July 25, 2012 – Republic of Mining

Miners forced to get creative as traditional financing sources dry up – by Peter Koven (National Post – July 24, 2012)

July 25, 2012

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

Nolan Watson’s phone is ringing off the hook these days. On the other end of the line are increasingly desperate mining executives trying to entice him to part with some of his precious cash.

As the chief executive of gold-streaming firm Sandstorm Gold Ltd., Mr. Watson, a youthful 32, represents one of the few options for miners to turn to as they struggle to raise a penny of new capital.

“The pendulum has swung from anyone being able to get any amount of capital on just about any terms, to nobody being able to get any amount of capital on any terms,” says the Vancouver-based executive.

Indeed. Capital raising for mining companies has dried up to a point that is unprecedented in recent memory. Equity financing, when it is even possible, is so dilutive at current share prices that almost no one is pursuing it. Debt deals are being called off just days after they are announced as investor appetite shrinks from one moment to the next.

CNOOC’s Nexen bid an indication of how far goal posts have moved – by Jeff Rubin (Globe and Mail – July 24, 2012)

July 25, 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.

Jeff Rubin is an author and former chief economist of CIBC World Markets. His second book is The End of Growth.

CNOOC Ltd.’s blockbuster deal for Nexen Inc., if nothing else, is a stark indication of how far the goal posts have moved not only for Canada’s oil patch, but also for world oil demand.

Only four or five years ago, the notion that a state-owned Chinese company could buy–lock, stock and barrel of bitumen–one of Canada’s premier oil names was politically unthinkable. Any such deal was sure to be turned down by Ottawa under its Foreign Investment Review Act (not to mention the hue and cry that would come from Alberta’s provincial government).

Today, that’s all changed. CNOOC’s $15-billion offer for Nexen follows a number of major foreign transactions in Canada’s energy sector. Among others, Malaysian energy giant Petronas is paying $5.5-billion to get at Progress Energy’s natural gas reserves in British Columbia. Earlier this year, PetroChina Co. Ltd. completed a two-pronged deal for Athabasca Oil Sands Corp. that tallied $2.5-billion. In 2010, Sinopec paid $4.65-billion for a 9 per cent stake in Syncrude, which runs Alberta’s largest oilsands mine.

Limit state takeovers – by Jack M. Mintz (National Post – July 24, 2012)

July 25, 2012

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

Canadian oil and gas markets are being rocked by a lot of news lately, whether it involves building pipelines in Canada or potential economic turmoil in Europe. The latest is Monday’s announcement that China National Offshore Oil Corp. will pay $15.1-billion in cash to take over Nexen at a 66% premium relative to the 20-day average stock price.

The immediate consequence is to make a lot of Nexen shareholders richer, since the share price shot up from $17.29 to $26.35.

The Nexen takeover also lit up the chattering political classes in Ottawa. The federal government will need to make a critical decision over whether to approve this takeover under the Investment Canada Act. In my view, the worst decision would be one based on poor economics and perceptions. The best decision would be a clear policy focused on “net benefits” when assessing takeovers of Canadian companies by foreign state-owned enterprises and sovereign wealth funds.

Certainly, the usual nationalists will be out in full force, pushing to block the takeover. My skin crawls with dubious concepts such as “strategic assets,” “national champions” and “hollowing out.”

Divisions deepen as fight over energy spoils takes nasty turn – by Claudia Cattaneo (National Post – July 24, 2012)

July 25, 2012

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

As premiers gather in Halifax this week, the divide between Alberta, British Columbia and Saskatchewan over the spoils of energy development is growing. B.C. is demanding its fair share of benefits from oil pipelines cutting through the province and Saskatchewan has got to be nervous that Alberta’s oil sands production is going full tilt, pushing down prices for its conventional crude because there’s not enough pipeline space to move both.

All this makes talk of a national energy strategy, championed by Alberta and expected to be one of the main topics of discussion at the Council of the Federation meeting, naïve at best, explosive at worst. Given Canada’s bad experiences with central planning in energy, Alberta’s Premier, Alison Redford, and the strategy’s diverse cheerleaders, should have seen it coming.

The rift between Alberta and British Columbia over the proposed Northern Gateway pipeline cracked wide open this week and a quick fix is unlikely. In fact, it could be all downhill from here if the anti-Northern Gateway NDP gains power in the coming provincial election, as polls suggest.

“There is no way this pipeline is going to happen without B.C.’s approval,” Premier Christy Clark told CBC Radio from Halifax Tuesday.

Arbitrator restores fire worker’s job – by Carol Mulligan (Sudbury Star – July 25, 2012)

July 25, 2012

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

An arbitrator has given a fired Steelworker his job back. Wes Rayner has ruled that Vale Inco must reinstate Mike Courchesne, one of nine Steelworkers fired during the union’s year-long strike against the miner, provided he passes a standard medical test.

If all goes well, Courchesne should be back on the job within a month, said his lawyer, Brian Shell. Both Courchesne and his union were “ecstatic” about the decision, Shell said Tuesday afternoon.

“Right from the beginning, it was the union’s view the people fired during the strike should not have been fired, and that the company overreacted to the allegations the company believed they had,” Shell said after the decision was rendered. Nine strikers were fired for alleged misconduct on picket lines in the community during the nasty labour dispute.

One, John Landry, retired after the strike ended in July 2010. Steelworkers Adam Cowie and Dan Labelle have found employment elsewhere and do not want to return to Vale, said Shell.