March 14, 2013 – Republic of Mining

Commodities on the Rise – by Dambisa Moyo (Project Syndicate – March 14, 2013)

March 14, 2013

Dambisa Moyo is the author, most recently, of Winner Take All: China’s Race for Resources and What it Means for the World.

SEOUL – The commodity super-cycle – in which commodity prices reach ever-higher highs, and fall only to higher lows – is not over. Despite the euphoria around shale gas – indeed, despite weak global growth – commodity prices have risen by as much as 150% in the aftermath of the financial crisis. In the medium term, this trend will continue to pose an inflation risk and undermine living standards worldwide.

For starters, there is the convergence argument. As China grows, its increasing size, wealth, and urbanization will continue to stoke demand for energy, grains, minerals, and other resources.

For example, the US consumes more than nine times as much oil as China on a per capita basis. As more of China’s population converges to Western standards of consumption, demand for commodities – and thus their prices – will remain on an upward trajectory.

Of course, not all commodities are equal. For example, although the case for copper seems straightforward, given that it is a key input for wiring, electronics, and indoor plumbing, a strong bid for iron is not as obvious, given the Chinese infrastructure boom that already has occurred in the last two decades.

Worst-case estimates have China’s real GDP growing at around 7% per year over the next decade. Meanwhile, the supply of most commodities is forecast to grow by no more than 2% annually in real terms.

Greenland rolls up the resource welcome mat – by Paul Waldie (Globe and Mail – March 14, 2013)

March 14, 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.

The tiny population of Greenland has sent a powerful message to China and a host of global mining companies eager to tap the territory’s resources: Not so fast.

Greenland has been getting more attention from resource companies, as global warming opens up sea lanes and makes accessible its vast potential riches of iron ore, gold, uranium and oil. In recent years, the region has been visited by energy and mining companies eager to exploit these resources – including Calgary-based Husky Energy Inc., which holds exploration rights off the island’s west coast.

China has taken a particular interest: One of the few mining projects under way is a $2.3-billion mine led by Britain’s London Mining PLC that would send 15 million metric tons of iron ore to China annually.

But in elections Tuesday, Greenlanders made it clear they have become wary of the foreign invasion. Voters turfed out a coalition government led by Kuupik Kleist, who had been opening the island up to offshore investment. Mr. Kleist had issued roughly 140 exploration licences and introduced legislation to make it easier for foreign workers to come to Greenland. That law was seen by many as clearing the way for up to 2,000 Chinese workers to help build the iron ore mine.

Opposition leader Aleqa Hammond, who heads social democratic party called Siumut, won 42 per cent of the vote and 14 seats in Greenland’s 31-seat parliament.

First Quantum has its work cut out on Cobre Panama – by Pav Jordan (Globe and Mail – March 14, 2013)

March 14, 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.

It took six months and more than $5-billion for First Quantum Minerals Ltd. to get its hands on Cobre Panama, one of the world’s largest copper projects.

The trick now will be to build the mine on time and on budget in a world where costs have skyrocketed and the outlook for metals prices is murky. Moreover, Cobre is to be built in a country, Panama, that has virtually no mining industry to speak of.

Vancouver-based First Quantum gained control of the project this week with the hostile takeover of Inmet Mining Corp., and hopes it can shave as much as $1-billion (U.S.) from the $6.2-billion construction cost budgeted by its current owner.

The mine, already fully financed under Inmet, will be the largest ever in Central America and represents the most ambitious development project in Panama since the building of the Panama Canal. After it comes into production in 2016, it is expected to produce about 300,000 tonnes of copper a year for 40 years.

Analysts are divided on whether First Quantum can build Cobre Panama more cheaply than Inmet, pointing to such massive cost escalation across the mining industry that it has felled free-spending CEOs and decimated smaller companies.

Myanmar villagers protest mine – by Yadana Htun (Globe and Mail – March 14, 2013)

March 14, 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.

MONYWA, MYANMAR — The Associated Press – Myanmar opposition leader Aung San Suu Kyi met with rare public scorn Wednesday as she tried to justify an official report endorsing continued operation of a copper mine opposed by many local residents in northwestern Myanmar.

Ms. Suu Kyi travelled to Monywa township on Wednesday to talk with protesters about the report of a commission she led to investigate the Letpadaung mine’s operations and a police crackdown on a protest there last November that left scores of people badly injured.

The report, made public Tuesday, said honouring the mining contract with a Chinese joint venture outweighed villagers’ demands that mining operations be halted because of alleged social and environmental problems. It only mildly criticized police, despite the injuries caused to protesters, mostly Buddhist monks, by the use of incendiary smoke bombs.

More than 700 protesters shouted denunciations of the report as Ms. Suu Kyi’s motorcade passed between visits to four villages.

Raising their fists in the air, protesters yelled: “We don’t want the commission,” and “To stop the Letpadaung copper project is our duty,” shouting louder as Ms. Suu Kyi’s car came closer. Sandar, a protester from Alaltaw village, said the report neglected the troubles the mine caused local residents.

India not quite the shining knight for coal miners – by Clyde Russell (Reuters India – March 14, 2013)

March 14, 2013

http://in.reuters.com/

(Clyde Russell is a Reuters market analyst. The views expressed are his own.)

(Reuters) – Rising Indian coal imports are the knight in shining armour for producers from the Americas through Africa to Asia — at least that’s the impression the industry is keen to give.

That India’s coal imports have no option but to rise and the only matter in dispute is by how much, was the consensus of producers and consumers at the Coaltrans India conference this week in this resort state an hour’s flight south of Mumbai.

But is the consensus based more in hope than reality? The thing that is always striking about India’s coal sector, for both domestic production and imports, is that forecasts are rarely correct.

India’s coal demand was around 730 million tonnes in the 2011/12 fiscal year, with about 100 million tonnes of that met through imports. The consensus of forecasts at the Coaltrans event is for demand to rise to about 1.1 billion tonnes by the end of the current five-year plan in 2016/17.

Some of this 370 million tonnes increase in annual demand is expected to be met by state-controlled Coal India, the world’s biggest miner of the fuel.

Mechanisation still far off for South Africa’s platinum mines – by Clara Ferreira-Marques and Sherilee Lakmidas (Reuters India – March 14, 2013)

March 14, 2013

http://in.reuters.com/

LONDON/MARIKANA, South Africa, March 14 (Reuters) – Rising wage costs and strikes have revived the arguments in favour of automating South Africa’s loss-making platinum mines, but weak prices for the metal and tough conditions underground mean mechanisation remains a distant prospect.

The rest of the mining industry, from copper to coal, has been transformed in recent decades by automation, unmanned trucks and remotely controlled equipment.

That is in large part thanks to geology. In the cramped mines where platinum is found, the rock is still drilled, blasted and cleared by men. The platinum seams are damp, sweltering and claustrophobic places to work: men often drill in shafts so constricted that it is like mining under a table.

Mines are evacuated for hours a day so blasting can take place – a major inefficiency for operations with the thinnest of profit margins.

But mechanising platinum would be costly and the mining companies need to be convinced it is worth it. “They would need to believe that any investment in platinum mechanisation would significantly drive them down the cost curve,” said analyst Alison Turner at Panmure Gordon.

Editorial: The PDAC-saw – by John Cumming (Northern Miner – March 13, 2013)

March 14, 2013

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry. Editor John Cumming MSc (Geol) is one of the country’s most well respected mining journalists.jcumming@northernminer.com

The first week of March was dominated by the Prospectors and Developers Association of Canada’s mega-convention in Toronto, with 30,147 investors, analysts, mining executives, geologists, government officials, students and international delegations converging in downtown Toronto, just slightly off last year’s record numbers.

The floor was again overwhelming, with more than 10 interesting things going on at any given time for four days straight, and so many people circulating that you could no longer count on just bumping into someone you wanted to meet.

Not bad at all, considering the sharp downturn for junior miners over the past year. Still, the mood was much more sombre than during the giddiest peaks of 2006 and 2011, and a few juniors couldn’t scratch enough money together to buy an airplane ticket and occupy their hard-to-come-by booths.

Lack of funding for juniors was the number-one topic for speakers and delegates. Number two was the dismal share price performances of so many juniors over the last years, as the term “penny stock” has once again become an accurate description of many companies’ shares, rather than a quaint phrase from another era.

Support for Minnesota copper mines drops in poll – by John Myers (Duluth News Tribune – March 14, 2013)

March 14, 2013

http://www.duluthnewstribune.com/

Opponents of copper mining in Minnesota might be winning over more state residents, according to a new poll that shows more people oppose the new kind of mining here than support it.

The poll, paid for by the Minnesota Environmental Partnership and released Wednesday, found that 48 percent of state residents polled opposed copper mining while 39 percent favor the projects.

It’s the first time in five years the poll has been taken that more people opposed than supported copper mining. The coalition of 75 environmental groups conducts the survey annually to gauge public opinions on several key conservation issues.

The results show support for mining slipping from a high of 66 percent in 2009 to 62 percent in 2010, 52 percent in 2012 and 39 percent this year. Statewide, opposition increased from 19 percent in 2009 to 48 percent this year.

The telephone poll was conducted Jan. 6-8 by the team of California-based Fairbank, Maslin, Maullin, Metz and Associates along with Alexandria, Va.-based Public Opinion Strategies.

NEWS RELEASE: Report: NWT Diamond Mining Benefits Continue to Mount

March 14, 2013

For the full report, click here: http://www.miningnorth.com/wp-content/uploads/2013/03/Measuring-Success-Diamond-Benefits-to-NWT-March2013.pdf

Yellowknife, NWT (March 13, 2013)Diamond mining benefits to the North continue to accumulate according to a report released by the Chamber of Mines. “Measuring Success: The Positive Impact of Diamond Mining in the Northwest Territories” describes a variety of benefits provided by the three NWT diamond mines – EKATI, Diavik and Snap Lake. These benefits include:

• Training: $11.4 million in cash and in-kind investments were invested with the NWT Mine Training Society between 2004 and 2012 to provide training to 1,400 northern residents, supporting a new generation of millwrights, electricians, mechanics, underground miners, process plant operators, and providing a base of skilled Northerners. The vast majority of these trainees are Aboriginal. The 3 mines recently committed an additional $6.6 million in financial
and in-kind support over the next 3 years to the Society.

• Jobs: Collectively, EKATI, Diavik, and the Snap Lake Mine are employing significantly more northerners than the companies had predicted. In 2011, the mines provided 1,541 northern jobs, or 403 more jobs than were predicted during the mines’ environmental assessments.

• Business spending: Combined, the three mines spent $12.8 billion from 1996-2011 to build and operate the mines. Of this, $9.25 billion (72%) was with northern companies, including over $4 billion with Aboriginal companies.

Defiant Canadian oil industry produces record 4 million bpd – by Yadullah Hussain (National Post – March 14, 2013)

March 14, 2013

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

Canada’s defiant oil industry shrugged off criticism as it cranked up production to four million barrels per day last December – its highest ever output, according to the International Energy Agency. “Canadian oil production has increased rapidly over the last several months, reaching an all-time high of 4.1 mbpd in December on the back of a record one million bpd in synthetic crude output from surface mining operations,” the IEA said in a report published Wednesday.

Growth was not restricted to the oil sands. Alberta light and medium output also rose to 440,000 bpd, its highest level in a decade, on the back of new light tight oil developments in Cardium and Viking in Alberta, along with other plays in Saskatchewan and Manitoba, the IEA said.

Canada’s eastern offshore production stood at around 250,000 bpd in December. The record ramp-up in production came as some of the oil sands’ biggest critics expressed hope that the U.S. rejection of the Keystone XL pipeline would slow down heavy crude production in Alberta.

“The markets are relentless and will continue to search for ways to move that product into the United States, whether Keystone XL is approved or not,” Jim Prentice, vice-chairman of the Canadian Imperial Bank of Commerce, told the Financial Post from New York where he gave a speech on the pipeline’s role in North America’s quest for continental energy security.

KXL rejection will diminish North American energy security: Prentice (National Post – March 14, 2013)

March 14, 2013

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

Excerpts from a speech given by Jim Prentice, Senior Executive Vice President and Vice Chairman of the Canadian Imperial Bank of Commerce, at the Financial Times Forum: Focus on Canada in New York

I am strongly of the view that President Obama should approve the Keystone XL pipeline on the basis that it is in the ‘national interest’ of the United States.

I say this because North America is accelerating towards a future of energy independence and the Canadian oil sands are an essential part of the North American energy marketplace.

That resource will afford both Canada and the United States security of supply and a consequential global competitive advantage for generations. That, in my view, is a prize worth seeking.

It is a pivotal and a volatile time for oil and gas producers – as new technology helps generate greater supply, and our continental relationship becomes increasingly exposed to, and influenced by, the global marketplace.

We are seeing the benefits of innovation not only in how we extract resources from the earth – but in how we reduce and limit the impact on our environment.

Deranged science, perverse policy – by Peter Foster (National Post – March 14, 2013)

March 14, 2013

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

Book describes attempt to impose climate servitude

In his brilliant new book, The Age of Global Warming, British writer Rupert Darwall notes a phenomenon known as “climate change derangement syndrome.” The phenomenon was on prominent display this week when NDP leader Tom Mulcair went to Washington.

It wasn’t just that Mr. Mulcair’s attack on the climate policies of Stephen Harper was diplomatically inappropriate, or that his support for the recent New York Times anti-Keystone XL editorial was fatuous, it was that Mr. Mulcair’s stance made absolutely no sense if he is truly concerned about the welfare of Canadians – or indeed humanity as a whole.

Mr. Mulcair criticized Mr. Harper for pulling out of Kyoto, but is he even aware that the Americans never signed on to Kyoto in the first place? To find out why, Mr. Mulcair badly needs to read Mr. Darwall’s book, which provides a thoroughly researched and lucidly written account of the truly amazing cultural, scientific and political background to the dominant global political issue of our age, at least until the subprime crisis came along.

The book should profoundly embarrass virtually the entire global scientific community, either for actively supporting the political corruption of science, or for standing silently by while it happened — although the consequences of speaking out shouldn’t be underestimated.

Profits Drop at Big Five Miners – by Reuters (New York Times – February 12, 2013)

March 14, 2013

http://www.nytimes.com/

MELBOURNE — Global mining companies are set to unveil their biggest profit decreases in more than a decade and are clearing the decks with multibillion-dollar write-downs on poorly performing assets as they bring in new chief executives.

A sharp drop in commodity prices is likely to have driven down profits for the second half of last year by 40 percent to 50 percent at the top five mining companies when compared with the same period in 2011, forcing them to shelve expansion projects, slash costs and sell assets.

For the top three — BHP Billiton; Vale, based in Brazil; and Rio Tinto — iron ore earnings are likely to cushion losses in coal, aluminum and nickel for the period.

Chief executives are being punished for splurging in the boom years on projects and acquisitions instead of rewarding shareholders more generously, and investors are calling for Rio Tinto and BHP to rethink their policies.

One of the 10 largest shareholders in BHP and Rio Tinto’s Australian-traded stocks said his fund had been pressing both to pay out more of their profit to shareholders. The shareholder, Ross Barker, the managing director of Australian Foundation Investment, said that the companies were not paying higher dividends to shareholders so they could use the funds for investments that would deliver attractive returns.

In spirit of fairness and respect [First Nations and resourses] – by Xavier Kataquapit (Timmins Daily Press – March 14, 2013)

March 14, 2013

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – There are many success stories across Canada when it comes to resource development agreements and partnerships between First Nations, companies and government. Most non-Native people don’t realize this.

Even in my home community of Attawapiskat negotiations in general between my people and De Beers has benefited many. The process is obviously not perfect but at the very least, the company, First Nation leadership and governments have bargained in good faith to make a very large project happen in the middle of pristine wilderness.

This is a big change for my people considering that we were largely forgotten and through a process of assimilation and marginalization, my grandfathers and great grandfathers had little choice but to live off a limited amount of land and survive through hunting and gathering. Even though resource development companies and non-Native people were reaping the benefits of huge projects happening on traditional territories, we saw very little coming to us.

These days, people think that First Nations in southern areas such as Timmins, Kirkland Lake, North Bay and Sudbury were the recipients in one way or another of the many huge mining, forestry and hydro projects that occurred over the past 100 years.

If you check with First Nation leaders and Elders in these areas, you will quickly find out that Native people were very much left out of the loop when it came to all this development.