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Rio Tinto faces tough talks in Mongolia over giant mine – by Terrence Edwards and Sonali Paul (Reuters.com – February 1, 2013)

http://www.reuters.com/

ULAN BATOR/MELBOURNE, Feb 1 (Reuters) – Rio Tinto faces tough negotiations next week in Mongolia, where the government is under pressure to plug a budget deficit and increase its share of the wealth from the $6.2 billion Oyu Tolgoi copper and gold mine.

Oyu Tolgoi, 34 percent owned by Mongolia and controlled by Rio Tinto, produced its first concentrate this week and is on track to start supplying metal and paying royalties by June.

The success of the mine is crucial for both sides as, at full tilt, Oyu Tolgoi will account for nearly a third of Mongolia’s economy, while Rio Tinto is depending on the mine to drive growth beyond its powerhouse iron ore business.

Rio Tinto is not expected to have to give up a bigger share of the mine, but some analysts say it could end up agreeing to provide more funding in areas like infrastructure to remove uncertainty over a project that is expected to produce 425,000 tonnes of copper and 460,000 ounces of gold a year. Rio Tinto and its subsidiary, Turquoise Hill Resources Ltd , last year fended off an attempt by Mongolia to renegotiate their 2009 investment agreement on Oyu Tolgoi.

The government is drafting a law that would require Mongolians to hold at least a 34 percent stake in mines, however talk that this would apply to Oyu Tolgoi has died down.

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Ontario’s appeal of Grassy Narrows case wraps up – by Shawn Bell (Wawatay News – January 31, 2013)

http://wawataynews.ca/

A legal appeal with national implications on Aboriginal treaty rights now rests in the hands of the judges after arguments in Grassy Narrows versus Ontario closed last week.

The legal battle between Ontario and Grassy Narrows First Nation over clear-cut logging on Grassy Narrows’ traditional territory has been ongoing for over a decade. In 2011 an Ontario judge ruled in favour of the First Nation, essentially saying that Ontario did have not the authority to authorize logging that violated treaty rights.

Ontario’s appeal of the decision was “hard fought,” said Grassy Narrows’ legal representative Robert Janes. “This will be a precedent-setting case,” Janes said, adding that a decision may take anywhere from four to seven months given the case’s complexity and the likelihood it will go to the Supreme Court of Canada.

Ontario argues that the province has jurisdiction over treaty rights, which allows it to authorize logging or other activities that may violate the treaties. But Grassy Narrows’ lawyers respond that only the federal government has the jurisdiction over treaty rights, so that Ontario cannot approve projects that impose on the treaties. The original court case was initiated by three Grassy Narrows’ trappers in 2000.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

THE AUSTRALIAN NICKEL BOOM

The Australian mining boom of the late 1960s was given the generic title of the nickel boom, although it can be argued that nickel was, in economic terms, a relatively minor part of a period of exploration and new discoveries that saw the genesis of the giant iron ore industry in the northern part of Western Australia and the discovery of uranium in the Northern Territories.

In terms of nickel there were three major events – the discovery of nickel by Western Mining at Kambalda in Western Australia in 1966, the sensational but ultimately disappointing Poseidon discovery at Windarra to the north of Kambalda in 1969, and in 1971 the Selection Trust group’s Agnew nickel discovery, which was further north still.

A FINANCIAL EVENT

Although Australia had spawned a number of mining booms in its past, the 1960s boom at times was as much a financial event as a mining event. As far as stock market activity was concerned, the surge of interest in Australian mining shares followed an extended worldwide boom in industrial, technology and financial shares, and was symptomatic of an era when confidence was high and investors, buoyed by profits elsewhere, were in the mood for speculation.

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Mining is a job multiplier in Ontario

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.

Because almost 90% of the input costs of mining operations in Ontario are sourced from within Canada, with most of those being local, and 60% of its output is exported, the mining sector is a natural multiplier of jobs. The economists who produced the recent study Mining: Dynamic and Dependable for Ontario’s Future explored, with the use of StatsCan data, some of the upstream linkages of the various inputs for mineral production in this province.

They employed this input-output model to see what impact a $1 billion increase in the value of Ontario’s mineral production, based on OMA members, would have on the economy and employment. In 2011, the value of total mineral production in Ontario was $10.7 billion.

This analysis shows that such an increase would boost Ontario’s GDP by $858 million and Canada’s GDP by $900 million. It also shows that there would be an increase in direct mine employment of 2,421 jobs. Because of the overwhelmingly domestic source of mine inputs, this leads to 1,997 direct jobs in Ontario in sectors such as wholesale trade, professional and scientific, administration, finance, construction, utilities and government. That makes for a total of 4,418 jobs.

Keep going! When the induced impact of $1 billion increase in mineral sector revenues is included, the boost to the provincial GDP surpasses $1 billion for Ontario and $1.1 billion for Canada. In addition, we see 1,942 new jobs created in sectors such as retail, health care, accommodation and food services, non-profit institutions, arts and entertainment, information industries and construction. The induced jobs are derived from where and how the direct and indirect employees spend their pay cheques.

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Anglo American – Haunted by history – by Rex Gibson (Financial Mail – January 31, 2013)

http://www.fm.co.za/

What’s in Mark Cutifani’s in-tray

What kind of company will Mark Cutifani inherit? Every move Anglo American makes provokes an intense response from its myriad local stakeholders. This despite its moving its primary listing to London 14 years ago . Rex Gibson reflects on the role mining, and in particular Anglo American, has played in the SA economy.

It may be one of the most inept public relations performances ever by a government not renowned for its PR skills. President Jacob Zuma went to the World Economic Forum in Davos intending to reassure the world that SA welcomed investors in mining. But it appears that nobody told some of his top lieutenants.

A few days before, mineral resources minister Susan Shabangu launched a broadside of remarkable ferocity and insensitivity against Anglo American and its subsidiary, Anglo American Platinum (Amplats). The two culprits had had the nerve to announce their business proposals without talking to her.

Though clearly directed at these two, her bullying approach carried a disturbing message for the industry as a whole: “I’ll show you who’s the boss.” The result was that Zuma felt obliged to repudiate Shabangu, insisting that investors were welcome. But that didn’t do much for the confidence and sense of security of those looking to store their money for the long term in a safe place.

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Mining tycoon becomes first African billionaire to pledge half his wealth to charity – by Geoffrey York (Globe and Mail – January 31, 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.

JOHANNESBURG — As a boy in an impoverished village in South Africa’s apartheid era, Patrice Motsepe watched his mother giving free food to the poorest customers at their small grocery store.

It was a lesson he never forgot, even when he made history by becoming South Africa’s first black billionaire. Ranked the eighth-richest man on the continent with an estimated fortune of $2.65-billion, the 51-year-old mining tycoon has become the first African billionaire to make a dramatic pledge to give away half the wealth generated by his family’s assets.

It’s a huge coup for U.S. entrepreneurs Warren Buffett and Bill Gates as they try to launch a global wave of philanthropy. They have persuaded nearly 100 billionaires to pledge the bulk of their wealth to charity, but most so far are American, and Mr. Motsepe is believed to be the first in the fast-rising African economy to participate in the program, the Giving Pledge, in which prosperous families are encourage to give away at least half their wealth.

The 51-year-old mining tycoon announced Wednesday that he has joined the Giving Pledge. Members of the campaign have courted him for months. Last August he held talks with Mr. Buffett in Omaha, and last month Mr. Gates flew to Cape Town and met Mr. Motsepe to explain the Giving Pledge. At a press conference on Wednesday, Mr. Gates joined by video link to praise Mr. Motsepe’s decision.

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Rio Tinto considering halting work at Oyu Tolgoi mine over dispute – by Christopher Donville, Todd Baer and Yuriy Humber (Bloomberg News/National Post – January 31, 2013)

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

Rio Tinto Group, the second-biggest mining company, is considering a temporary halt to construction work at its US$6.2-billion Oyu Tolgoi copper and gold project in Mongolia as the government demands a greater share of profit from the mine, according to two people familiar with the plans.

The London-based company is discussing the suspension to protest the central Asian nation’s demands for a bigger stake in the project and new mining royalty rates, said the people, who asked not to be identified because they aren’t authorized to comment publicly. A suspension of work, which may halt mining and processing, isn’t certain and is among options that managers are discussing in London, one of the people said.

“We continue to work together with all stakeholders including the government of Mongolia to bring the benefits of Oyu Tolgoi to all parties,” said Bruce Tobin, a spokesman for Rio in Melbourne. He declined to comment on whether it’s considering a temporary halt.

The dispute comes as Mongolian Prime Minister Norovyn Altankhuyag’s government tries to maintain support for foreign investment amid growing nationalism and wealth disparity. In October, Rio rejected a second move by Mongolia to renegotiate a 2009 investment agreement for the development of Oyu Tolgoi, which is currently the world’s biggest copper project under construction.

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The North wants in – by Jesse Kline (National Post Editorial – January 31, 2013)

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

According to Northwest Territories Premier Bob McLeod — who, along with his cabinet, deputy ministers and a contingent of First Nations and business leaders, is in Ottawa for negotiations with the federal government — the N.W.T. is “on the verge of achieving” a historic agreement to gain control over its natural resources. If such an agreement is reached, it would be a significant marker in the long battle between Western Canadians and the federal government.

Of all the geographical divisions that make up this country, the Northwest Territories has been the most tortured. Historically used as a catch-all for large swaths of land Ottawa had no idea what to do with, the territory originally encompassed parts of modern-day British Columbia, the Yukon, Nunavut, Saskatchewan and Alberta.

When Ottawa purchased Rupert’s Land from the Hudson’s Bay Co. (HBC) in 1870, the territory grew immensely, but would slowly be whittled down as time went on: Manitoba and B.C. would expand north, the Yukon was created in 1898, Alberta and Saskatchewan were carved out in 1905 and Nunavut was created in 1999.

If one thing has remained fairly constant throughout these expansions and contractions, it’s the fight of Western Canadians — including Northwest Territorians — to control their own resources.

Shortly after consuming much of HBC’s North American holdings, Frederick Haultain, the premier of what was known as the North-West Territories, would come to embody that struggle.

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Potash miners settle antitrust claims – by Peter Koven (National Post – January 31, 2013)

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

Saskatchewan’s Big Three potash producers have agreed to pay a total of US$97.5-million to settle U.S. antitrust allegations they colluded to keep prices artificially high.

The deal ends a legal battle that dates back to 2008. But despite the settlement, Bill Doyle went out of his way to express his utter contempt for the class-action proceedings.

In a lengthy statement, the chief executive of Potash Corp. of Saskatchewan derided the claims as an example of the “well-documented abuse of class actions” in the United States in which “self-interested” lawyers assert “meritless” claims because they and their clients have nothing to lose. He called it a “wasteful and unnecessary” cost of doing business in the United States.

Nonetheless, he is happy to have the matter behind him. “The reality is that we weighed the multi-year effort in time and resources that would have been required to defend this lawsuit, and determined that our management should remain focused on the production of potash and serving our customers,” he said.

Potash Corp. and Mosaic Co. agreed to pay US$43.75-million each to settle the claims, while Agrium Inc. is paying US$10-million.

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As cost pressures mount, Ontario’s wholesale power prices set to soar – by Shawn McCarthy (Globe and Mail – January 31, 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 – Electricity consumers in Ontario face the prospect of soaring prices in the coming decade, a trend that would put additional cost pressure on power-hungry industrial users.

The cost pressures are rising at the province completes the closing of its coal-fired plants while its nuclear fleet faces further retooling and renewable power takes a greater share of the load. A new forecast by London Economics International predicts Ontario’s wholesale power price will jump by 74 per cent – to $55.80 per megawatt hour between 2013 and 2022 from $32. That figure does not include higher costs to distribute the power and for conservation and other demand-side programs.

Concerns about rising electricity prices will be one of the key economic challenges facing the incoming premier Kathleen Wynne as she prepares to assume power from the outgoing Dalton McGuinty. Ms. Wynne will have to take on opposition critics who have slammed the government for its election-related cancellation of a gas-fired power plant that result in $190-million in compensation payments to the plant’s financiers.

Ontario is not alone in anticipating sharply higher power prices. Alberta will see its wholesale prices decline slightly over the next few years, but then turn, beginning to rise significantly in the latter part of the decade. Western New York State could see wholesale electricity prices double, but from a lower base than Ontario, according to A.J. Goulding, president of the Toronto-based economics firm, which has produced a series of forecasts for provinces and states.

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The oil sands’ grand aim for co-operation – by Nathan Vanderklippe (Globe and Mail – January 31, 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.

 CALGARY — It was, in many ways, the signing of a corporate peace treaty. On March 1, 2012, the heads of 12 of the largest energy companies in Canada sat on a downtown Calgary stage and agreed to a legal détente. No longer would they fight each other in court over patents or intellectual property on matters related to the environmental performance in the Fort McMurray area.

Instead, they would agree to work hand-in-hand on ways to make the oil sands cleaner and greener. It was, they said, quite likely the most important collaboration agreement between competitors in any industry, anywhere. It may be their single best chance to beat back a sea of criticism that threatens the very existence of their industry.

What got less mention was that the splashy signing ceremony – complete with a big-screen live-video feed of each executive signing documents – had settled little of the big issues. And no one mentioned that the months ahead would be filled with painful meetings, with a dozen companies each sending legal teams for multiple weekly meetings to sort out how, precisely, they would establish a détente that went against the instinct of most people in the room. Nor did they predict that nearly a year later, some of the thorniest questions confronting the oil sands would remain unresolved, like how high the industry should aim its ambitions to prune its dirtiest excesses.

Yet behind the scenes, the man tasked with quietly making progress – a man who arguably has one of the most delicate jobs in all of Calgary – said he is surprised at what Big Oil is accomplishing.

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In Alberta, a bitter-tasting sales tax is on the table – Gary Mason (Globe and Mail – January 31, 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.

Alison Redford appears destined to go down in history as the premier who introduced Albertans to a fact of life most Canadians have lived with for generations: a sales tax.

It won’t happen in the budget she will introduce in early March – she has said as much. Instead, it would appear the province will run another deficit – its sixth in a row – rather than make the kind of draconian cuts necessary to balance its books. But a sales tax is coming. There seems no escaping it now.

It’s all rather hard to believe. For years, Alberta has been the economic envy of the country, awash in petro dollars that allowed a succession of premiers to avoid the hard choices their counterparts in other parts of the country have been forced to make.

When spending got truly out of hand, Ralph Klein took a cleaver to things. But then it resumed as normal, with successive governments radically expanding the size and cost of the public sector while exhausting money supplies in the province’s Sustainability Fund. For more than four decades, Alberta’s Progressive Conservative governments have blithely ignored the possibility that, one day, oil money might not be there to bail them out.

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North Dakota Went Boom – by Chip Brown (New York Times Magaine – January 31, 2013)

http://www.nytimes.com/

Long before the full frenzy of the boom, you could see its harbingers at the Mountrail County courthouse in Stanley, N.D. Geologists had pored over core samples and log signatures and had made their educated guesses, and now it was the hour of the “landmen,” the men and women whose job was to dig through courthouse books for the often-tangled history of mineral title and surface rights.

Apart from a few fanatics who sometimes turned up at midnight, the landmen would begin arriving at the courthouse around 6 a.m. In the dead of winter, it would still be dark and often 20 or 30 below zero, and because the courthouse didn’t open until 7:30, the landmen would leave their briefcases outside the entrance, on the steps, in the order they arrived. And then they would go back to their cars and trucks to wait with the engines running, their faces wreathed in coffee steam.

Sometimes there were more than 20 briefcases filed on the courthouse steps. The former landman who told me this — Brent Brannan, now director of the North Dakota Oil and Gas Research Program — said he sometimes thought he could see the whole boom in that one image, briefcases waiting for the day to start, and it killed him a little that he never took a picture.

For many years North Dakota has been a frontier — not the classic 19th-century kind based on American avarice and the lure of opportunity in unsettled lands, but the kind that comes afterward, when a place has been stripped bare or just forgotten because it was a hard garden that no one wanted too much to begin with, and now it has reverted to the wilderness that widens around dying towns.

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Oil sands face defining days as U.S. Keystone ruling, EU vote draw closer – by Claudia Cattaneo (National Post – January 31, 2013)

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

Judgment day on the oil sands — and on Canada’s integrity as an oil producer — by our top trading partners and allies, United States and the European Union, is just a season away.

After a six-year campaign by green activists to brand them as a climate change villain, two major decisions will either validate the campaign against the oil sands or rehabilitate their reputation are expected this spring: U.S. president Barack Obama’s ruling on the proposed Keystone XL oil sands pipeline, and a European Union vote on whether to label the oil sands as more polluting than other oils in its Fuel Quality Directive.

The U.S. decision is expected around the end of March, the EU is expected to rule around June. The decisions will open or close markets, help fix or entrench the deep discounting of Canada’s oil because of insufficient pipeline capacity and uncertainty about future markets, show how far jurisdictions are prepared to go to shape — and shame? — others’ economic choices and environmental standards in the name of the climate.

“In the context of continued and expanded market access, [the two policy decisions] are critically important,” Cal Dallas, Alberta’s minister of international and intergovernmental relations, said in an interview Wednesday.

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Obama should ‘face down critics’ and approve Keystone XL: science journal – by Yadullah Hussain (National Post – January 31, 2013)

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

One of the world’s most respected scientific journals says U.S. President Barack Obama should focus on coal-gorging power and utility companies in the United States, instead of appeasing environmentalists by turning down the Keystone XL pipeline.

“Regarding the Keystone pipeline, the administration should face down critics of the project, ensure that environmental standards are met and then approve it,” Nature said in an editorial on its website. (Read full editorial here).

Keystone XL pipeline, which will ship oil sands product from Alberta to the Gulf Coast, has been the subject of environmental rage and its scrapping is seen as central to reducing global carbon emissions. But Nature contends the pipeline’s impact on the environment is exaggerated.

“Nor is oil produced from the Canadian tar sands as dirty from a climate perspective as many believe (some of the oil produced in California, without attention from environmentalists, is worse).”

While oil sands development raises “serious air- and water-quality issues in Canada,” these issues are beyond the president’s jurisdiction, the weekly periodical said.

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