Shaky investment markets [in Northern Ontario] forces driller offshore – by Ian Ross (Northern Ontario Business – January 2, 2013)

 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.

Although some companies and the province laud Ontario as being one of the best mining-friendly
jurisdictions in the world, Courte said that perception has changed. In conversation with her
industry colleagues, Ontario is considered a “risk area” for investment, based on some high-
profile First Nations-industry conflicts, along with the uncertainty of how the new Mining Act
plans and permits regulations will play out.

A Thunder Bay drilling company boss said exploration work is drying up in Northern Ontario and she’s finding greener pastures in the Caribbean. Barb Courte, president of Cobra Drilling and North Star Drilling, is dispatching four drills to the Dominican Republic this fall for a project with Unigold, a Canadian junior company.

“I’m getting calls from other companies in the Dominican to do more work.” While 2012 has been a solid year for her two companies, she has major trepidations for what lies ahead. “I think we’re going to have a very hard year ahead of us.”

A tepid investors’ market means exploration budgets for junior miners’ drilling programs are being slashed or the companies aren’t doing anything. “If they have any money, if they were going to do a 5,000-metre contract, they’re doing a 1,500-metre.”

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Grounded rig Shell’s latest Arctic setback – by Carrie Tait (Globe and Mail – January 3, 2013)

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 — Royal Dutch Shell PLC is scrambling to develop a recovery plan for a grounded drilling rig and its toxic cargo, in what has become the latest flashpoint in the debate over the industry’s ability to safely operate in the environmentally fragile Arctic.

About 143,000 gallons of diesel fuel, as well as other petroleum products such as lubricants, is on the rig, which is stuck off the Alaskan coast. It was being pulled to Seattle for servicing when “near hurricane” weather and engine failures on the tugboat thwarted the voyage late last week.

Towlines separated earlier this week, and the emergency backup plan – towing it by the stern – also faltered. The Dutch company did not have a contingency plan if both towing blueprints failed.

While the grounded rig, named Kulluk, was not drilling when trouble struck, even its transportation woes demonstrate how difficult it is to operate in the Arctic. The vast region’s delicate ecosystems are a key point in the debate, with critics arguing it is impossible to safely extract hydrocarbons in the area and operators saying they can do so successfully and responsibly.

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Thunder Bay and the challenge of seniority – by Joe Friesen (Globe and Mail – December 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.

THUNDER BAY, ONT. — The history of Canadian wealth is written on the land here north of Lake Superior: the fur trade post that supplied Europe’s beaver pelts, the forest that yielded billions in lumber, the towering grain elevators, the smoking pulp mill, the railway that opened the West.

Fortunes have been made and lost in Thunder Bay through periods of boom and bust. In 2013, another challenge looms, one that it shares with the rest of the country: Thunder Bay is aging, and it may get old before it can get rich again.

With 7 per cent of its population aged 60 to 64, Thunder Bay has a greater proportion of people nearing the traditional retirement age than almost any other Canadian city. Rebecca Johnson, a local councillor who led the push to make Thunder Bay officially Age Friendly, has seen so many retirement parties she swears she won’t attend another.

But as the first wave of the baby-boom generation nears retirement, Thunder Bay is also on the cusp of a potential economic boom. There are 13 mines planned in the next six years for the region north of here, many in the area known as the Ring of Fire. Thunder Bay will be the hub for all that development, which includes building roads, camps, mines, as well as services for the influx of workers. An economic-impact study estimates that 16,000 new jobs will be created through the first nine mine projects.

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Aboriginal Ring of Fire director Michael Fox sees opportunity in mining – by Lindsay Jolivet (Yahoo News Canada – January 1, 2013)

http://ca.news.yahoo.com/

A mineral deposit in Ontario’s far north is a source of excitement and controversy for the province’s mining industry. Named the Ring of Fire — after the Johnny Cash song — the area contains a Nickel deposit and the largest deposit of chromite ever discovered in North America. Chromite is a key ingredient in stainless steel. Two companies, Cliffs Natural Resources and Noront, are in talks to mine the region.

Dalton McGuinty has suggested the Ring of Fire could rival Alberta’s oil sands, creating thousands of jobs near reserves that are plagued by unemployment. But its economic potential is matched only by its hurdles and risks. Environmental damage, sustainable infrastructure, and the well-being of nearby aboriginal communities are at stake.

Michael Fox is the Ring of Fire senior director for Webequie First Nation, a fly-in community 540 kilometres north of Thunder Bay. He’s a liaison between the community and those seeking to exploit its resources. Fox spoke with Yahoo! Canada News about the complex process of developing a remote region and the challenges of ensuring that Webequie benefits from the Ring of Fire as much as the companies planning to mine it. This is a condensed version of that discussion.

Yahoo! Canada News: What are your biggest challenges as a liaison between the community, the companies, and the government? It sounds like a big job.

Michael Fox: There are two visions of the two distinct mines that the two companies have. Noront has a nickel deposit that is going to be an underground mine. And their project description has an east-west road. The Cliffs project is an open pit mine, it has a north-south road.

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RIO TINTO ON LEAN MANUFACTURING IN THE MINING SECTOR – by Paul Smith (Shinka Management.com – December 20, 2012)

http://shinkamanagement.com/

In November following the completion of our 2012 Lean Japan Tour I was fortunate to attend the 40th Anniversary of the establishment of the Australian and New Zealand Chamber of Commerce in Japan. It was an enjoyable night in Tokyo’s beautiful Peninsula Hotel, with the Australian Food and Beverage Manager treating guests to a superb meal, and singer Sarah Àlainn entertaining us early in the night with a number of songs from her recent debut album.

The highlight of the evening for myself was the keynote address from Sam Walsh AO, Executive Director of Rio Tinto. Sam opened his address by talking about the trade relationship between Australia and Japan and the growth and development of the broader Asia Pacific region.

Sam then turned to his own background with Japan and Rio Tinto’s iron ore business. To my pleasant surprise Sam focused his talk on his 20-year experience in the automotive industry and how lessons learned from lean manufacturing have been critical to Rio Tinto’s mining operations.

Sam began by addressing the seemingly unrelated industries of automotive manufacturing and large-scale mineral resource extraction.

“To the uninitiated, the two industries might seem worlds apart. One manufactures highly engineered, precision vehicle components to exacting specifications. It’s an extremely competitive industry. It requires complex, hugely sophisticated and wherever possible automated plant and equipment. It demands first rate forecasting and scheduling, tight inventory and costs control and a keen customer focus. It depends upon top-flight engineering, electronics and technical expertise and lean, high performance business practices.

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

 

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

BRAZIL and MARRO VEHLO

At least one of the companies that Disraeli was pushing, Imperial Brazilian, established a profitable mining business in the state of Minas Gerais in Brazil at the old and rich Gongo Soco mine, which lasted from 1826 until 1856 when flooding led to the mine’s collapse. Over 30 years it produced more than 400,000 ozs of gold, the revenue generated being divided 60% to costs, 20% to shareholder dividends and 20% to the Brazilian government in taxes, making it one of the few profitable companies to come under Disraeli’s gaze.

Brazil had been a major gold producer since gold was first discovered in Minas Gerais at the end of the 17th century. Gold production is thought to have been around 1,200 tonnes between 1700 and 1820, at which time British capital was allowed in, following independence from Portugal, to revive the ageing mines of the region. The British had in fact benefited for decades from the growth of gold mining in the pre-independence era as Portugal ran a permanent trade deficit with Britain which was plugged by gold deliveries from Brazil.

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Is there any hope for America? Absolutely! – by Margaret Wente (Globe and Mail – January 3, 2013)

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.

Washington’s epic battle over the “fiscal cliff” would be tragic if it weren’t so pathetic. It reminds me of a cartoon in which the duelling combatants hurl themselves off the precipice and keep fighting until they look down and go splat.

The Republicans and Democrats are desperately hoping that cartoon physics applies to them, too. So long as they deny reality, they won’t go splat – or so they hope. This week’s alleged “deal” simply postponed the inevitable day of reckoning. And it confirmed that the American people’s vast contempt for their legislators is richly deserved.

Is the U.S. finished? It’s awfully tempting to think so. Political dysfunction, crushing debt, a bad economy and a sinking middle class are not exactly signs of vigour. Two failed wars have dealt huge blows to its reputation and prestige. Not to mention the gun culture and the junk food and the [fill in your favourite example of American pathology here].

But if the U.S. were a stock, I’d buy it. Despite the gloomy news, its future is looking brighter than it has in years. One reason is the new energy revolution, a phenomenal reversal of fortune that nobody foresaw. The country is awash in cheap new supplies of unconventional oil and gas that are being unlocked with new technologies. This unexpected bonanza is rocket fuel for the economy.

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The way to break the Northern Gateway logjam: aboriginal equity – by Brian Lee Crowley and Ken Coates (Globe and Mail – January 3, 2013)

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.

Brian Lee Crowley and Ken Coates are co-leaders of the Aboriginal Canada and the Natural Resource Economy project at the Macdonald-Laurier Institute, an Ottawa-based public policy think tank.

The bitter debate over the Northern Gateway oil pipeline project shows Canadian policy-making at its worst.

A piece of nationally significant infrastructure, the project is currently mired in a toxic mess, assailed by environmentalists, targeted by vote-hungry B.C. politicians and publicly challenged by many first nations. You could be forgiven for feeling a dreadful sense of déjà vu.

In the 1970s, an ambitious plan was mooted for a natural gas pipeline down the Mackenzie Valley. Aboriginal people and environmentalists protested. Justice Thomas Berger was named to head an inquiry that galvanized opposition to the pipeline, recommending that it be delayed until aboriginal people were ready to participate fully.

Eventually, companies created new aboriginal partnership models. Aboriginal communities and governments grew more familiar with the project and innovated by becoming equity partners. While some opposition remained, most in the region supported a pipeline that promised jobs for the North and revenue for aboriginal governments.

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Pipeline politics forcing producers to rely on rail, and other more expensive, incident-prone options to transport crude – by Jen Gerson (National Post – January 3, 2013)

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

As Alberta continues to feel the pinch of a deeply discounted bitumen price, it’s perhaps no surprise the provincial government and oil companies are looking for an alternative to politically contentious pipelines to get crude to market.

The provincial government said Monday it is considering spending $10-million to study building a new railway to deliver landlocked oil to an Alaska port.

If it did get built, there would be no shortage of irony: Fewer pipelines won’t keep oil in the ground; if anti-Keystone XL and Northern Gateway campaigns were successful, it would just force producers to rely on rail, and other more expensive, incident-prone options.

“Pipelines are the safest way to move crude. That’s the bottom line and that’s why most of it does move by pipeline today,”said Travis Davies, a spokesperson for the Canadian Association of Petroleum Producers. “Rail can be safe [but] you’re looking at volumes that aren’t as high as what’s moving through a pipeline everyday.”

Although pipelines are politically unpalatable, their safety record is massively better than every other option, including railways. Trains are currently seen as a complementary method to pipelines; something to ease the hurt as more pipeline infrastructure comes on line.

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Simplistic arguments from Theresa Spence, Idle No More could have tragic consequences for natives – by John Ivison (National Post – January 3, 2013)

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

“De Beers is investing $1-billion in the Victor mine near Attawapiskat. It agreed to pay
the band about $30-million over the 12-year life span of the mine. A further $325-million
in contracts has been funnelled through companies owned by the band, to supply catering,
helicopters, dynamite and the like. One wonders how Attawapiskat Resources Inc. has only
made profits of $100,000 on that level of revenue, but that’s for another day.” (John Ivison)

I made the observation on Twitter the other day that certain native leaders seem intent on conflict, and that they want the “hapless” Theresa Spence, the hunger-striking Attawapiskat First Nation chief, to become a martyr.

The reaction was venomous. One of the more considered respondents, Gerald Taiaiake Alfred, called me a “racist p—k” and threatened to kick my “immigrant ass” back to Scotland. And he’s a political science professor at the University of Victoria.

It brought home the power of what psychologist Jonathan Haidt calls “the righteous mind” — the righteous certainty that those who see things differently are wrong, while being completely blind to our own biases.

The prospect of rational debate on this subject is slipping away — and may be lost entirely if Ms. Spence dies. Canada is facing a tumultuous moment in its history with its native people, such as we haven’t seen since the Oka crisis.

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The Real Stimulus: Low-Cost Natural Gas – by Daniel Yergin (Wall Street Journal – October 22, 2012)

http://online.wsj.com/home-page?mod=WSJ_topnav_home_main

Mr. Yergin, vice chairman of IHS, a global market information and analytics company, is author of “The Quest: Energy, Security and the Remaking of the Modern World” (Penguin, new edition, 2012).

The impact of the U.S. energy revolution is only beginning. It is already providing a foundation for a domestic renaissance in manufacturing.

An unconventional oil and gas revolution is under way in the United States, but its full ramifications are only beginning to be understood. The basic facts are clear enough. Half a decade ago, it was assumed that the U.S. would become a large importer of liquefied natural gas; now the domestic natural gas market is oversupplied, thanks to the ability to produce shale gas through hydraulic fracturing and horizontal drilling technologies.

Shale gas alone is now 10% of the overall U.S. energy supply. And similar technologies to recover so-called tight oil trapped in rock formations are largely responsible for boosting U.S. oil production by 25% since 2008—the highest growth in oil output of any country in the world over that time period.

So far more than 1.7 million jobs are the result, according to a report titled “America’s New Energy Future,” released Tuesday by my research firm, IHS.

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Are You a Base Metal Growth Bull or a Gold Gloom-and-Doomer? – by Brian Sylvester (The Gold Report – January 2, 2013)

http://www.theaureport.com/

Gold bugs say the global economy could collapse any day now. But what about investors who see continued growth in emerging economies and a steady, if slow, U.S. recovery? Look to base metals, recommends Haywood Analyst Stefan Ioannou. He expects price runs for 2013–2015, especially for zinc, which is facing a serious supply squeeze. Do your homework now to get positioned as soon as the uptick begins. Ioannou shares his favorites in this Gold Report interview.

The Gold Report: Stefan, what is your 2013 outlook for copper?

Stefan Ioannou: Strong fundamentals underpin the copper price going into 2013. Despite a tough copper equity market in 2012, the metal price itself has been pretty solid, averaging around $3.60 per pound ($3.60/lb). Improving automobile numbers out of the U.S. and stronger manufacturing numbers out of China will both have a positive near-term impact on the copper price. We expect copper prices to move a bit higher in 2013.

TGR: How far off is a return to $4/lb copper?

SI: I think 2013 is too soon for a sustained $4/lb price, but it will likely test that mark a few times in the coming year. There is a stronger argument for a long-term $4/lb copper price.

TGR: Many of the copper companies you cover also have a zinc component. Zinc started 2012 near $2,200 per metric ton ($2,200/mt), dipped to $1,750/mt at midyear and now hovers around $2,000/mt. What is behind the volatility?

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Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

PADDY HANNAN (1840-1925)

The history of gold prospecting in Australia is populated by countless thousands of mostly unlucky and long forgotten men. One of the few whose name still survives is Paddy Hannan, who found the fabulous Kalgoorlie gold field in Western Australia in 1893 and whose statue is still to be seen in the centre of Kalgoorlie today.

Hannan was born in Ireland in 1840, one of five brothers and six sisters. He travelled to Australia in 1862 and worked for several years as a miner in the gold fields of Ballarat in Victoria where his uncle, William Lynch, was a miner. After that he went to work in the gold fields of New Zealand for several years and returned to prospect in New South Wales and then South Australia. He later crossed Australia to prospect for gold in Western Australia around Southern Cross. Hannan was a careful man with an ability to find water as well as gold, something that stood him in good stead in parched Western Australia. It was this skill at finding water that led to Hannan’s discovery of the famous Kalgoorlie gold field in 1892, for it was while he was looking for sources to fill his waterbags that he stumbled over surface gold.

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