Anglo American – Haunted by history – by Rex Gibson (Financial Mail – January 31, 2013)

http://www.fm.co.za/

What’s in Mark Cutifani’s in-tray

What kind of company will Mark Cutifani inherit? Every move Anglo American makes provokes an intense response from its myriad local stakeholders. This despite its moving its primary listing to London 14 years ago . Rex Gibson reflects on the role mining, and in particular Anglo American, has played in the SA economy.

It may be one of the most inept public relations performances ever by a government not renowned for its PR skills. President Jacob Zuma went to the World Economic Forum in Davos intending to reassure the world that SA welcomed investors in mining. But it appears that nobody told some of his top lieutenants.

A few days before, mineral resources minister Susan Shabangu launched a broadside of remarkable ferocity and insensitivity against Anglo American and its subsidiary, Anglo American Platinum (Amplats). The two culprits had had the nerve to announce their business proposals without talking to her.

Though clearly directed at these two, her bullying approach carried a disturbing message for the industry as a whole: “I’ll show you who’s the boss.” The result was that Zuma felt obliged to repudiate Shabangu, insisting that investors were welcome. But that didn’t do much for the confidence and sense of security of those looking to store their money for the long term in a safe place.

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Mining tycoon becomes first African billionaire to pledge half his wealth to charity – by Geoffrey York (Globe and Mail – January 31, 2013)

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.

JOHANNESBURG — As a boy in an impoverished village in South Africa’s apartheid era, Patrice Motsepe watched his mother giving free food to the poorest customers at their small grocery store.

It was a lesson he never forgot, even when he made history by becoming South Africa’s first black billionaire. Ranked the eighth-richest man on the continent with an estimated fortune of $2.65-billion, the 51-year-old mining tycoon has become the first African billionaire to make a dramatic pledge to give away half the wealth generated by his family’s assets.

It’s a huge coup for U.S. entrepreneurs Warren Buffett and Bill Gates as they try to launch a global wave of philanthropy. They have persuaded nearly 100 billionaires to pledge the bulk of their wealth to charity, but most so far are American, and Mr. Motsepe is believed to be the first in the fast-rising African economy to participate in the program, the Giving Pledge, in which prosperous families are encourage to give away at least half their wealth.

The 51-year-old mining tycoon announced Wednesday that he has joined the Giving Pledge. Members of the campaign have courted him for months. Last August he held talks with Mr. Buffett in Omaha, and last month Mr. Gates flew to Cape Town and met Mr. Motsepe to explain the Giving Pledge. At a press conference on Wednesday, Mr. Gates joined by video link to praise Mr. Motsepe’s decision.

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Rio Tinto considering halting work at Oyu Tolgoi mine over dispute – by Christopher Donville, Todd Baer and Yuriy Humber (Bloomberg News/National Post – January 31, 2013)

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

Rio Tinto Group, the second-biggest mining company, is considering a temporary halt to construction work at its US$6.2-billion Oyu Tolgoi copper and gold project in Mongolia as the government demands a greater share of profit from the mine, according to two people familiar with the plans.

The London-based company is discussing the suspension to protest the central Asian nation’s demands for a bigger stake in the project and new mining royalty rates, said the people, who asked not to be identified because they aren’t authorized to comment publicly. A suspension of work, which may halt mining and processing, isn’t certain and is among options that managers are discussing in London, one of the people said.

“We continue to work together with all stakeholders including the government of Mongolia to bring the benefits of Oyu Tolgoi to all parties,” said Bruce Tobin, a spokesman for Rio in Melbourne. He declined to comment on whether it’s considering a temporary halt.

The dispute comes as Mongolian Prime Minister Norovyn Altankhuyag’s government tries to maintain support for foreign investment amid growing nationalism and wealth disparity. In October, Rio rejected a second move by Mongolia to renegotiate a 2009 investment agreement for the development of Oyu Tolgoi, which is currently the world’s biggest copper project under construction.

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The North wants in – by Jesse Kline (National Post Editorial – January 31, 2013)

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

According to Northwest Territories Premier Bob McLeod — who, along with his cabinet, deputy ministers and a contingent of First Nations and business leaders, is in Ottawa for negotiations with the federal government — the N.W.T. is “on the verge of achieving” a historic agreement to gain control over its natural resources. If such an agreement is reached, it would be a significant marker in the long battle between Western Canadians and the federal government.

Of all the geographical divisions that make up this country, the Northwest Territories has been the most tortured. Historically used as a catch-all for large swaths of land Ottawa had no idea what to do with, the territory originally encompassed parts of modern-day British Columbia, the Yukon, Nunavut, Saskatchewan and Alberta.

When Ottawa purchased Rupert’s Land from the Hudson’s Bay Co. (HBC) in 1870, the territory grew immensely, but would slowly be whittled down as time went on: Manitoba and B.C. would expand north, the Yukon was created in 1898, Alberta and Saskatchewan were carved out in 1905 and Nunavut was created in 1999.

If one thing has remained fairly constant throughout these expansions and contractions, it’s the fight of Western Canadians — including Northwest Territorians — to control their own resources.

Shortly after consuming much of HBC’s North American holdings, Frederick Haultain, the premier of what was known as the North-West Territories, would come to embody that struggle.

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Potash miners settle antitrust claims – by Peter Koven (National Post – January 31, 2013)

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

Saskatchewan’s Big Three potash producers have agreed to pay a total of US$97.5-million to settle U.S. antitrust allegations they colluded to keep prices artificially high.

The deal ends a legal battle that dates back to 2008. But despite the settlement, Bill Doyle went out of his way to express his utter contempt for the class-action proceedings.

In a lengthy statement, the chief executive of Potash Corp. of Saskatchewan derided the claims as an example of the “well-documented abuse of class actions” in the United States in which “self-interested” lawyers assert “meritless” claims because they and their clients have nothing to lose. He called it a “wasteful and unnecessary” cost of doing business in the United States.

Nonetheless, he is happy to have the matter behind him. “The reality is that we weighed the multi-year effort in time and resources that would have been required to defend this lawsuit, and determined that our management should remain focused on the production of potash and serving our customers,” he said.

Potash Corp. and Mosaic Co. agreed to pay US$43.75-million each to settle the claims, while Agrium Inc. is paying US$10-million.

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As cost pressures mount, Ontario’s wholesale power prices set to soar – by Shawn McCarthy (Globe and Mail – January 31, 2013)

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.

OTTAWA – Electricity consumers in Ontario face the prospect of soaring prices in the coming decade, a trend that would put additional cost pressure on power-hungry industrial users.

The cost pressures are rising at the province completes the closing of its coal-fired plants while its nuclear fleet faces further retooling and renewable power takes a greater share of the load. A new forecast by London Economics International predicts Ontario’s wholesale power price will jump by 74 per cent – to $55.80 per megawatt hour between 2013 and 2022 from $32. That figure does not include higher costs to distribute the power and for conservation and other demand-side programs.

Concerns about rising electricity prices will be one of the key economic challenges facing the incoming premier Kathleen Wynne as she prepares to assume power from the outgoing Dalton McGuinty. Ms. Wynne will have to take on opposition critics who have slammed the government for its election-related cancellation of a gas-fired power plant that result in $190-million in compensation payments to the plant’s financiers.

Ontario is not alone in anticipating sharply higher power prices. Alberta will see its wholesale prices decline slightly over the next few years, but then turn, beginning to rise significantly in the latter part of the decade. Western New York State could see wholesale electricity prices double, but from a lower base than Ontario, according to A.J. Goulding, president of the Toronto-based economics firm, which has produced a series of forecasts for provinces and states.

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The oil sands’ grand aim for co-operation – by Nathan Vanderklippe (Globe and Mail – January 31, 2013)

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 — It was, in many ways, the signing of a corporate peace treaty. On March 1, 2012, the heads of 12 of the largest energy companies in Canada sat on a downtown Calgary stage and agreed to a legal détente. No longer would they fight each other in court over patents or intellectual property on matters related to the environmental performance in the Fort McMurray area.

Instead, they would agree to work hand-in-hand on ways to make the oil sands cleaner and greener. It was, they said, quite likely the most important collaboration agreement between competitors in any industry, anywhere. It may be their single best chance to beat back a sea of criticism that threatens the very existence of their industry.

What got less mention was that the splashy signing ceremony – complete with a big-screen live-video feed of each executive signing documents – had settled little of the big issues. And no one mentioned that the months ahead would be filled with painful meetings, with a dozen companies each sending legal teams for multiple weekly meetings to sort out how, precisely, they would establish a détente that went against the instinct of most people in the room. Nor did they predict that nearly a year later, some of the thorniest questions confronting the oil sands would remain unresolved, like how high the industry should aim its ambitions to prune its dirtiest excesses.

Yet behind the scenes, the man tasked with quietly making progress – a man who arguably has one of the most delicate jobs in all of Calgary – said he is surprised at what Big Oil is accomplishing.

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In Alberta, a bitter-tasting sales tax is on the table – Gary Mason (Globe and Mail – January 31, 2013)

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.

Alison Redford appears destined to go down in history as the premier who introduced Albertans to a fact of life most Canadians have lived with for generations: a sales tax.

It won’t happen in the budget she will introduce in early March – she has said as much. Instead, it would appear the province will run another deficit – its sixth in a row – rather than make the kind of draconian cuts necessary to balance its books. But a sales tax is coming. There seems no escaping it now.

It’s all rather hard to believe. For years, Alberta has been the economic envy of the country, awash in petro dollars that allowed a succession of premiers to avoid the hard choices their counterparts in other parts of the country have been forced to make.

When spending got truly out of hand, Ralph Klein took a cleaver to things. But then it resumed as normal, with successive governments radically expanding the size and cost of the public sector while exhausting money supplies in the province’s Sustainability Fund. For more than four decades, Alberta’s Progressive Conservative governments have blithely ignored the possibility that, one day, oil money might not be there to bail them out.

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North Dakota Went Boom – by Chip Brown (New York Times Magaine – January 31, 2013)

http://www.nytimes.com/

Long before the full frenzy of the boom, you could see its harbingers at the Mountrail County courthouse in Stanley, N.D. Geologists had pored over core samples and log signatures and had made their educated guesses, and now it was the hour of the “landmen,” the men and women whose job was to dig through courthouse books for the often-tangled history of mineral title and surface rights.

Apart from a few fanatics who sometimes turned up at midnight, the landmen would begin arriving at the courthouse around 6 a.m. In the dead of winter, it would still be dark and often 20 or 30 below zero, and because the courthouse didn’t open until 7:30, the landmen would leave their briefcases outside the entrance, on the steps, in the order they arrived. And then they would go back to their cars and trucks to wait with the engines running, their faces wreathed in coffee steam.

Sometimes there were more than 20 briefcases filed on the courthouse steps. The former landman who told me this — Brent Brannan, now director of the North Dakota Oil and Gas Research Program — said he sometimes thought he could see the whole boom in that one image, briefcases waiting for the day to start, and it killed him a little that he never took a picture.

For many years North Dakota has been a frontier — not the classic 19th-century kind based on American avarice and the lure of opportunity in unsettled lands, but the kind that comes afterward, when a place has been stripped bare or just forgotten because it was a hard garden that no one wanted too much to begin with, and now it has reverted to the wilderness that widens around dying towns.

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Oil sands face defining days as U.S. Keystone ruling, EU vote draw closer – by Claudia Cattaneo (National Post – January 31, 2013)

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

Judgment day on the oil sands — and on Canada’s integrity as an oil producer — by our top trading partners and allies, United States and the European Union, is just a season away.

After a six-year campaign by green activists to brand them as a climate change villain, two major decisions will either validate the campaign against the oil sands or rehabilitate their reputation are expected this spring: U.S. president Barack Obama’s ruling on the proposed Keystone XL oil sands pipeline, and a European Union vote on whether to label the oil sands as more polluting than other oils in its Fuel Quality Directive.

The U.S. decision is expected around the end of March, the EU is expected to rule around June. The decisions will open or close markets, help fix or entrench the deep discounting of Canada’s oil because of insufficient pipeline capacity and uncertainty about future markets, show how far jurisdictions are prepared to go to shape — and shame? — others’ economic choices and environmental standards in the name of the climate.

“In the context of continued and expanded market access, [the two policy decisions] are critically important,” Cal Dallas, Alberta’s minister of international and intergovernmental relations, said in an interview Wednesday.

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Obama should ‘face down critics’ and approve Keystone XL: science journal – by Yadullah Hussain (National Post – January 31, 2013)

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

One of the world’s most respected scientific journals says U.S. President Barack Obama should focus on coal-gorging power and utility companies in the United States, instead of appeasing environmentalists by turning down the Keystone XL pipeline.

“Regarding the Keystone pipeline, the administration should face down critics of the project, ensure that environmental standards are met and then approve it,” Nature said in an editorial on its website. (Read full editorial here).

Keystone XL pipeline, which will ship oil sands product from Alberta to the Gulf Coast, has been the subject of environmental rage and its scrapping is seen as central to reducing global carbon emissions. But Nature contends the pipeline’s impact on the environment is exaggerated.

“Nor is oil produced from the Canadian tar sands as dirty from a climate perspective as many believe (some of the oil produced in California, without attention from environmentalists, is worse).”

While oil sands development raises “serious air- and water-quality issues in Canada,” these issues are beyond the president’s jurisdiction, the weekly periodical said.

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Vale Brazil – Carajás Iron Ore Mine – by Will Daynes (Business Excellence – January 30, 2013)

Business Excellence is a global on-line publication portal for businesses who have stories of excellence to tell:  http://www.bus-ex.com/

Simply ore-inspiring

The most widely used of all minerals, iron accounts for approximately 95 percent of the world’s metal production in terms of weight. As the world’s third largest iron ore producer and exporter, Brazil has long reaped the financial benefits provided by one of its largest export products.

The Carajás region of the country boasts some of the richest reserves and concentrations of iron ore anywhere on the planet, with the Carajás Mine, located in the state of Pará in Northern Brazil, holding the distinction of being the world’s largest iron ore mine. Fully owned by Vale, the mine holds up to 7.2 billion metric tonnes of iron ore in proven and probable reserves.

The Carajás Mineral Province was originally discovered entirely by accident when a US Steel helicopter was forced to land on a hill in the area to refuel in 1967, with the first iron ore mine called N4E Mine coming into operation in 1985. In the mine’s first year output reached one million metric tonnes of iron ore, which was processed at a semi-industrial plant. During the second year an industrial-scale processing plant was brought online and this resulted in production rising to 13.5 million metric tonnes of final product.

Mining operations in Carajás are open-pit, with 15-meter-high benches. The off-highway trucks that Vale uses, each capable of carrying loads of over 240 metric tonnes, unload ore at crushing facilities located inside the mines. After this, the material is transported on conveyor belts for further processing.

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Donors closing wallets to Canadian charities who work with CIDA, mining companies – by Rick Westhead (Toronto Star – January 31, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Plan Canada, who works with Iamgold, is part of Canadian International Development Agency’s program pairing NGOs with Canadian mining companies.

A leading Canadian charity says it is considering abandoning a controversial development project funded by the federal government and a Canadian mining company because of pressure from its donors.

Plan Canada, one of three NGOs involved in a Canadian International Development Agency project that pairs NGOs and the government with mining companies, says the mining sector’s poor image threatens to tarnish its own reputation. Some Plan donors have complained the mining companies have enough money to fund their own social programs and that Plan shouldn’t be partnering with them.

“Would we try it again? Probably not,” Rosemary McCarney, Plan’s president, said in an interview with the Toronto Star. “It’s upsetting to donors. People are mad. The reality is that working with any mining company is going to be a problem. There are going to be (employee) strikes and spills. Is it worth the headache? Probably not.”

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Ivan Glasenberg’s Play For Xstrata Forces Him From His Cone of Secrecy – by Tim Treadgold (Forbes Asia Magazine – January 30, 2013)

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This story appears in the 11 February 2013 issue of Forbes Asia.

Commodities trading has already made Ivan Glasenberg one of the richest people in the world. Now he was trying to pull off one of the world’s biggest corporate deals, one that would make him even richer. As chief executive ofSwitzerland‘s Glencore International he had usually managed to keep his head down and stay out of the news.

But last year, as Glencore waged its $33 billion takeover battle for miner Xstrata, he was learning that he could no longer live the secretive life, with just a few public appearances and a home high on a hill near the Swiss village of Rüschlikon, a 15-minute drive from Zurich.

So Glasenberg, pushed by his advisors, briefly emerged from his corporate cocoon to speak publicly and sit for a handful of media interviews. He was not happy about it. After all, he had learned the business from mysterious oil trader Marc Rich.

The most open event hosting Glasenberg was a meeting of the Melbourne Mining Club held, oddly enough, in London. Conducted under a marquee at Lord’s Cricket Ground, the 600 people on hand heard the guest speaker talk forcefully about his business and private lives. It was perhaps fitting that he opened up to an Australian organization because, after growing up and starting his career in Johannesburg, he gained Australian citizenship during a two-year coal-trading assignment for Glencore in Sydney in the late 1980s.

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On the edge [Australia resources] – Banyon (The Economist – January 26, 2013)

 http://www.economist.com/

Australia still does not seem entirely sure where it is

IN FEW countries do history and geography tug in such different directions. It is half a century since Japan overtook Britain as Australia’s largest trading partner, itself to be overtaken by another Asian giant, China, in 2007. More than 40 years have passed since “White Australia” immigration policies were dropped and Australia began to look a little more like Asia. And it is 16 years since an Australian prime minister, John Howard, claimed “we do not have to choose between our history and our geography.”

It is only three months, however, since Australia’s government produced a white paper on “Australia in the Asian Century”, which has provoked renewed debate about Australia’s place in its closest neighbourhood. As Kevin Rudd, a former prime minister, says, Australians feel they live “slightly on the edge”, a feeling heightened by extreme natural events, such as the recent heatwave and accompanying bushfires.

Their head of state is still the British queen and their security is founded on a treaty with America. Indeed, by agreeing to play host to up to 2,500 American marines, Australia is central to the Obama administration’s “rebalancing” to Asia. And most of Australia’s foreign investment is still from America and Europe. A poll last year by the Lowy Institute, a think-tank in Sydney, found that 95% of Australians thought China already was, or would become, “Asia’s leading power”; 52% felt uncomfortable about it.

The upshot of months of bureaucratic arm-wrestling between independent experts and various government departments, the white paper offers a predictably awestruck view of Asia’s economic rise. By the early 2020s Asia will overtake the combined economic output of Europe and North America.

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