February 7, 2012 – Republic of Mining

Official Welcoming Address to the Mining Indaba Conference 2012 – by Susan Shabangu: Minister of Mineral Resources for the Republic of South Africa (February 7, 2012)

February 7, 2012

This speech is from the Resourceinvestor.com website: www.resourceinvestor.com

CAPE TOWN, South Africa –

Programme Director: Mr Jonathan Moore; Organisers of the Mining Indaba; Honourable Ministers of Mineral Resources from other African countries; Members of the Diplomatic Corps; The investment community; Senior government officials; Delegates; Distinguished Guests; Ladies and gentlemen

Introduction

On behalf of the democratic Government of South Africa, I bid you the warmest of welcomes to our country, and to this region of the Western Cape, in whose capital city we meet today amidst its splendour and beauty.

Even if mining has always been somewhat elusive in this region, may you have a chance to make interesting side trips, for instance, viewing where oceans converge, where wine farms abound, or where a world famous mountain with a flat top towers over a beautiful city.

Investing in African Mining Indaba 2012

It was Mark Twain, travelling the world more than a century ago, who called Table Mountain “a majestic pile” (Following the Equator, Dover Publications, USA, 1989, page 710). He described visiting the old Cape Parliament, “where they quarrelled in two languages and agreed in none.”

Glencore, Xstrata Turn to Selling Deal – by Dana Cimilluca, John W. Miller and Rhiannon Hoyle (Wall Steet Journal – February 7, 2012)

February 7, 2012

http://online.wsj.com/home-page

Long-Awaited Deal Would Create Commodities Giant, but Some Mining-Firm Shareholders Balk at Premium

Now that Xstrata PLC and Glencore International AG have unveiled their widely expected plan to merge and form a mining-and-commodities behemoth, the hard work begins: selling the deal to shareholders and regulators.

As expected, the companies announced Tuesday they will combine in a swap of Xstrata shares for Glencore stock that would give Glencore 55% of the new company, to be called Glencore Xstrata International PLC. In a sign that investor approval of the deal isn’t a given, Xstrata shares fell by 4.9% to 1,200 pence ($18.99) in London; Glencore slipped 3.8% to 443.25 pence.

And even if shareholders ultimately go along, the companies might also have their work cut out for them winning approval from regulators around the world.

Underscoring the perils for the deal’s principal architects—Xstrata Chief Executive Mick Davis and his Glencore counterpart, Ivan Glasenberg—two of Xstrata’s top shareholders, Standard Life Investments Ltd. and Schroder Investment Management Ltd., came out against the deal, saying Glencore needs to pay more.

Cliffs Becomes Easy Target With Cheapest Mining Value in America: Real M&A – by Charles Mead (Bloomberg.com – February 7, 2012)

February 7, 2012

www.bloomberg.com

For all the acquisitions being struck in the mining industry, no company in North America is a cheaper takeover candidate than Cliffs Natural Resources Inc.

The biggest North American iron-ore producer yesterday sold for 6.4 times its cash from operations, after deducting capital expenses, according to data compiled by Bloomberg. That was less than every other metals or mining company in the U.S. or Canada exceeding $5 billion in market value, and a 70 percent discount to the median. Cleveland-based Cliffs, which analysts say will generate record sales in 2012, was also the least expensive relative to its estimated net income this year and next.

Mining takeovers accelerated to a four-year high in 2011 as companies sought to replace deposits and industrial growth in China and the developing world fueled demand for raw materials. With Glencore International Plc and Xstrata Plc (XTA) agreeing to merge to create a $90 billion global mining company, Cliffs may attract interest from BHP Billiton Ltd. (BHP) or Rio Tinto Group, Lutetia Capital said. An acquirer could pay a 30 percent premium and still get Cliffs for less than any comparable publicly traded mining company versus its free cash flow, the data show.

Xstrata-Glencore deal a possible game changer – by David Ebner (Globe and Mail – February 7, 2012)

February 7, 2012

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.

VANCOUVER— The merger of Glencore International PLC and Xstrata PLC has the potential to spark a new wave of deals in the mining industry, particularly among copper producers, some analysts say.

The two companies are expected to announce an $88-billion (U.S.) deal Tuesday that will unite one of the world’s biggest traders of commodities with one of the largest miners of base metals. The new company will be a massive player in resources such as zinc, thermal coal, nickel and copper.

And even though their union has been anticipated for months, even years, the reality of a merged Xstrata-Glencore might be enough to jar others to action.

“There’s a big difference between almost pregnant and pregnant,” said Michael Locker of consulting firm Locker Associates in New York.

The natural resources deficit: the implications for German politics – by Anna Kwiatkowska-Drożdż (Centre for Eastern Studies – February 8, 2011)

February 7, 2012

http://www.osw.waw.pl/en

The Centre for Eastern Studies (OSW) is a Polish think tank dealing with analyses of the political, economic and social situation in the neighbour countries, Central and Eastern Europe, the Balkans, Southern Caucasus, Central Asia and Germany. (Warsaw, Poland)

Falling amounts of natural resources and the ‘peak oil’ question, i.e. the point in time when the maximum rate of extraction of easily-accessible oil reserves is reached, have been among the key issues in public debate in Germany on all levels: expert, business and – most crucially – the government level. The alarming assessments of German analysts anticipate a rapid shrinkage of oil reserves and a sharp rise in oil prices, which in the longer term will affect the economic and political systems of importer countries.

Concerns about the consequences of the projected resource deficit, especially among representatives of German industry, are also fuelled by the stance of those countries which export raw materials. China, which meets 97% of global demand for minerals crucial for the production of new technologies, cut its exports by 40% in summer 2010 (compared to 2009), arguing that it had to protect its reserves from overexploitation.

Private ownership helps First Nation fix housing problems – by Shawn Bell (Wawatay News – February 6, 2012)

February 7, 2012

This article came from Wawatay News: http://www.wawataynews.ca/

Chief Franklin Paibomgai of Whitefish River First Nation is happy to talk housing. Despite the prevalence of housing woes all across northern Ontario First Nations, the days of housing concerns in Whitefish River – just north of Manitoulin Island – are a thing of the past.

Paibomgai laughs when asked about the last time housing has come up at a band meeting. Housing has not been on the agenda for years, he says. It used to be a constant thing – someone wanting a new home, or needing renovations on a current house. But now, thanks to a dramatic shift in how the community looks at housing, there are subdivisions going up and a community-owned construction company doing the work.

In 2003 Whitefish River’s housing situation was similar to many First Nations across northern Ontario. Existing houses were in poor condition. There was a long list of people wanting new homes. And the housing money provided by the federal government was barely enough to complete upkeep on existing houses, never mind build anything new.

The Devastating Costs of the Amazon Gold Rush – by Donovan Webster (Smithsonian Magazine – February, 2012)

February 7, 2012

This article is from: http://www.smithsonianmag.com/?ref=home

Spurred by rising global demand for the metal, miners are destroying invaluable rainforest in Peru’s Amazon basin

It’s a few hours before dawn in the Peruvian rainforest, and five bare light bulbs hang from a wire above a 40-foot-deep pit. Gold miners, operating illegally, have worked in this chasm since 11 a.m. yesterday. Standing waist-deep in muddy water, they chew coca leaves to stave off exhaustion and hunger.

In the pit a minivan-size gasoline engine, set on a wooden cargo pallet, powers a pump, which siphons water from a nearby river. A man holding a flexible ribbed-plastic hose aims the water jet at the walls, tearing away chunks of earth and enlarging the pit every minute until it’s now about the size of six football fields laid side by side. The engine also drives an industrial vacuum pump. Another hose suctions the gold-fleck-laced soil torn loose by the water cannon.

At first light, workers hefting huge Stihl chain saws roar into action, cutting down trees that may be 1,200 years old. Red macaws and brilliant-feathered toucans take off, heading deeper into the rainforest. The chain saw crews also set fires, making way for more pits.

Australia-China relationship a lesson for Ottawa [about resources] – by Matthew Fisher (National Post – February 7, 2012)

February 7, 2012

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

Canadians are about to discover that Prime Minister Stephen Harper has caught China fever. The Prime Minister arrives Tuesday in Beijing to shout that Canada is open for business.

Australia caught China fever some years ago and because of it the Land Down Under has been creating a staggering amount of wealth out of one of the greatest resource booms of all time.

To little fanfare elsewhere, Australia’s trade to China has tripled over the past five years to more than $60-billion a year.

When imports are included, trade between the countries is $80-billion a year, compared with a relatively piddling $30-billion a year of trade between Canada and China.

Glencore-Xstrata deal meets shareholder opposition – by Sarah Young and Eric Onstad (Reuters – February 7, 2012)

February 7, 2012

This article came from: www.reuters.com

LONDON (Reuters) – Two top 10 shareholders in miner Xstrata said on Tuesday they would vote against a takeover by commodities trader Glencore, threatening the industry’s biggest deal to create a powerhouse spanning mining, agriculture and trading.

Standard Life Investments, the fourth largest investor in Xstrata, and Schroders head of UK equities said the deal to buy the remaining 66 percent of Xstrata for $41 billion undervalued their shares.

The two own 3.6 percent of Xstrata, according to Thomson Reuters data. Their statements may persuade others to follow suit and block Glencore’s ambition to create a company to rival mining heavyweights such as BHP Billiton and Rio Tinto.

“I’m in complete agreement with Standard Life and we intend to do exactly the same. This is a fabulous deal for Glencore, it’s probably a great deal for the Xstrata management, but it’s a poor deal for Xstrata’s majority shareholders,” Shroders’ Richard Buxton told Reuters.

Xstrata agrees $41bn Glencore takeover deal – by Sarah Young and Eric Onstad (Mineweb.com – February 7, 2012)

February 7, 2012

This article came from: www.mineweb.com

In the biggest merger in the mining sector since Rio and Alcan, Glencore and Xstrata will form a company worth $90bn, Mick Davis will be CEO.

LONDON (Reuters) – Commodities trader Glencore agreed on Tuesday to buy the remaining 66 percent of miner Xstrata for $41 billion in a record deal to create a powerhouse spanning mining, agriculture and trading.

In what has been billed as a merger of equals, Glencore, the world’s largest diversified commodities trading house, and Xstrata will form a company worth $90 billion to rival other mining heavyweights such as BHP Billiton and Rio Tinto.

The new group, which will have mining assets from New Caledonia to the Democratic Republic of Congo, are expected to use their combined clout to look at other deals, including potentially a takeover of Anglo American, analysts say.

“M&A is a space that you’d expect the combined group to be in,” Xstrata chief executive Mick Davis, who will be CEO of the enlarged Glencore, told Reuters.