October 26, 2012 – Republic of Mining

Under pressure, Anglo CEO Cynthia Carroll quits – by Clara Ferreira-Marques and Sinead Cruise (Reuters – October 26, 2012)

October 26, 2012

http://www.reuters.com/

(Reuters) – Anglo American’s (AAL.L) Chief Executive Cynthia Carroll has quit after more than five years in the job, under pressure from investors over the miner’s lagging share price and continued dependence on troubled South Africa.

A geologist by training, New Jersey-born Carroll ruffled feathers when, fresh from the aluminum industry, she became the first non-South African, the first woman and the first outsider to take the top job at Anglo in 2007.

Brushing aside suggestions she was pushed to leave, Carroll and Chairman John Parker, her long-standing supporter, said on Friday there had been “differences of opinion” with shareholders but the decision to step down was her own, as she approached a seventh year in a “very grueling and demanding role”.

Carroll’s efforts to streamline a miner with colonial roots that became a sprawling conglomerate, her campaign to cut billions in costs and efforts to shift Anglo’s centre of gravity away from South Africa have won her support among investors. A campaign to improve ties with South Africa’s government has also garnered plaudits.

But her relationship with investors became more troubled after big-ticket acquisitions like the Minas Rio iron ore project in Brazil – an early bid to diversify Anglo’s portfolio – which became mired in cost overruns and delays.

Ontario Mining contractor celebrates 50 years of service and growth

October 26, 2012

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

The Ontario Mining Association congratulates member JS Redpath on reaching its fiftieth company birthday — today. Recently, a gala event to acknowledge this milestone was held at Memorial Gardens in North Bay, which attracted more than 400 guests including company founder Jim Redpath.

Local dignitaries and current and retired Redpath employees were also on hand at the celebratory event. Mr. Redpath established the mining contracting company in 1962, when he was 26 years of age.

Redpath is believed to be the first Canadian mine contractor to reach a fiftieth anniversary. North Bay has been the home base of JS Redpath since 1969. The company has grown from a regional supplier of mining contracting services, in its early years, to a global service provider with business units in North America, South America, Australia, South Africa and Europe, today.

The company has 6,000 employees world-wide working on projects in 18 different countries during 2012. Redpath employees celebrated their employer’s fiftieth anniversary not just in Ontario but at many locations around the world.

Here’s what Ottawa’s new rules on foreign takeovers by state-owned buyers could look like – by Claudia Cattaneo and Jameson Berkow (National Post – October 26, 2012)

October 26, 2012

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

CALGARY — Squeezed between public alarm over increasing ownership of Canadian resources by state-owned entities and investors demanding their payday, Prime Minister Stephen Harper has promised new rules to ensure Canadians don’t get short-changed.

While state-owned enterprises (SOEs) have been quietly building their holdings in Canada’s oil and gas industry, China’s largest attempt at a foreign acquisition to date — CNOOC Ltd.’s $15.2-billion bid for Nexen Inc. — has ignited an intense public policy debate over what Canada should do while foreign governments seek to plant their flags across the oil patch. That debate contributed to the government blocking a $5.9-billion takeover of Progress Energy Resources Corp. by Malaysia’s Petronas last Friday.

With Ottawa under pressure to complete the reviews of the two deals by year-end, the focus now is on what government is planning and how billions in planned investments could be affected.

In interviews this week, industry sources and foreign-ownership experts painted a picture of what we could see when the statement is finally released. Taxes and royalties, transfer pricing, ownership limits and corporate governance policies could all be in play to address concerns ranging from espionage to productivity.

The case against SOEs – by Vikas Mehrotra and Randall Morck (National Post – October 26, 2012)

October 26, 2012

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

Randall Morck is Jarislowsky distinguished professor of finance and University professor, School of Business, University of Alberta. Vikas Mehrotra is A. F. (Chip) Collins professor of finance and Jarislowsky fellow, School of Business, University of Alberta.

Bids must meet corporate-governance standards. SOEs fall short

China-phobia is a bad idea. China will soon be the world’s largest economy, and Canadian consumers and businesses can benefit from China’s rise. Canada needs foreign-investment policies that apply evenly to all foreign companies, and that businesses can expect to remain the same over time. A two-track policy makes sense: an open door to private-sector foreign bidders but skepticism toward foreign state-controlled bidders, unless they make a compelling case.

Research into corporate takeovers shows that some are good and others bad — for the firms involved, their employees, consumers and the economy. In general, society benefits from takeovers that transfer control of a company from top managers who are running it poorly to top managers who will run it well. Unfortunately, many Canadian firms are indeed run by people who invest in white elephants, fail to invest in productivity improvement, or neglect their firms while enjoying the perks of being a CEO.

But many other takeovers feature poor managers, temporarily flush with cash, wresting control of a target firm away from its perfectly fine managers. An ideal takeover law would encourage the first kind of takeover and forbid the second kind. Unfortunately, making such a decision requires hugely expensive information and expertise that is often highly specific to a given industry. If government officials actually could decide what constitutes running a firm well versus badly, Soviet-style communism would have worked.

Fascism by another name – by Terence Corcoran (National Post – October 26, 2012)

October 26, 2012

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

State ownership makes mockery of markets

Recent media reports portray Ottawa as ready to horse-trade its way out of a looming foreign investment crisis over takeovers of Canadian companies by state-owned enterprises. In Bloomberg’s version, “Canada plans to ask China to allow several transactions in exchange for approval of state-owned CNOOC Ltd.’s $15.1-billion bid for Nexen Inc., said a person with knowledge of the matter.”

Finance Minister Jim Flaherty quickly announced that he personally had no knowledge of the matter. But speculation persists, particularly over attempts by the Bank of Nova Scotia and Manulife Financial to secure greater access to Chinese financial sectors. The Canadian mining industry is also keen on massaging its way into the Chinese market, and if that means using CNOOC’s $15-billion Nexen takeover as a reciprocity play, so much the better. Or so it is said.

As the Harper government wades deeper into the challenge posed by state-owned enterprises investing in Canada, whether from China or Malaysia or even the United States, some overarching issues need to be recognized. Foremost is this: The global rise of state-owned enterprises (SOEs) poses a threat to the market principles that have governed international and national investment for decades, and that dominate Canadian law and policy today.

Investor-driven corporations, aiming to maximize profits in an open competitive market, are at the heart of market capitalism.

Iron ore: The lore of ore – The Economist (October 13, 2012)

October 26, 2012

http://www.economist.com

The most important commodity after oil deserves more attention than it gets

THE development of a process to turn raw earth into steel merits a high spot on a list of mankind’s most ingenious achievements. The metal provides the backbone of skyscrapers, bridges and motorways, and the carapace and internal organs of cars, fridges and washing machines. Given steel’s ubiquity—it makes up 95% of global metal production—iron ore, the raw material from which it is made, attracts strangely little attention.

The trade in iron ore makes it the second-largest commodity market by value after crude oil. Some 2 billion tonnes of the stuff will be dug up in 2012. The price swings of the past few months say plenty about the world economy, as well as the febrile state of global commodity markets. Between June and September spot prices for iron ore fell from around $140 a tonne to close to $85, a three-year low, way off a record high of over $190 a tonne set in February 2011. Prices have recovered a bit since, settling at around $100 a tonne. Had the oil price undergone similar upheavals it would have provoked endless discussion.

Iron ore lacks the clout of oil for several reasons. The market is smaller, worth less than a tenth of the $3 trillion of crude traded every year. Unlike oil, iron is plentiful—it makes up 5% of the Earth’s crust. The difficulty is finding it in sufficient concentrations and then shifting millions of tonnes of dirt to where it is needed. Iron ore is also largely a physical market; the ability to make big speculative punts on oil generates far more interest about where prices are heading.

Cynthia Carroll exits as Anglo American CEO – by Eric Reguly (Globe and Mail – October 26, 2012)

October 26, 2012

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.

Rome — And then there were three. The surprise resignation Friday of Cynthia Carroll, the Alcan-trained CEO of global mining group Anglo American PLC, comes as a blow to female corporate advancement.

Ms. Carroll, 55, was one of only the four women CEOs among FTSE-100 companies. She was the first woman to take the top job at Anglo when she joined the company in 2007, as well as the first non-South African and the first non-insider. Founded in Johannesburg in 1917 by Sir Ernest Oppenheimer, Anglo had always picked its bosses from its own ranks.

Her departure, however, does not come as a blow to shareholder advancement. Anglo shares rose more almost 3 per cent Friday morning on the news that the search has begun for a new CEO. Ms. Carroll will not leave the company until her replacement is named, likely some time in the first half of 2013.

Ms. Carroll, an American who graduated from Skidmore College with a geology degree, worked for Alcan in Montreal from 1989 until she joined Anglo in March, 2007. Her last job at Alcan was head of its primary metals group, one of aluminium maker’s top jobs.

Vale will stay [in Sudbury]: Analyst – by Sebastien Perth (Sudbury Star – October 26, 2012)

October 26, 2012

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

A leading mining analyst thinks Vale is likely to hold onto its Sudbury operations, even though executives with the Brazilian mining company said Thursday it plans to sell underperforming assets to control costs and boost profit.

However, Raymond Goldie at Salman Partners said he believes Vale’s Sudbury operations are flexible enough to stay off the auction block. Goldie said while nickel prices are depressed, copper, platinum and palladium prices are “pretty high. My speculation was not that they would sell assets in Sudbury, but they would focus less on nickel-rich ore and focus more on copper, platinum and palladium-rich ore.”

He said unlike Sudbury, many of Vale’s mining operations are one-trick ponies where the company can only mine one mineral.

“(Vale) would consider Sudbury less for sale because you have the possibility of switching mining from nickel to copper and precious metals. Some of Vale’s other mining operations, such as the problem- plagued Goro nickel operations in New Caledonia, it’s nickel or nothing.

“They would be more likely to sell their interest in Goro or Indonesia because they are mostly nickel and cobalt operations. They don’t have the flexibility of you folks in Sudbury.”

Cliffs holds open house to discuss [Sudbury] chromite smelter – by Carol Mulligan (Sudbury Star – October 26, 2012)

October 26, 2012

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

Interested residents who attended an open house Thursd ay in Capreol on had an opportunity to have their comments and complaints considered by Cliffs Natural Resources as it undertakes the environmental assessment for its chromite smelter project.

Cleveland-based Cliffs is about two years into collecting baseline data for its combined federal and provincial environmental assessment for development of its Black Thor deposit near McFaulds Lake in the Ring of Fire.

Jason Aagenes, director of environmental affairs for Cliffs’ ferroalloys division, briefed reporters on the environmental assessment of the four components of its Ring of Fire. Cliffs is looking to develop an open-pit mine in the James Bay lowlands, which will include a concentrator to crush chromite ore and a lined tailings pond.

It is also developing an integrated transportation corridor to move concentrated ore from the Ring of Fire to a ferrochrome processing plant it plans to build at the former Moose Mountain Mine site, north of Capreol.

Aagenes said the project is in the feasibility and environmental assessment stages, and said Cliffs is working on an aggressive deadline to begin mining and processing by 2016. Cliffs originally intended to be in production by 2015.