May 1, 2013 – Republic of Mining

Luisa Moreno: Brace Yourself for Three More Years of Heavy Rare Earth Shortages – by Brian Sylvester (The Metals Report – April 30, 2013)

May 1, 2013

http://www.theaureport.com/

Rare earth elements are a crucial component of our everyday lives, but many of the companies unearthing them are still learning to navigate the supply chain. Those that can master the dance of metallurgy and end-user relationships will find success, says Luisa Moreno, a senior research analyst with Euro Pacific in Toronto. In this interview with The Metals Report, Moreno updates us on which miners are making the most progress.

The Metals Report: Luisa, where does the rare earth elements (REE) space stand now?

Luisa Moreno: This space has been a learning experience for all of us, and by “us” I don’t just mean analysts, but investors, companies, management and end-users.

In the beginning, we realized that some elements are less common than others and we all became very excited with the idea of finding deposits that were rich in heavy rare earth elements (HREEs). But it’s harder to develop these projects; hopefully some of them will be developed fast enough to show end-users that the sustainable supply of these elements is possible. The challenges have been around the metallurgy and that’s where we stand right now. We have a few frontrunners that have made progress with their metallurgy and we continue to learn more about the economics.

TMR: So, every HREE project out there has warts; it’s just a matter of finding the one with the least warts?

China’s ruthless foreign policy is changing the world in dangerous ways – by Jonathan Kay (National Post – April 30, 2013)

May 1, 2013

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

Are we witnessing the end of the “American age”? It depends whom you ask. But one thing is certain: Thanks to the near-bankruptcy of the American welfare state, Washington is losing both the means and desire to project power across the world. Inevitably, nations with deeper pockets — China, most notably — will fill the void.

This process already is underway in many parts of the world. That includes large swathes of Central Asia, where Beijing’s billions are beginning to revolutionize regional infrastructure and alliances — in dazzling but potentially dangerous ways.

Analyzing Beijing’s foreign policy is a relatively simple exercise. That’s because, unlike the United States and other Western nations, China doesn’t even pretend to operate on any other principle except naked self-interest.

On one hand, China has courted Israel as a partner in developing Mediterranean gas fields — but it also has been happy to do business with Israel’s arch-enemy, Iran, and has sold weapons that ended up in Hezbollah’s arsenal. In South Asia, meanwhile, China has cynically helped Pakistan check India’s regional role, even as China’s state-controlled press has warned Pakistan that Beijing may “intervene militarily” in South Asia if Pakistani-origin jihadis continue to infiltrate Muslim areas of Western China.

In the east, China’s policy has been to claim every square inch of the South China Sea, and intimidate every smaller country that dares to oppose its claims.

Xstrata Zinc’s Brunswick mine closes, bestowed safety award – by Henry Lazenby (MiningWeekly.com – May 1, 2013)

May 1, 2013

http://www.miningweekly.com/

TORONTO (miningweekly.com) – After 49 years of operation, Xstrata Zinc’s Brunswick mine closed on a high note on Tuesday, as the company announced it had recently learned that it would be awarded this year’s John T Ryan Award for outstanding safety performance in the metal mine category in the Quebec and East Region.

Located in northern New Brunswick, 30 km south-west of the city of Bathurst, Brunswick mine was one of the world’s largest underground zinc/lead mines providing direct employment to about 700 people.

“I am extremely proud that Brunswick’s workforce has been awarded one of our industry’s most prestigious safety awards. It’s especially significant because as we come near to the end of the life of the Brunswick mine, the challenges of safely mining the remaining ore becomes even greater.

“This award is a recognition of the tremendous effort that has gone into creating our ‘safety first’ culture and I can think of no better way to crown nearly half a century of operations than by receiving this honour,” Brunswick mine GM Greg Ashe said in a statement.

The Ryan Awards were presented to mines with the lowest accident frequency, with trophies granted across metal, coal and select mine categories. This was the ninth regional honour for the mine, having won this trophy in 2010, 2007, 2006, 2004, 2003, 1996, 1995 and 1994 and came after winning the national award in 2011.

Kathleen Wynne hoping voters pin blame for cancelled power plant costs on Dalton McGuinty – by Scott Stinson (National Post – May 1, 2013)

May 1, 2013

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

Kathleen Wynne insists that she didn’t know.

For 90 minutes, minus the time she was deftly addressing the muffin-soft questions lovingly served up by Liberal members of the Standing Committee on Justice Policy, the Premier said in many different ways that she was no more aware of the true cost to the Ontario public of cancelling two gas-plant projects — a number that keeps being ratcheted higher, and went from $315-million to $585-million on Tuesday alone — than was the Ontario public.

When the plants were killed, did she, as a member of the Liberal cabinet, have any idea of the scope of the resultant costs?

“I didn’t have access to any of those numbers,” she said. Did she, as a vice-chair of the Dalton McGuinty-led re-election bid in 2011, realize the dollars that were involved in cancelling the Mississauga plant in the middle of the campaign?

“I was not part of the strategy discussions around that decision,” she said. Why did the Liberals continue to cite figures of $190-million to cancel and relocate the Mississauga plant, and $40-million to do the same with the Oakville facility, even as critics, media and analysts said the numbers would easily be much, much higher?

Commentary: Legal warning signals from the HD Mining case – by Kevin MacNeill, Sharaf Sultan and Daniel Mayer (Northern Miner – April 30, 2013)

May 1, 2013

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

The HD Mining case, which is currently before the Federal Court of Canada, has a high media profile these days. It’s a story that weaves together two hot button legal issues for the labour movement: immigration and occupational health and safety (OHS).

Employers may wish to consider the issues the case raises and review existing practices for compliance, as cases like this will come under increasing regulatory scrutiny.

As background, in response to a chronic shortage of skilled labour, the number of temporary foreign workers in Canada has grown from 60,000 to over 250,000 during the last 13 years. In this context, HD Mining hired of hundreds of Chinese nationals to work at its Murray River Coal project in B.C., further to an approval by Human Resources and Skills Development Canada (HRSDC).

To secure permits for the Chinese workers, HD Mining had to apply to HRSDC for a positive Labour Market Opinion (LMO), an assessment of the local labour market to determine whether allowing a foreigner to work in Canada is justifiable in the circumstances.

Employers are required not only to undertake to comply with wage levels and working conditions promised under an LMO, but also to adhere to all rules and regulations relating to employment, including all OHS obligations in the jurisdiction where an employee will work.

BHP nets $650m on sale of Arizona mine – by Allan Seccombe (Business Day – April 30, 2013)

May 1, 2013

http://www.bdlive.co.za/

BHP Billiton, the world’s largest resources group, has sold a small, noncore copper mine in Arizona and an associated railway company for $650m, bringing its sale of assets in the past year to $5bn, BHP announced on Monday.

Analysts widely expect further asset sales from Australia-based BHP after Marius Kloppers stepped down as CEO. He was replaced by Andrew Mackenzie who has said he will focus on securing profit margins and cash flows by ensuring optimal performances from the group’s assets.

BHP sold Pinto Valley and the San Manuel Arizona Railroad Company to Canada’s Capstone Mining for $650m in cash in a deal subject to regulatory approval. The transaction should be concluded in the second half of this year.

“The sale of Pinto Valley is an excellent outcome for BHP Billiton shareholders,” Peter Beaven, president of BHP Billiton Copper, said yesterday. “It is consistent with our strategy and it takes the transaction value of divestments announced over the last 12 months to $5bn.”

Analysts said the price was well above what the market was expecting and that it was no surprise BHP was selling the business because of its small size and limited remaining life.

NEWS RELEASE: Commodity expert to share her wisdom with OMA directors

May 1, 2013

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.

Patricia Mohr, Scotiabank Vice President of Economics and Commodity Market Specialist, will be the featured speaker at the Ontario Mining Association’s annual meeting and board of directors meeting on June 5, 2013. Given the current swings in commodity markets and economic volatility around the world, a perspective from this leading and globally respected economist will be timely.

Earlier this year, Ms Mohr received the 2012 Metal Bulletin Apex awards for the top gold and overall precious metals price forecasts throughout the year. These awards are presented to the most accurate forecasters of precious and base metals prices. Ms. Mohr’s gold forecast was estimated with 99%-plus accuracy.

“It is truly an honour to be recognized by Metal Bulletin and to be among the few overall winners for the Apex award,” said Ms Mohr when accepting the trophy. “This success is a tribute to Scotiabank’s leading position in financing the global mining industry and in making a market in gold and precious metals.”

She developed the Scotiabank Commodity Price Index, which was the first yardstick designed to measure price trends for Canadian commodities in export markets. This benchmark was first introduced in 1987. It is a U.S. dollar based index specifically designed to track commodity prices and global markets of interest to Canadian resource producers and Canadians.

The case for the Kitimat refinery – by David Black (National Post – April 29, 2013)

May 1, 2013

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

Last year Canada’s trade deficit was $12-billion — compared to a $45-billion surplus in 2007. CIBC’s deputy chief economist, Benjamin Tal, has defined our national challenge: “The volume of Canadian exports today is at the same level it was a decade ago. Regardless of how you look at it, this was a lost decade for Canadian exports. “

I believe Canadians — and British Columbia, in particular — can do something about this worrying trend.

I have been in Beijing in recent weeks to sign a memorandum of understanding with the Industrial and Commercial Bank of China, the largest bank in China, to finance a $15-billion oil refinery on Canada’s west coast. This MOU states that China will finance the refinery and find markets for all of its output. My company, Kitimat Clean, will build this state-of-the-art refinery in Kitimat, B.C.

The economic benefits for Canada are enormous. The Kitimat refinery will process 550,000 barrels per day of diluted bitumen from the Alberta oil sands, delivered to the site by an environmentally acceptable pipeline (my preference) or by rail. The bitumen will be processed there into value-added fuel products the world needs: 100,000 barrels per day of gasoline; 50,000 of jet fuel and 250,000 of diesel fuel.

With export revenue of roughly $16-billion a year, the refinery will more than balance the country’s trade deficit.

Dirty Gold: Crisis Has Europe Clamoring to Mine – by Luke Dale-Harris (Spiegel Online International [Germany] – April 26, 2013)

May 1, 2013

http://www.spiegel.de/

In a bland and brightly lit ballroom in the center of Zurich, the leaders of a hundred of the world’s largest gold exploitation companies looked on as the European Gold Forum opened with a slide show of bank notes from Weimar Germany. One hundred marks, 500, 10,000, 1 million, 100 million, 500 million. It cut to some text, left hanging on the screen as the audience applauded. “Currency destruction through Hyperinflation. Will history repeat itself?”

Over the next three days of last week’s conference, many seemed to hope the answer would be “yes”. With the price of gold driven by economic instability, the current grim outlook suggests a bright future for gold, as investors shift their money into the relative safety offered by the precious metal.

Around the world, mining companies have been gearing themselves up accordingly and, for those at the conference, even the recent dramatic drop in the value of gold couldn’t hamper the optimistic atmosphere. “The price drop will be temporary,” insists Tim Wood, executive director of the forum’s host, Denver Gold Group. “The expectation is that gold will resume its climb and go to new record highs as ultimately the monetary policy of all these countries is going to fail.”

A markedly different mood became apparent on the street outside the venue, where a group of anti-mining protesters held banners and waved the flags of their home countries, the colors of Greece, Portugal and Bulgaria conspicuous among them.

Sick miners ask Anglo for details of defence – by Ernest Mabuza (Business Day Live [South Africa] – April 29, 2013)

May 1, 2013

http://www.bdlive.co.za/

THE long-awaited hearing in which 10 former Anglo miners with silicosis and silico-tuberculosis are seeking compensation began on Friday with an application to compel Anglo American to provide more details of its defence.

The Legal Resources Centre, Legal Aid SA and London-based Leigh Day have been involved in the groundbreaking class action suit since 2004. The two sides agreed last year to go to arbitration.

President Steyn, at which the 10 miners worked, was Anglo’s largest mine in the Free State in the 50-year period up to 1998. Four of the claims are brought by the next of kin of miners who have passed away since the litigation began.

The 10 plaintiffs are part of a group of 18 from the Free State, Eastern Cape and Lesotho who are claiming compensation for silicosis and silico-tuberculosis they argue were contracted when they worked at mines owned by Anglo.

Their claim is that Anglo American SA, the head office company of the Anglo group, was negligently controlled and wrongly advised the mines about dust control measures and silicosis. The former miners are seeking compensation for pain and suffering and for lost earnings and medical expenses.

B.C. First Nation threatens mine shutdown over lack of jobs – by Mark Hume (Globe and Mail – May 1, 2013)

May 1, 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.

VANCOUVER — A small band in central British Columbia is threatening to shut down a big copper mine because the rapidly expanding operation does not employ anyone from the Wet’suwet’en First Nation.

“The Wet’suwet’en chief and council were instructed by their members to take whatever action is necessary, including direct action and legal action, to stop further mine expansion,” a statement by the band said.

Chief Karen Ogen said the band is determined to shut down the mine if Imperial Metals Corporation and its partner, a Japanese consortium, do not address Wet’suwet’en demands.

“I guess we are having to get tough with industry,” Ms. Ogen said in an interview on Tuesday. “We’re going to need to get [their] attention.” A forest service road used by the mine crosses Indian Reserve number 7, and she hinted that may be the focus of future direct action by the band.

Ms. Ogen said the band is upset because none of its 250 members have found work at the Huckleberry Mine, 123 kilometres southwest of Houston.

Peru rolling back indigenous law in win for mining sector – by Mitra Taj and Teresa Cespedes (Reuters India – May 1, 2013)

May 1, 2013

http://in.reuters.com/

LIMA – (Reuters) – Peru’s mining minister is winning a crucial cabinet battle by swaying President Ollanta Humala to water down a law that gives indigenous groups more say over new mines and oil projects – and a deputy minister will likely resign in protest.

According to half a dozen people with direct knowledge of the internal tug-of-war, Mines and Energy Minister Jorge Merino has prevailed in excluding Quechua-speaking communities in the mineral-rich Andes from being covered by the law.

Sources said he fears applying the law throughout the highlands – as the government once said it planned to do – would delay a pipeline of mining investments worth $50 billion. Several people in Merino’s office declined repeated requests by phone and email for comment.

The tussle underscores a quandary facing Peru, one of Latin America’ fastest-growing economies: how to develop its vast mineral wealth while also addressing a legacy of inequality from its colonial past.

The “prior consultation law,” which Humala touted during his 2011 campaign as a salve for widespread conflicts over natural resources, requires companies to negotiate agreements with indigenous communities before building new mines or oil wells around their lands.

Upheaval in mining sector a test for private equity – by Anjuli Davies and Clara Ferreira-Marques (Reuters U.S. – April 29, 2013)

May 1, 2013

http://in.reuters.com/

LONDON – (Reuters) – With the world’s largest miners flocking to sell assets, cost cuts across the industry and a virtual drought in buyers, private equity funds may finally be tempted into a sector long seen as potentially lucrative but risky.

Industry veterans say the coming months will be a test of whether private equity funds can turn intentions into investments and become more than niche players in an industry that has traditionally relied on public markets for cash.

“Interest from private equity in the sector is the highest I have ever seen,” one veteran industry banker said.

Another senior industry adviser described a “now or never” moment despite volatility in commodity prices, citing what could be a drawn out period of low valuations in which traditional buyers – largely, other miners – are kept out by demands they refocus and cut back rather than grow. Volumes certainly point to increased interest.

According to research and data group Preqin which studies private equity, eight natural resources funds focused solely on mining raised an aggregate $8.5 billion in 2012, more than the years 2006-2010 combined, though data did not show how much was spent on acquisitions.

NEWS RELEASE: Earnings down, but 2012 marks another prosperous year for BC mining industry: PwC survey

May 1, 2013

Click here for full report: http://www.pwc.com/ca/en/mining/publications/pwc-mining-survey-bc-2013-04-en.pdf

Lower commodities prices and higher costs for labour, energy and raw materials trimmed profits

VANCOUVER, April 30 — It was another thriving year for BC’s mining industry in 2012, including mineral exploration and development, despite profits being lower than 2011, according to PwC’s BC Mining Industry Survey for 2012.

“BC’s mining industry faced significant headwinds in 2012, including lower commodity prices as a result of global market jitters and a range of rising costs — labour, raw materials and energy,’ said Michael Cinnamond, survey co-author and leader of PwC’s Mining practice at PwC. “Lower capital expenditures, revenues and a drop in operating cash flows resulted.”

Gross mining revenues were reported as $9.2 billion in 2012. That is down 7% from $9.9 billion in 2011, when the price of copper reached a new high and coal was near its peak. Commodity prices slid as a result of slower global economic growth and a deepening debt crisis in Europe. The prices of BC’s two largest revenue generating commodities, coal and copper, experienced slides as a result, causing a drop in aggregate BC mining revenues and profits for PwC survey participants in 2012.

Discoveries, joint ventures, expected to revive B.C. mining investment – by Gordon Hamilton (Vancouver Sun – April 29, 2013)

May 1, 2013

http://www.vancouversun.com/index.html

Industry sees positive signs despite downturn in grassroots exploration

The mining industry faced a significant increase in exploration costs in 2012, particularly machinery and construction materials, said Marianne Carroll, manager of PwC’s mining practice, resulting in net income of $1.8 billion, down from $3.7 billion in 2011.

Despite record expenditures in mineral exploration in British Columbia last year, almost no new exploration took place by junior companies, a trend that is not sustainable, the president of the Association for Mineral Exploration said Tuesday.

Gavin Dirom told a PwC conference on the state of the mining industry that only one to two per cent of the $680 million spent on mineral exploration in 2012 was for grassroots or greenfield projects. The rest of the money went to mature or advanced-stage mining projects owned by major companies.

“That’s not a sustainable formula. Usually, eight to 10 per cent, even pushing 20 per cent, is where we need to go in terms of having sustainability in this sector and having new projects feeding in,” Dirom said.

Despite the drought in exploration investment — the result of the eurozone crisis and falling commodity prices — Dirom said 2013 is shaping up to be a positive year, if not a record year, for exploration.