel in its crown. In 2011 alone, the global mining sector invested $17 billion in Canadian operations and was directly responsible for $63 billion (3.9 per cent) of Canada’s GDP. [1] The mining sector is also an important contributor to the economy of Quebec, with mining and mineral manufacturing adding $10.2 billion (3.4 per cent) to provincial GDP in 2011, and $15.7 billion (24.7 per cent) of its total exports. [2] Quebec was ranked as the most attractive Canadian province for mining in recent years, but its edge is fading fast. And recently announced changes to the royalty regime in Quebec could threaten the mining sector’s future at a time when mining investors are already fleeing the province.

On May 6, Quebec announced long-awaited changes to its mining royalty regime. These changes will raise Quebec’s mining royalties to the highest in Canada and will introduce a host of factors that decrease Quebec’s attractiveness for mining investment. The first difference is in how the royalty is calculated: Instead of taxing profits, as is currently the case in Quebec, the new royalty regime will be based on the value of the ore being produced at a mine. In addition, a minimum royalty of one per cent of the ore value will be introduced for the first $80 million in output and four per cent for excess amounts. [2] These changes will result in companies paying royalties, regardless of whether or not they are profitable, and will compound problems during economic downturns and periods of low commodity prices.

A new three-tiered tax on profits will also be introduced with rates based on the profit margin: 16 per cent on up to 35 per cent profit, 22 per cent for profit between 35 and 50 per cent, and 28 per cent for profit above 50 per cent. [2] The proposed changes, scheduled to come into force in 2014, will require miners to pay the greater amount of either the minimum royalty or profit tax. [3]

Civil War Pretty Much Declared in Ely over [Minnesota Twin Metals] Sulfide Mining – by Bill Hanna Executive Editor (Mesabi Daily News – June 8, 2013)

June 19, 2013June 10, 2013

http://www.virginiamn.com/

ELY — A well-known self-described “612-er” pretty much issued a declaration of civil war in Ely over copper/nickel/precious metals mining on a cloudy and misty Saturday afternoon a week ago.

In combative remarks during an event to officially open the “Sustainable Ely” storefront in a house on the city’s main drag of Sheridan Street, former WCCO Twin Cities TV reporter/personality Don Shelby issued some marching orders directed against the proposed Twin Metals Minnesota nonferrous project near Ely and Babbitt.

Meanwhile, Twin Metals continues its work and involvement in the community, with one of its headquarters in Ely, while planning and setting the stage for a major project that will create more than 1,000 long-term jobs.

A group of more than 100 anti-sulfide mining supporters packed inside the house’s lower level were more than receptive to his comments, nodding in agreement and clapping in support. They embraced the hard-line message, many of them with stern facial expressions.

Shelby, who is also a board member of the Minnesota Center for Environmental Advocacy, which is headquartered in St. Paul, told the faithful that they won’t have to just fight the mining companies over proposed nonferrous projects in the area.

American decline has been exaggerated – by David Olive (Toronto Star – June 8, 2013)

June 10, 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.

Pundits who say America is on the decline are wrong, says David Olive.

The timing could have been better for Madeleine Albright’s assertion that “We are the indispensable nation. We stand taller. We see further into the future.”

That description of America by the Clinton-era secretary of state was followed, in the 2000s, by an epic foreign-policy blunder in Iraq; riotous greed culminating in a Wall Street meltdown and resulting Great Recession; and tragic incompetence by which New York and Washington were naked to their 9/11 enemies, and Hurricane Katrina destroyed a large portion of a great city, New Orleans.

Add in America’s more recent flirtation with defaulting on its unprecedented, staggering debt, and the U.S. display of varied ineptitude for all the world to see was bound to raise doubts about the shelf life of Pax Americana.

And that’s the context in which the superb American author Cullen Murphy, in his 2007 bestseller Are We Rome? The Fall of an Empire and the Fate of America, wrote ominously that “Whenever I see the space shuttle…I think back to the Rome of Hadrian’s day, and the gargantuan statue of the Sun-God, as tall as the shuttle, being dragged into place by 24 elephants.”