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Metals and mining seen as Ontario’s ‘star performer’ this year – by Henry Lazenby (MiningWeekly.com – May 22, 2013)

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

TORONTO (miningweekly.com) – Metals and mining are expected to be Ontario’s “star performer” on the export stage this year, with the sector that makes up 34% of the province’s exports expected to grow by 15% in 2013.

Export Development Canada’s (EDC’s) ‘Global Export Forecast for Ontario’, released on Wednesday, stated the province’s exports would get a “huge” boost this year, thanks to the double-digit surge in metal exports. EDC chief economist Peter Hall said the improvement was timely.

“Ontario mineral producers can expect to ship a lot more volume in 2013, which will help to offset lower base metal prices. Gold production will jump by over 20%, while nickel output will be more muted. Added to that, chemical manufacturing, which will spike towards the end of the year, will round out a solid sectoral performance,” Hall said.

This sector was expected to grow by about 2% in 2014. EDC expected Ontario’s total international exports to grow by 8% this year and by another 4% in 2014.

Hall pointed out that after a few years of double-digit gains, the automotive sector would slow considerably, held back by tight capacity. “A revival of US private investment will be really good for Ontario’s machinery and equipment industry this year and next,” he said.

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Harper visit to Peru targets better use of mining royalties to alleviate poverty – by Heather Scoffield (Canadian Press/CTV News – May 22, 2013)

http://www.ctvnews.ca/

LIMA, Peru — Canadian mining companies hope that Stephen Harper’s visit to Peru will lead to better use of the billions in royalties and taxes that are sitting idle in a country where poverty is still a large problem.

Harper met mining executives Wednesday before a lengthy tete-a-tete with Peruvian President Ollanta Humala Tasso.
The executives stressed the need for regional governments to invest the royalties and taxes in local initiatives that will help alleviate poverty that affects more than half the rural population of Peru.

Humala, too, said he wants to see better social inclusion as a result of the mining activity that dominates his country’s economy.

Regional governments are sitting on up to $4 billion in unspent royalties, money lying idle in government bank accounts.
The pressure to “publish what you pay” in Peru is part of a push from mining companies and G8 governments that is gaining momentum around the world, said Glenn Nolan, president of the Prospectors and Developers Association of Canada. Nolan was in Lima to meet Harper.

“We want to see good laws and transparency so that our (royalties) go back into the community,” Nolan said in an interview.

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Tapping Quebec’s oil opportunity – by Shawn McCarthy (Globe and Mail – May 23, 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 – Texas-based Valero Energy Corp. will invest as much as $200-million in its Quebec refinery if Enbridge Inc. proceeds with its plan to reverse its Line 9 pipeline, a project one Quebec business leader described Wednesday as critical to the province’s refining and petrochemical industry.

In a presentation to analysts, Valero chief executive officer Brian Klesse said the San Antonio-based company has committed to take “substantial volume” of light crude from Enbridge’s Line 9, which, subject to regulatory approval, will be reversed to bring oil from western North America to Montreal. Valero will then deliver the crude from Montreal to its refinery near Quebec City by company-owned ships down the St. Lawrence.

Valero plans to invest between $110-million and $200-million to overhaul its handling capacity at the refinery, including increased tankage and new crude-carrying ships, in order to increase access to North American crude. That will provide it with a competitive advantage over Atlantic basin refineries that rely on high-priced imports.

In addition to supporting Enbridge’s Line 9B reversal, Valero is expanding the 265,000-barrel-a-day refinery’s ability to receive western crude by rail and will import up to 50,000 barrels a day from Texas’s prolific Eagle Ford tight oil play.

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Eastern pipelines needed to revive Quebec refinery and petrochemicals industry – by Yadullah Hussain (National Post – May 23, 2013)

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

TORONTO — Moratoriums and new regulations in Quebec are sending a signal to the investment community to take their business elsewhere, Françoise Bertrand, president and CEO of Fédération des chambres de commerce du Québec said Wednesday.

Ms. Bertrand was in Toronto to push her 1,200 members’ pro-pipeline message as Quebec’s minority government under Premier Pauline Marois takes a tough stance on fossil fuel development. This month, the government proposed a five-year ban on fracking and has also proposed higher royalties on mining companies.

“We are very concerned with energy,” Ms. Bertrand said in an interview, noting companies are leaving the province due to high royalty and moratorium proposals being proposed by the government.

“I think she [the Premier] was sincere when she met the Alberta Premier [Alison Redford], but I think it’s more difficult than she had envisaged in terms of delivery.”

Five Quebec refineries have closed down in the past 30 years as they slowly lost their competitive edge. Shell, meanwhile, shuttered its 161,000-barrels-per-day Montreal refinery two years ago and is in the process of dismantling the facility, snuffing out any hopes of reviving the project.

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Barrick Weighs Shrinking to Add Profits: Corporate Canada – by Liezel Hill (Bloomberg News – May 22, 2013)

http://www.bloomberg.com/

May 22 (Bloomberg News) — Barrick Gold Corp. (ABX), the biggest miner of the metal by sales, is considering shrinking in size as the company focuses on returns over production volumes, Chief Executive Officer Jamie Sokalsky said.

“Being more profitable is better than being bigger,” Sokalsky said yesterday at the Bloomberg Canada Economic Summit in Toronto. “If we divested of some of those smaller, higher-cost assets and came down to a suite of assets that are long-lived and lower-cost and more valuable, I think that ultimately that can be a better investment proposition.”

Gold producers are trading at their cheapest in more than a decade relative to the broader market, according to data compiled by Bloomberg, as investors flee the industry amid rising mining costs, project delays and asset writedowns.

Sokalsky, who took over as CEO of the Toronto-based company 11 months ago, is reviewing growth plans and pursuing asset sales as gold trades at a two-year low and is poised to end a rally that has extended for 12 straight years.

Barrick, the owner or part owner of 27 mines, rose 2.1 percent to C$20.29 at 9:43 a.m. in Toronto. The company closed at a two-decade low on April 17, losing its position as the top gold miner by market value to Vancouver-based Goldcorp Inc. (G) last month.

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Swedish City Is Displaced by Race for Arctic Iron – by Niklas Magnusson and Johan Carlstrom (Bloomberg Business Week – May 21, 2013)

http://www.businessweek.com/

Swedes living in the Arctic town of Kiruna are packing up their belongings before their homes are bulldozed to make way for iron ore mining driven by Chinese demand.

LKAB (LKAB), Sweden’s state-owned mining company, opened a new level yesterday, more than 1 kilometer (3,281 feet) below the town, to be able to continue tapping the world’s largest contiguous body of iron ore. Many of the 18,000 who live above the deposit in the Scandinavian nation’s fourth-richest county will move a few kilometers east to accommodate the mine.

The extreme measure underscores the lengths to which governments and companies are willing to go to gain access to commodities prized by importers like China, the world’s fastest-growing major economy. And with LKAB producing 90 percent of all iron in the European Union, the willingness of Swedes to move is proving key to the whole region’s access to the metal.

“The move is of course crucial for the continuation of mining in Kiruna,” LKAB Chief Executive Officer Lars-Eric Aaro said in a May 20 phone interview. “Being Sweden’s seventh-largest exporter and third-biggest taxpayer, in addition to the dividend we pay the state each year, this is a national matter.”

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Canada Works – by Mark Carney: Governor of the Bank of Canada (May 21, 2013)

Presented to: Chambre de commerce du Montréal métropolitain (CCMM)/Board of Trade of Metropolitan Montreal, Montréal, Quebec on May 21, 2013

Introduction

It is almost six years since the start of the global financial crisis, and its dynamics still dominate the economic outlook.

In the United States, households are emerging from a painful period of deleveraging. Their economic expansion continues at a modest pace, with gradually strengthening private demand partly offset by accelerated fiscal consolidation. Despite recent progress, the U.S. economy has not yet achieved escape velocity.

Europe remains in recession, with economic activity constrained by fiscal austerity, low confidence and tight credit conditions. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens.

Europe can draw lessons from Japan on the dangers of half measures. It is now more than two decades since the Japanese financial crisis erupted. To end its debilitating legacy, Japan has just embarked on a bold policy experiment. Its success or failure will have a major impact on the outlook over the coming years.

Amongst the G-7, Canada is unique. For us, the global financial crisis was an external rather than internal shock. When Canadian policy-makers responded quickly and forcefully, our financial system channelled credit to where it was needed and our economy adjusted smartly.

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Mining Future is Bright for First Nations – by Stan Sudol (Onotassiniik – Summer 2013)

A version of this column was recently published in the premier issue of Onotassiniik, Wawatay’s Mining Quarterly http://onotassiniik.com/

Stan Sudol is a Toronto-based mining analyst, communications consultant and owner/editor of the RepublicOfMining.com website. www.republicofmining.com  stan.sudol@republicofmining.com

While this year’s PDAC mining convention was filled with gloom and doom for both junior explorers and large miners, let’s remember that we are still in the middle of one of the largest expansions of mining activity in the history of mankind. Even in past commodity super cycles – the most recent occurred from the mid 1940s to the late 1970s – there were significant “corrections” but the overall trend was always upwards.

Well-respected Scotia Commodity expert Patricia Mohr recently stated that she feels that there will be a slowdown in exploration and mining activity in the next few years but the “bull run” will return in the second half of the decade.

As hundreds of millions of people in China, India and other developing nations urbanize and industrialize they will need the minerals that we dig out of the ground in northern Ontario and Canada. Mining has always been a boom and bust business and it is no different this time.

However, this slowdown will also give the First Nations surrounding the Ring of Fire a chance to access their training and infrastructure needs, allow ample time to complete and resolve environmental studies – hopefully Cliffs and the federal government will come to their senses and switch to the broader Joint Review Panel Environmental Assessment that most First Nations in the Ring of Fire prefer – as well as resolve outstanding resource revenue sharing issues with governments.

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Sudbury: Ontario’s mining superstore – by Dick DeStefano (Sudbury Mining Solutions Journal – May 2013)

Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA).destefan@isys.ca This column was originally published in the May 2013 issue of Sudbury Mining Solutions Journal.

SAMSSA is having a banner year on its tenth anniversary with multiple accolades recognition and events. One of the most important acknowledgements came from The Canadian Chamber of Commerce.

A study entitled, Chamber of Commerce Mining Report Mining Capital-How Canada Transformed its Resources Endowment into a Global Competitive Advantage, announced the importance of years of effort by SAMSSA to identify the “Sudbury Mining Cluster” as the leader in underground intelligence in Canada.

The report demonstrates how Canada is home to a number of competitive clusters that deserve greater recognition not only for Canadians but from the Canadian Government as well. After multiple interviews with the Canadian Chamber researchers the following important statements were included in the Study:

  • Toronto is the small to medium capitalization finance capital of the world, boasting a unique collection of experts and institutions that draw exploration and mining companies seeking capital from around the world.
  • Vancouver has established itself as a global hub of the exploration sector, running projects in Africa, Asia, South America and Europe well as Canada and the United States.
  • Sudbury’s emerging mining supply and technology cluster is the “superstore” of Ontario for underground mining with the potential to become a global leader.

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B.C. mining company justified in bringing in Chinese workers, Federal Court rules – by Tobi Cohen (Vancouver Sun – May 22, 2013)

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

OTTAWA — The government was justified in issuing a positive labour market opinion that allowed a British Columbia mining company to hire 201 temporary foreign workers from China, the Federal Court ruled Tuesday.

The decision comes after two unions challenged the government and the companies involved, arguing Canadians are available to do the jobs required and that it was not necessary to look outside the country for foreign labour.

The incident touched off a massive debate over Canada’s Temporary Foreign Worker Program, with the government promising, and eventually delivering on, a number of changes to protect Canadian jobs.

While the Construction and Specialized Workers’ Union and the International Union of Operating Engineers ultimately lost their court case, their lawyer, Lorne Waldman, said it’s far from a total defeat.

“I’m disappointed that the courts opted to uphold the decision, but having said that, I think the importance of the case goes far beyond this decision,” he said. “I think this case was an extremely important one and was successful because it ultimately exposed some of major shortcomings in the labour market opinion process and forced the government to make changes.”

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In Peru, PM’s officials say Harper will answer questions on Senate controversy – by Heather Scoffield (Canadian Press/CTV News – May 22, 2013)

http://www.ctvnews.ca/

LIMA, Peru — The Senate expenses scandal is turning Prime Minister Stephen Harper’s visit to South America into an awkward communications exercise.

Harper’s officials have indicated that the prime minister will finally take questions early this afternoon on the Prime Minister’s Office involvement in reimbursing Senator Mike Duffy $90,000 for improper housing expense claims.

But Harper will be next to Peruvian President Ollanta Humala Tasso in a joint presentation that was supposed to be about boosting the mining sector to aid development in Peru.

So Harper took the rare step of announcing a $53-million aid package and the text of the joint statement well before holding any meetings with Peruvians in the hopes of garnering some attention for his policy plan.

The $53 million will be spread over six years and go towards mining-related initiatives and education — a new and controversial approach for Canada’s aid and foreign policy that places natural resource extraction and promotion of Canadian business at the centre.

“Canada is committed to working with countries in the Americas to support development through sustainable economic growth and improved education,” Harper said in a news release.

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Gold space now a ‘buyer’s market’, Barrick chief says – by Peter Koven (National Post – May 22, 2013)

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

TORONTO – Gold mining stocks have been decimated in recent months, but Jamie Sokalsky does not think investors should expect any corresponding uptick in M&A activity.

Speaking at the Bloomberg Canada Economic Summit, the chief executive of Barrick Gold Corp. said there is a general “anti-M&A” mood in the gold space right now, and that investors don’t even ask him about it much anymore.

“It’s a lot harder to sell assets now than it would have been a year or two ago,” he said, adding that it is a “buyer’s market.”

Until recently, Barrick would have been taking advantage of a buyer’s market to snap up almost anything that caught its eye. But as the company shifts its focus from growing production to growing profitability, it is trying to dump its smaller and higher-cost mines rather than purchase anything new.

The Toronto-based miner has stated that its oil, nickel and Tanzanian gold assets are on the block, and sources confirmed to the Financial Post that its Australian gold mines are being shopped as well. Other seniors are also keen to shed non-core assets to upgrade their portfolios.

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NEWS RELEASE: Chile ranked third as most attractive country for copper mining investments (Merco Press – May 21, 2013)

Chile is the third most attractive country for copper mining investments behind Canada and Australia according to a report from the Chilean Copper Committee, Cochilco that includes fifteen leading countries in the industry and was released this week by Mining minister Hernan de Solminihac in Santiago.

“After analyzing all variables, Chile is placed in third place among the most attractive countries for investments behind developed mining powerhouses such as Canada and Australia”, said Solminihac.

The ranking was based taking into account structural aspects of the different economies from the World Economic Forum and the Heritage Foundation records, as well as information on investing conditions in the mining sector in countries provided by the Fraser Institute.
According to the Chilean minister Cochilco took into account six variables: macroeconomics, political stability, labour specialization, business infrastructure, licences and geological potential.

“The work included the fifteen countries with the largest copper mining developments in the next decade with a total of 120 projects which imply investments in the range of 240 billion dollars”, said Solminihac. Of that number of projects, 32% are in Chile.

Chile is also the world’s leading producer and exporter of copper and is enjoying the benefits of world demand bonanza led by China.

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LNG: The race for the next ‘Fort McMurray’ – by Drew Hasselback (National Post – May 22, 2013)

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

You’ve been hearing about the many liquefied natural gas projects that are planned for British Columbia’s west coast over the next few years. What you might not know is the degree to which LNG is already dominating the work done by energy lawyers in Calgary.

The oil sands are still chugging along, and the battle to build oil pipelines won’t end soon — especially with the surprise re-election of the pipeline friendly BC Liberals in British Columbia. The oil files alone can fill the desks of a great many energy lawyers. Yet the chase for LNG projects is well underway. There’s a bit of a gold rush mentality in the air.

“LNG feels like the next Fort McMurray,” says Chad Schneider, a partner with Blake, Cassels & Graydon LLP in Calgary. Adds Brock Gibson, chairman of Blakes: “People are already working around-the-clock on those deals.”

“Each of the larger projects would be amongst the largest things ever constructed in B.C.,” says Paul Wilson, a partner in the Vancouver office of Fasken Martineau DuMoulin LLP. “It’s probably more than half of what we’re doing day to day.”

Proponents are backing the development of at least 10 multi-billion dollar LNG plants for B.C.’s west coast. Many are early stage proposals, and not all will be built. Mountains of paperwork and millions of dollars in fees are needed to transform such complicated projects from dream to reality. Yet the projects are backed by some well-financed and technically able players — BG Group PLC, Imperial Oil Ltd., Nexen Inc., Royal Dutch Shell PLC, just to name a few.

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An adapt-or-die moment for junior miners – by By: Alisha Hiyate (Mining Markets Magazine – May 21, 2013)

http://www.miningmarkets.ca/

Survival in indifferent market will depend on tapping alternative financing options

Newsletter writer and mining analyst John Kaiser sounds a little dejected as he describes the utterly bleak state of the mining industry today. “The phones are completely dead, nobody cares,” says the editor of Kaiser Research Online. “Companies can’t raise money, it’s like a complete dying sector.”

Kaiser made a now-famous prediction last year that around 500 juniors were bound for “extinction” because of an inability to raise capital, low share prices and negative sentiment on commodities.

As of mid-May, that number has grown: Of the roughly 1,800 publicly listed TSX and TSXV companies involved in mining or exploration and listed in the KRO database, 694 had less than $200,000 in working capital — basically the amount needed annually to maintain a listing. Kaiser adds that about 70% of all the companies in the KRO database are trading at below 20¢.

“It’s starting to feel like 1999, and we still had several more years to go after that,” Kaiser says of the last prolonged downturn in the industry. “That’s when the dot-com stuff was taking off and I remember subscribers mocking me for still talking about resource stocks, they were history — technology was the place to be.”

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