July 13, 2012 – Republic of Mining

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Ironclad deal

When news about slowing growth in China shook down global commodity markets in May, Basil Botha wasn’t the least bit spooked. The president and CEO of Northern Iron Corp. announced this past spring that his company’s inroads into Asia had turned into good fortune.

His Vancouver-based exploration outfit received a sizeable order for 900,000 tonnes of hot briquetted iron (HBI) from China Railways Material Import and Export Company.

The product is scheduled for delivery in 2016 when Northern Iron’s mining and processing plant should be in operation near Ear Falls in the Red Lake district of northwestern Ontario. The company is advancing a series of iron ore deposits that involves dewatering the former Griffith open pit, once operated by Stelco.

This initial off-take agreement will take up two-thirds of Northern Iron’s anticipated annual production of HBI. Payment will be secured by a letter of credit from the prime bank of the People’s Republic of China.

www.mineweb.com

Politicians, environmentalists, labour activists, dissident shareholders – all can create major problems for today’s mining executive, particularly in a time of falling commodity prices.

LONDON (Mineweb) – Pity today’s mining company executive! Not only do today’s mining company boards have to weigh up the technical and environmental considerations of mining projects and dealing with ‘mining-friendly’ governments keen to use natural resource development as building blocks to advance their economies , but also deal with a major downturn in commodity prices, resource nationalism issues in less mining friendly nations, environmental activism, dissident shareholders and workforces with high expectations.

To a great extent all the above are connected – by a period of very strong commodity prices – often called the commodity supercycle – which is currently in remission. The commodity price benefits achieved because of the huge surge in demand, while supply struggled to keep up, might have seemed like boom times for the miners, but in retrospect may be seen to be the root of many of its most recent problems too.

High commodity prices meant high profits and stock prices for miner, developer and explorer alike, but high profitability, or potential profitability, has led to often excessively high expectations from the stakeholders – governments, investors, workforces etc. and when an inevitable downturn arises the mining companies are seen to be underperforming and the expectations of these stakeholders are just not achievable.

Miner strikes Chinese off-take agreement – by Ian Ross (Northern Ontario Business – July 2012)

It’s a tough time to be running a mining company – by Lawrence Williams (Mineweb.com – July 13, 2012)