February 5, 2013 – Republic of Mining

Mining the Deep Sea and Outer Space for a Mineral Bonanza -by Harvey Morris (International Herald Tribune – January 26, 2013)

February 5, 2013

http://rendezvous.blogs.nytimes.com/

LONDON — Whatever happened to manganese nodules? As newly announced plans to mine the mineral wealth of asteroids generate a mixture of excitement and skepticism, it is worth recalling the fate of an earlier craze to exploit a potential metals bonanza somewhat closer to home.

From the early 1970s, the prospect of hauling up a boundless harvest of metal rich nodules from the deepest ocean beds was touted as the answer to the world’s increasing hunger for diminishing resources. The potato-size rocks that carpet the deep seabed — commonly known as manganese nodules — also contain a mix of other elements, including copper, cobalt and nickel.

Governments and private companies joined the treasure hunt as explorations were launched to determine whether projects to vacuum the nodules from miles below the ocean’s surface were commercially viable.

Lockheed Martin led a consortium of companies in an effort to develop a commercial mining operation, collecting thousands of nodules from an area of the Pacific Ocean between Hawaii and Mexico as part of an effort that would today cost more than $500 million.

Howard Hughes, the reclusive American tycoon, fueled the frenzy with the launch of the Glomar Explorer, a 618-foot ship he said was built to mine the manganese nodules. (It was, in fact, cover for a secret C.I.A. project to raise a sunken Soviet submarine.)

New heads for a new cycle: Mining giants switch bosses (The Economist – January 26, 2013)

February 5, 2013

http://www.economist.com/

Why the top posts are changing hands

MINING is a cyclical business. If China’s epic demand for commodities has done much to disguise that fact in recent years, a slew of changes at the top of the big Western mining firms is a timely reminder that it is still true. The latest casualty, Tom Albanese, was shown the door by Rio Tinto on January 17th. His departure is the latest sign that investors reckon a change of leadership is required for the next phase of the cycle.

Rio’s decision comes after Cynthia Carroll said last October that she would step down as boss of Anglo American. A couple of weeks later it was reported that BHP Billiton, the world’s biggest mining company, is seeking a successor to Marius Kloppers, suggesting that he may remain only for another year or so. The terms of a merger between Glencore and Xstrata mean that Mick Davis, Xstrata’s boss, will also soon be looking for a new job.

The clear-out is no coincidence. With the exception of Mr Davis the current crop were all appointed in 2007. If mining bosses have a shelf-life, they may all have reached the end of it. Moreover, none has been entirely successful in profiting from sky-high commodity prices.

Each of the mining giants claims to have been the first to notice the rise of China—which now consumes 40% of the world’s industrial metals—and to have reacted fast. In fact, they were all slow off the mark. The current bosses took office with a remit to catch up. But things have not gone well.

Fool’s platinum? – Asteroid mining (The Economist – January 24, 2013)

February 5, 2013

http://www.economist.com/

IT ISN’T a gold rush quite yet. But the launch of a second asteroid-mining venture in a year suggests that the allure of extra-terrestrial prospecting may be as hard to resist for some as the Klondike was. On January 22nd a Californian start-up called Deep Space Industries entered the fray. It joins Planetary Resources, a firm backed by Google executives Larry Page and Eric Schmidt, which promised to have its first asteroid-hunting spacecraft in orbit by the end of 2014.

The potential bonanza is, well, astronomical. A single 500-metre metal-rich asteroid might contain the equivalent of all the platinum-group metals mined to date. Even humble ice could sustain astronauts or be processed into rocket fuel for future missions to Mars.

Deep Space Industries might be dreaming big but it is starting small. Smaller still, in fact, than the relatively puny Planetary Resources. The company is aiming to raise a mere $3m this year from venture capitalists, angels and private-equity funds, and another $10m next year. It will spend the money designing, building and launching a fleet of three single-use spacecraft, dubbed Firefly, to conduct fly-bys of small asteroids.

Planetary Resources, by comparison, intends to launch several constellations of tiny spacecraft into Earth orbit, where they will spend years observing and cataloguing nearby rocks.

The idea is to build Firefly on the cheap, forgoing extensive testing and using commercial off-the-shelf components rather than custom-built electronics. To reduce costs further, it will fly alongside larger payloads on scheduled flights.

HD Mining chief makes his case for hiring temporary foreign workers – by Wendy Stueck (Globe and Mail – February 5, 2013)

February 5, 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.

VANCOUVER — In a downtown office, Penggui Yan is sketching on a white board, using pictures to illustrate mining techniques and back his claim that he needs to hire Chinese workers to determine whether the Murray River project near Tumbler Ridge can be a viable mine.

The proposed project would use a technique known as longwall mining, which extracts coal in long seams rather than the so-called room-and-pillar model used in existing coal mines in Canada. To make the method work, you need employees that understand the equipment, methods and dangers – including potentially explosive gases – of working in such an environment, Mr. Yan insists.

“You have to have that continuity,” Mr. Yan said on Monday. “You have to allow me to prove this mine is mineable. For the time being, I don’t know if it’s mineable. I am taking $150-million out of my own pocket to prove this will be a mine.” Exploration and bulk sampling would amount to $150-million of a projected $300-million cost to build the mine, Mr. Yan said.

For Mr. Yan, the chair of Vancouver-based HD Mining International Ltd., the logic behind hiring foreign workers is unassailable. Others, however, have questioned the company’s rationale. Two unions have launched a court case to challenge the process that cleared the way for HD Mining to hire 200 foreign workers at Murray River.

Investors look to Teck for clues to China’s path – by Pav Jordan and Brent Jang (Globe and Mail – February 4, 2013)

February 5, 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.

When Don Lindsay talks about China, he can’t help but mention the 200,000 kilometres of power transmission lines the country plans to install over the next five years.

“That’s a lot of copper,” the president and chief executive of Teck Resources Ltd. told mining aficionados packed into a ballroom in Vancouver last week.

Addressing the Association for Mineral Exploration B.C. conference, Mr. Lindsay also predicted that China will enjoy robust economic growth this year, fuelling demand for the metals his company produces, like copper and zinc.

Teck Resources, Canada’s largest diversified miner and a major exporter of coking coal for steel making, reports its fourth quarter and year-end financial results on Thursday.

The results are expected to compare unfavourably against those of the prior year, reflecting one of the most tumultuous periods for the global mining industry since the recession.

That’s it for the penny. Now, about those nickels… Globe and Mail Editorial (February 4, 2013)

February 5, 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.

Today is the day the Canadian penny begins to disappear from circulation. Good riddance, we say. Pennies made no economic sense, cost more to make than they were worth, and needlessly weighed down trouser pockets and cluttered coin dishes everywhere. One member of Parliament is now saying Canada should go even further and eliminate the nickel. It’s an interesting idea but it overlooks a larger truth: that in a few years from now, cash of any denomination will probably be a thing of the past for a large number of people.

Ottawa’s argument for pulling the penny out of circulation was that, over a period of years, it will save money at the Royal Canadian Mint, and that managing the penny is a burden for banks and businesses. The penny won’t be missed; it is a minor change in our currency, no pun intended.

Other countries have switched currencies altogether (think of the euro), or updated antiquated systems (think of the confusing shilling, crown and 240 pence to the pound in England before decimalization), or, worst of all, had to devalue their currencies (they still remember the “old franc” in France). The disappearance of the Canadian penny can hardly be called daring.

But where do we stop? Pat Martin, an NDP MP, already has announced that he will introduce a private member’s bill to eliminate the nickel and, necessarily, the quarter.

Royal Canadian Mint sees gold in the penny’s demise – by Tavia Grant (Globe and Mail – February 4, 2013)

February 5, 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.

Goodbye, Canadian penny. Hello, Botswanan pula? The end of the penny has given the Royal Canadian Mint 20 per cent more capacity, and it plans to put it to use producing other countries’ coins.

The Mint struck its final penny last May after the federal government announced it would kill the coin as a cost-saving measure. Monday marks beginning of the penny’s phase-out as the Mint will stop distributing them to retailers and banks.

So it’s circulating a new growth strategy. The Mint already has about 10-per-cent share in the global coin market “and our goal is to increase that to 15 per cent by 2020,” chief operating officer Beverley Lepine said in an interview from Berlin, where she is attending the 2013 World Money Fair.

The 105-year-old Mint has been making coins for other countries for more than three decades. In 2000, it introduced a new plated steel technology that it says makes coins cheaper to produce, harder to counterfeit and more durable. Since then, 30 countries including Botswana, Panama, New Zealand, Oman, Ethiopia, Barbados and Fiji have signed contracts to have multi-ply plated steel circulation coins made in Canada.

Environmental protections failing during resource boom, audits find – by Shawn McCarthy (Globe and Mail – February 5, 2013)

February 5, 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 – Canada’s resource boom is outpacing Ottawa’s ability to safeguard important ecosystems from dangerous levels of pollution, the federal environment commissioner reported Tuesday.

In a series of audits, commissioner Scott Vaughan revealed a litany of shortcomings, including the failure to regulate toxic chemicals used by the oil industry and a lack of preparedness for major accidents, particularly off Canada’s East Coast.

Mr. Vaughan detailed Ottawa’s hands-off approach to hydraulic fracturing – a rapidly-growing and controversial oil industry practice in which companies inject chemically-laced water deep underground to extract natural gas and oil. His report noted the resource boom brings risks as well as opportunities.

“Given the central role of natural resources in the Canadian economy, it is critical that environmental protection keeps pace with economic development, Mr. Vaughan said in a statement Tuesday. “I am concerned by the gaps we found in the way federal programs related to natural resources are managed.” At the same time, Ottawa continues to subsidize the oil industry, though the level of support is declining, the auditor reported.

First nations carving out an energy bridge to the B.C. coast – Nathan Vanderklippe (Globe and Mail – February 5, 2013)

February 5, 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 — For the Canadian energy industry desperate to pump oil and natural gas through British Columbia, the single greatest obstacle has been the dozens of first nations fighting to ensure pipelines are never built.

Now, some of the leading figures in Canada’s aboriginal business community are offering a bridge across the province’s difficult political landscape. They have formed Eagle Spirit Energy Holdings Ltd., a company quietly working to create a first nations-owned energy corridor across northern B.C. that could serve as a physical line across the province to move natural gas, electricity and oil.

It’s an idea that promises first nations a much greater involvement in moving Canada’s energy, from large equity stakes in pipelines to major construction contracts, tugboat work, and engagement in spill response. In exchange, it promises the energy industry a possible route to the B.C. coast with less of the opposition that has confronted major pipelines in B.C., such as Enbridge Inc.’s Northern Gateway.

At a time when Canada faces seemingly intractable conflict between first nations and a resurgent resource sector, Eagle Spirit also presents a shimmer of hope that a third way may be possible. And the company has some deep-pocketed backers, including the Aquilini family, which among other assets, owns the Vancouver Canucks.

President Says Mongolia Should Get More Control of Mine – by Michael Kohn & Yuriy Humber (Bloomberg.com – February 5, 2013)

February 5, 2013

http://www.bloomberg.com/

Mongolia’s President Tsakhia Elbegdorj said the nation should have more control of Rio Tinto Group (RIO)’s Oyu Tolgoi copper and gold project after the government said costs had increased.

The total cost of the Rio Tinto-operated development in southern Mongolia has jumped to $24.4 billion, according to an e-mailed statement from the government, which gave a summary of a Feb. 1 parliamentary discussion attended by the president. London-based Rio had earlier estimated total costs at $14.6 billion, according to the statement.

“It’s time for Mongolia to have Mongolian representation on the management team,” Elbegdorj said at the session on Feb. 1, according to his website. “It’s important that the government takes the Oyu Tolgoi matter into its own hands.”

The president’s comments heighten tension with the second- biggest mining company over the ownership and future development of the project, which is currently the world’s biggest copper mine under construction. Rio is considering a temporary halt to work to protest government demands for a greater share of profit, two people familiar with the plans said last week.

Republican senator lays out path for U.S. independence from OPEC – by Ayesha Rascoe (Reuters.com – February 4, 2013)

February 5, 2013

http://www.reuters.com/

WASHINGTON, Feb 4 (Reuters) – U.S. independence from OPEC could be a reality if the U.S. government opens more lands for oil and gas development, speeds permitting and approves the Keystone XL pipeline, the top Republican on the Senate energy committee said in a policy report on Monday.

Senator Lisa Murkowski, of Alaska, laid out a wide-ranging plan to take advantage of the United States’ energy bounty.

“We no longer should view energy policy from a perspective of scarcity, but rather, from a perspective of increasing abundance,” the 120-page report from Murkowski’s office said. “With the right policies, abundant and affordable energy is achievable.”

Murkowski’s vision called for the government to embrace the nation’s shale oil and gas boom and various other fuels, rein in regulations, and eschew new mandates on the use of renewable resources.

Many of the policies, such as opening parts of Atlantic coast and the Arctic National Wildlife Refuge to drilling, are perennial Republican objectives. These goals are likely to face strong opposition in the Democratic-controlled Senate. Many Democrats vehemently oppose expanded drilling.

Bitumen bubble gives Alberta the vapours – by Edward Greenspon (Toronto Star – February 5, 2013)

February 5, 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.

Over reliance on one resource and one market has boomeranged on province.

Alberta Premier Alison Redford brought her sad tale of budgetary woe to Ontario last week. Her province isn’t collecting enough money for its oil. It suffers from overreliance on a single export market.

That market is not as needy as it once was. And so Alberta is headed for a $6-billion surge in its deficit. Her finance minister described the situation as a perfect storm. Cry me a Bitumen Bubble. Has ever there been a province so lax in its fiscal management and so derelict in its policy duties as Canada’s petro-superpower?

Perfect storms arise from an unusual array of natural forces. What’s happening in Alberta is the predictable outcome of three decades of policy indifference and political pandering. If these were storms, they would go by the names of Don, Ralph and Ed — the province’s three premiers from the mid-1980s till 16 months ago. Will Alison be blown off course, too?

Redford’s so-called bitumen bubble is a familiar phenomenon more commonly known as the price differential. Alberta’s sludgy crude requires extra processing. So it sells at a discount to the benchmark West Texas Intermediate price. The situation is aggravated by swelling U.S. production and plugged pipelines. As a result, the differential has widened to $30-$40 a barrel, more than twice the province’s expectation.

Scotiabank’s Mohr argues strong case for commodities now to 2020 – by Kip Keen (Mineweb.com – February 4, 2013)

February 5, 2013

http://www.mineweb.com/

Scotiabank’s Patricia Mohr delivers a bullish stance on emerging markets and thus demand for commodities such as copper.

HALIFAX, NS (MINEWEB) – Patricia Mohr, Scotiabank’s commodity market specialist, made the case for higher or resilient prices for commodities, including copper, potash and uranium, in the near and longer term.

Mohr, speaking on the last day of AME BC’s Roundup conference last week in Vancouver, grounded her views on increasing demand from emerging markets.

Potash price – Close or at bottom

Mohr noted food prices are high and “this is going to incent farmers to apply a lot of potash next spring, something we expect is going to happen.” Vancouver free-of-board potash prices softened recently, she noted, but she said the soft spot probably put a floor on the price of potash. She pointed out that major potash customers have deferred buying and they would soon have to step it up again, with growth mainly coming from China and Brazil.