September 7, 2012 – Republic of Mining

Asian trade data point to dire outlook for mining stocks – by Scott Barlow (Globe and Mail – September 6, 2012)

September 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.

Recent trade data illustrate a near-collapse in Asian exports to the European Union which, if it continues to accelerate, would signal the end of the mining supercycle.

Over the past decade, Canadian mining stocks have closely tracked the path of Asian export data, highlighting the importance of Asian manufacturing growth on demand for base metals.

The incredibly sharp decline in exports from South Korea and China to Europe suggest a dire outlook for Canadian mining stocks and sustained selling pressure in the sector.

“Asia’s export growth to the E.U. fell from –5.0 per cent in June to –15.6 per cent in July, and the trajectory is becoming as steep as during the global financial crisis” writes Nomura economist Rob Subbaraman.

Glencore sweetens Xstrata bid as shareholder vote delayed – by Pav Jordan (Globe and Mail – September 7, 2012)

September 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.

Global commodities giant Glencore International PLC has sweetened its offer to acquire Swiss miner Xstrata PLC, bowing to pressure from a key shareholder who said the initial $34-billion was too low.

Xstrata, which is 34-per-cent owned by Glencore, said the new proposal envisaged an increase to the merger ratio to 3.05 Glencore shares for every Xstrata share, from a previous merger ratio of 2.8 shares.

“The board of Xstrata PLC has received a proposal from Glencore International PLC to amend the terms of the merger of Glencore and Xstrata,” Xstrata said in a statement.

Glencore’s offer to acquire Xstrata hit a road block in recent months after one of its top shareholders, Qatar Holdings, a global investment house founded by the Qatar Investment Authority, said the offer was too low.

Links with China bring ‘long-term pain’: study – by Jameson Berkow (National Post – September 7, 2012)

September 7, 2012

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

CALGARY – Bribery, corruption and state interest trumping business logic remain common in China, and Canada must remain keenly aware of those trends as it mulls closer economic ties with the Asian superpower, says a report published Thursday.

The University of Calgary paper, titled Dancing With The Dragon, was released the same day two other reports urged Canada to take steps toward fostering more business relationships between the two countries.

As the federal government reviews China’s $15-billion bid for Canada’s Nexen Inc. — the largest foreign takeover attempt to date by the Communist country — the three publications together serve as a warning for Ottawa not to trade long-term prosperity for short-term gains.

“Those short-term gains very often create long-term pain in such a terrible way that I [have seen] the suffering of those people [who] were raking in new opportunities and then all of a sudden they dry out,” Josephine Smart, economic anthropology professor at the University of Calgary and author of the report, said in an interview.

UPDATE 2: Glencore ups offer for Xstrata to $37bn – by Clara Ferreira-Marques and Emma Farge (Mineweb.com – September 7, 2012)

September 7, 2012

www.mineweb.com

Glencore is now proposing to offer 3.05 new shares for every Xstrata share, with Ivan Glasenberg as the new CEO in place of Xstrata’s Mick Davies.

LONDON/ZUG (Reuters) – Commodity trader Glencore has raised its offer for miner Xstrata to salvage a bid, now worth about $37 billion, that appeared to be heading for the rocks after Xstrata shareholder Qatar held out for more.

Xstrata said Glencore was now proposing to offer 3.05 new shares for every Xstrata share, up from 2.8, with Glencore Chief Executive Ivan Glasenberg to become CEO of the combined group, instead of Xstrata boss Mick Davis as originally envisaged.

Xstrata said Glencore was also suggesting a possible change to the structure of the deal that could allow it to pass more easily with a simple majority of shareholders.

Glencore’s bid had been teetering on the brink of collapse after Xstrata’s second-largest shareholder, Qatar, with 12 percent, said it would vote against the deal unless it was improved.

[Canada Natural Resources Minister] Oliver warns of ‘missed opportunity’ – by Yadullah Hussain (National Post – September 7, 2012)

September 7, 2012

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

You would think that Joe Oliver would be used to the media glare by now, but a little more than a year into the job as the minister of natural resources, he is still amazed to see his department get such intense press attention.

“It is interesting how much in the public eye all this is – it’s nothing to do with the colour of my tie, but it’s important for the country,” he said on the sidelines of a press conference this week that saw media folk crammed in the offices of Canaccord Genuity in downtown Toronto to listen to the minister speak. Despite the acres of media space dedicated to energy issues, the former investment banker is finding it tough to get many Canadians on his side.

Many energy projects Ottawa is trying to push face fierce opposition. The Alberta oil sands development is derided not only by environmentalists and many aboriginal groups but even provinces like British Columbia and Ontario. The two key pipeline projects – Enbridge Inc.’s Northern Gateway and TransCanada Corp.’s Keystone XL – are bogged down in regulatory and environmental red tape. And the federal government’s efforts to improve environmental standards have been dismissed by critics as weak and insufficient.

Democrats show no love for Canadian oil – by Claudia Cattaneo (National Post – September 7, 2012)

September 7, 2012

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

Amid all the hoopla of the Democratic party convention this week and the promises of shared prosperity, there was little for Canada to take away.

In the party’s national platform, released to coincide with the event in Charlotte, N.C., Canada barely rates a mention and there is nothing on the most important unresolved issue between the two countries and a big pillar of Canada’s own future prosperity — the stalled Keystone XL pipeline.

It’s a stark contrast to the Republican plan, which has made North American energy independence with the help of a stronger partnership with Canada and Mexico a key objective, and promises approval of the controversial US$7.6-billion pipeline from Alberta’s oil sands to refineries in the U.S. Gulf “on Day One” of a Mitt Romney administration.

Heads up: if re-elected in the Nov. 6 vote, Barack Obama will keep Canada guessing about the fate of the controversial project, despite approving the southern leg earlier this year, continuing efforts by proponent TransCanada Corp. to improve the more controversial northern leg, and by Ottawa to lobby for its approval.