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Day: September 8, 2012

With Glencore deal on verge of collapse, Xstrata ponders growth options – by Clara Ferreira-Marque (Reuters/National Post – September 6, 2012)

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

LONDON — With Glencore’s US$34-billion takeover bid set to collapse on Friday, Xstrata boss Mick Davis will have to woo back disgruntled shareholders in the miner and push ahead alone with ambitious growth plans.
 
Chief Executive Davis aims to steer the fourth-largest diversified miner from its acquisition-fuelled first decade into a phase of organic, or self-generated, growth, which the miner hopes will boost volumes by 50% by the end of 2014 and cut average operating costs by a fifth.
 
The broad, bespectacled South African who has led Xstrata for the past decade has major hurdles ahead – unhappy minority shareholders demanding changes at the top and an even unhappier situation in Xstrata’s platinum investment Lonmin, the South African miner hit by a strike and soaring costs.
 
Davis will also have to find new working relationships with 34-percent shareholder Glencore – increasingly a competitor as the commodity trader’s mining presence grows – and with Qatar.

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Glencore’s friendly bid for Xstrata turns hostile – by Peter Koven (National Post – September 7, 2012)

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

 The biggest takeover bid of the year is shaping up as one of the most unusual, as a battle over money and control have changed the face of it overnight.
 
What started as a friendly takeover of mining giant Xstrata PLC by Glencore International PLC has turned into an apparent hostile bid, and Xstrata is threatening to reject it even though the new offer price is higher than the one it previously accepted.
 
The dramatic turn of events began Thursday night, when Glencore chief executive Ivan Glasenberg held a secret meeting with Qatari Prime Minister Hamad bin Jassim al-Thani. According to the Financial Times, Tony Blair brokered the deal that brought them together.
 
Glencore thought it locked up Xstrata back in February, when it offered 2.8 of its shares for each Xstrata share. But that plan was thrown into doubt when Qatar Holdings, the country’s sovereign wealth fund, acquired a large minority stake in Xstrata and pushed for a higher price.

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[Canada] Mining transparency – Ottawa Citizen Editorial (September 7, 2012)

http://www.ottawacitizen.com/index.html
 
It is encouraging to see Canada’s mining industry take the reins when it comes to improving transparency. When the federal government is touting the growing importance of the resource sector, it is more important than ever that resource companies try to win public confidence. A plan for mandatory reporting of all payments to governments — both foreign and domestic — is a step in that direction.
 
Such payments are often in the form of royalties and taxes to the governments of countries in which mining companies operate.
 
Until recently, Canadian mining companies only released information on a voluntary basis about how much money they paid governments. Under new American legislation — the Dodd-Franks Act — all resource companies listed on American stock exchanges are now required to release the information annually. That includes some of Canada’s resource giants, but it leaves many smaller companies out.
 
With about 60 per cent of the world’s mining companies listed on the Toronto Stock Exchange, a mandatory rule for Canadian companies would have a significant impact around the world.

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High oil prices benefit Canada, Carney says – by Nathan VanderKlippe (Globe and Mail – September 8, 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.

Calgary — Mark Carney strode in front of the most powerful members of Canada’s energy industry with a message that was sure to please: the Bank of Canada has done the math, and oil companies are not setting the country on a course of economic destruction.

In short, he said, high oil prices aren’t hurting Canada. “In a world of elevated commodity prices, it is better to have them. Bank of Canada research shows that high commodity prices, regardless of the cause, are good for Canada,” he said.

Strong crude pricing does force a rise in the loonie, he said. But the overall impact is a net rise in “income, wealth and GDP in Canada.” While the higher dollar does harm non-commodity exports, that pain is “partially offset by the fact that a stronger currency reduces the cost of productivity-enhancing machinery and equipment imports,” he said at the annual Spruce Meadows Round Table just south of Calgary, which draws business leaders from across the world.

And, Mr. Carney added, any central bank efforts to ward off so-called Dutch disease – by tampering with Canada’s currency to protect manufacturers, for example – are likely to do more harm than good.

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NEWS RELEASE: Mining Association of Canada Remains Bullish on Metal Outlook

British Columbia in strategic position to benefit from mining’s largest customer, China
 
VANCOUVER, B.C, Sept. 7, 2012 /CNW/ – Canada’s mining industry is on the right path to continued prosperity despite current market volatility, says the Mining Association of Canada (MAC).
 
In a speech to members of the Vancouver Board of Trade, MAC President and CEO Pierre Gratton said regulatory reform, investment in infrastructure and promotion of strong trade relations with countries such as China, the world’s biggest consumer of metals, will keep Canada globally competitive.
 
Despite a slowdown in Chinese growth to 7.6 per cent in the second quarter, from decades of 10 per cent average annual growth, Gratton noted that most prices remain at relatively high levels, despite a fall off in recent months, and emphasized that the long-term fundamentals that have supported rising commodity prices over the past decade remain.
 
“The mining super cycle is not over, it is taking a pause. This is the nature of the mining business, which is cyclical,” said Gratton.  “The industry is generally better prepared for the current slowdown compared to last time, which was much more dramatic.”

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Tar and feathers suitable for [Ontario] premier and minister – by Mac Dysart (Timmins Daily Press – September 7, 2012)

 The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – If these were the days of the old western frontier, these men, after being rounded up by the posse, would probably have been dealt the most severe consequences of the old western judicial system for their complete disregard, humiliation and disrespect to country and fellow man. I am speaking of no one other than Rick Bartolucci, Minister of Northern Development and Mines, and Dalton McGuilty. (excuse the pun in spelling.)
 
Have we ever received a grant or a visit from Bart? Not that I know of! Have we ever seen McGuilty here? No!
 
These two men alone, especially Bart, a supposedly true northerner, since being appointed to this post by Dalton McGuilty, are doing more to ruin the structure of Northern Ontario than anyone in our history, and should and must, stand responsible for their actions of dissembling the Northeast Corridor of this province.
 
(Dr. David Suzuki fits into this category also, with his environmental issues, but that’s another story.) These actions should be declared an act against humanity, of which everyone must be held accountable, and these two are no exception to the rule.
 
The most eastern section of the North, including the Ontario Northland Railroad corridor, the very spinal system of the great North, does not fit into their vision as part of what we calls the North.

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In China, Silvercorp critic caught in campaign by police – by Mark MacKinnon and Andy Hoffman (Globe and Mail – September 8, 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.

BEIJING and VANCOUVER — On the afternoon of Dec. 28, Huang Kun was about to board a flight to Hong Kong when his Canadian passport was flagged by officials at Beijing’s International Airport, and he was taken into custody by Chinese police.

It was the beginning of a prolonged and often frightening ordeal for Mr. Huang that has landed the 35-year-old from British Columbia in a Chinese jail – sharing a one-bed cell with 20 other men. He is expected to soon face charges of criminally defaming a Vancouver-based mining company called Silvercorp Metals Inc.

Mr. Huang knew when he went to the airport that day that police in the city of Luoyang, where Silvercorp’s flagship mining operations are located, had arrested and interrogated two associates of his. The men had helped him prepare a scathing research report that, when its allegations were published, sent Silvercorp’s share price tumbling 20 per cent in one day on the Toronto Stock Exchange.

What he didn’t know was that in the wake of a series of scandals involving Chinese companies listed on North American stock exchanges, authorities in China had decided to push back hard against those attacking the credibility of Chinese firms.

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Martin Falls signs Ring of Fire agreement with Ontario – by Lenny Carpenter (Wawatay News – September 7, 2012)

Northern Ontario’s First Nations Voice: http://wawataynews.ca/

Marten Falls First Nation and the Ontario government signed a Memorandum of Understanding (MOU) on Sept. 7.  The agreement signifies a working relationship where the two parties will work to ensure minimal environmental impacts as a result of mining development in the Ring of Fire.
 
Signed in Marten Falls by Chief Eli Moonias, Northern Development and Mines Minister Rick Bartolucci and Natural Resources Minister Michael Gravelle, the MOU addresses the employment, economic development and environmental impacts of any Ring of Fire projects in the First Nation’s traditional territory.
 
In a media release, Moonias said the Ring of Fire is an opportunity for the community to work towards the implementation of Treaty 9, which their ancestors signed with mutual benefits for all parties, including an annual payment of $4 for all band members.
 
“Needless to say, the environment has no price tag,” he said. “Therefore, development will proceed only if the environmental assessment process is thorough and with the full participation of Marten Falls First Nation.”

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Good news: Vale’s Thompson smelter and refinery may stay open a year or two beyond 2015 – by John Barker (Thompson Citizen – Septmeber 7, 2012)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000. editor@thompsoncitizen.net

Peter Poppinga, who less than a year ago replaced Tito Martins in Toronto as chief executive officer of Vale Canada and became executive director of base metals globally for Brazilian-based mining giant Vale, told company managers Sept. 6 “that every aspect of the base metals business is under review, including our Manitoba Operations, and we may face new challenges and new opportunities in the coming months as a result,” Lovro Paulic, general manager of smelting and refining, Don Wood, general manager of production services and Mark Scott, general manager of mining and milling, said in a jointly-issued letter from the three most senior managers in Manitoba Operations to employees here Sept. 7.

“The most pressing and immediate challenge before us is to reduce costs and increase efficiencies while continuing to strive for Zero Harm—these are complementary,” the trio said.

United Steelworkers Local 6166 President Murray Nychyporuk, elected to his second three-year term last spring, says the “news is not surprising” and the union recognizes the world nickel market has taken a serious downturn over the last year and Vale has to find a way to cut costs. Nychyporuk said the union would work with the company during the review process to protect their common interests.

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