Twitter

Day: May 2, 2013

Mining Woes Snag Financial Firms – by Alistair MacDonald (Wall Street Journal – May 1, 2013)

http://online.wsj.com/home-page

TORONTO—Far from any mine shaft, the legions of bankers, consultants and lawyers who benefited from a decadelong commodities boom are now preparing to retrench as the market weakens.

Global mining capitals such as Toronto, Johannesburg and London all flourished amid lofty prices in recent years for everything from gold and copper to potash. Mining companies have tended to flock to a handful of cities to list their shares, set up headquarters and raise cash.

But over the past year, the sector has been hit by a triple whammy of falling prices, still-rising costs and waning investor interest. Most mined commodities have fallen sharply since their 2011 highs. Gold is 23% off its highs, and copper closed at an 18-month low Wednesday. Gold has fallen 14% since the start of this year to $1,446 a troy ounce.

As a result, some of the world’s biggest miners are slashing outlays, shedding assets they bought at the top of the market just a few years ago, and shaking up management teams that spearheaded several years’ of frenetic deal making and fundraising.

That is having a spillover effect on the industries servicing miners. Bankers and brokers involved in the sector are starting to see revenue dry up, and some are already shedding staff.

Read more

Potash, uranium to remain leaders of pack, forum hears – by Scott Larson (Saskatoon StarPhoenix – May 1, 2013)

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

The mining industry in Saskatchewan, led by potash and uranium, will continue to be a strong sector, says Gary Delaney, chief geologist with the province.

“We are very optimistic about potash and uranium,” said Delaney while speaking to an audience at the third annual Saskatchewan Mining Forum.

“Our mineral sector is well positioned for growth. The roots are strong and we are seeing vigorous exploration. There is more opportunities, there is more potential, and we hope going forward that will be realized and our sector will continue to grow.”

There are 10 producing potash mines in the province and at least nine potential greenfield projects have been identified. Pam Schwann, executive director with the Saskatchewan Mining Association, agreed those two sectors will lead the way. “I don’t see any big changes there.”

She said world population growth, increased industrialization, energy and food needs mean potash and uranium will continue to be high in demand.

Read more

Cameco’s $800-million tax battle – by David Milstead (Globe and Mail – May 2, 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.

Did you know one of the largest sellers of uranium in Switzerland is Saskatoon-based Cameco Corp.? The Canada Revenue Agency has been aware for some time. And now Cameco shareholders are getting more details about the potential problems it may cause the company – as in more than $800-million in back taxes.

It wasn’t supposed to work out this way, of course. In 1999, Cameco set up a subsidiary, Cameco Europe Ltd., in low-tax Zug, Switzerland. Cameco then signed a 17-year deal to take the uranium it produces in Canada, sell it to Cameco Europe, and have Cameco Europe make the final sale to the end customers all across the world.

Why inject a middleman into the transaction? Well, Cameco is selling the uranium to Cameco Europe at the low prices reflective of 1999, when the deal was signed. Cameco is recording little to any profit in Canada; instead, all the profits appear in Zug, where the tax rate is lower.

This has been a boon to Cameco’s bottom line. The uranium producer estimates it has avoided declaring $4.9-billion in Canadian income, saving it $1.4-billion in taxes, over the last 10 years.

Read more

Clusters, right to work and Ontario’s ‘prosperity gap’ – by Konrad Yakabuski (Globe and Mail – May 2, 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.

Last year was the 10th in a row that Ontario’s economy grew more slowly than the national average.

The cumulative effect of this underperformance is a doubling in provincial debt and an intractable deficit that the government will promise unconvincingly to subdue in Thursday’s budget. Long the province that punched above its weight, Ontario is fast becoming a bigger Quebec, faced with managing its relative decline.

You wouldn’t know it by Toronto’s skyline, where new hotel towers bearing the Trump, Shangri-La and Ritz banners signal the city’s membership in an elite network of global cities where big deals and decisions get made. As such, Ontario is also a lot like California, where pockets of extreme wealth and economic dynamism co-exist among low-income immigrant communities and rusted-out manufacturing towns that have made both places studies in contrast.

Maintaining public services (improving them might be asking for too much at this point) will challenge Ontario’s leaders as never before. If the province is serious about taming the deficit, every program, including health care and education, must be subject to spending constraints and/or tax increases for which Ontarians remain unprepared. But with long-term prospects for economic growth of less than 2 per cent a year, what choices does any government have?

Read more

Ontario Liberals employ kindergarten logic on gas plant fiasco – by Chris Selley (National Post – May 2, 2013)

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

The Ontario Liberals are currently under fire for grossly underestimating, willfully or in blissful ignorance, the cost of relocating two gas-fired power plants — one in the lead-up to the last provincial election campaign and the other in the thick of it. It was $190-million for the plant in Mississauga and $40-million for the one in Oakville, the Liberals said once; as of this week a combined figure in the neighbourhood of $600-million is in play.

Goodness knows they deserve the beating they’re getting over this. The only caveat I would add is that spending $230-million in public funds to shore up a party’s chances in a few ridings is no more defensible than spending $600-million. It’s like the old joke about prostitutes: We’ve established what the Liberals are. Now we’re just haggling over the price.

That said, the ultimate cost of this fiasco is relevant — at least I dearly hope it is — because people seem to draw a distinction between corruption that takes place behind closed doors, or is clearly illegal, and corruption that takes place out in the open where everyone can see it. (I almost find the latter more appalling; it’s like Dalton McGuinty smiling at you and patting your head — “good citizen; such a pretty Ontarian” — as he steals your wallet and tosses it to his campaign team. But clearly mine is a minority view.)

But there must be some level of expenditure so obscene, so grotesque, at which even quiescent Ontarians would rise up in fury at the Liberals’ actions, even if they see them as merely an extreme form of politics-as-usual. If it wasn’t $40-million or $190-million or $300-million, is it perhaps half a billion? The full billion? Two? Surely we must be approaching that level of waste, if we’re not there yet.

Read more

NEWS RELEASE: Aboriginal Canada and the Future of the Natural Resource Economy

The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government. http://www.macdonaldlaurier.ca/

First papers in new series highlight the alternative futures facing Aboriginal and non-Aboriginal Canadians in defining new relationships around natural resource development

New Beginnings – by Ken Coates and Brian Lee Crowley: http://www.macdonaldlaurier.ca/files/pdf/2013.01.05-MLI-New_Beginnings_Coates_vWEB.pdf

Canada and The First Nations: Cooperation or Conflict – by Douglas L. Band: http://www.macdonaldlaurier.ca/files/pdf/2013.01.05-MLI-Canada_FirstNations_BLAND_vWEB-V2.pdf

OTTAWA, 1 May, 2013 – Canada’s leading independent, non-partisan think tank, the Macdonald-Laurier Institute (MLI) announces today the launch of a signature project aimed at showing how natural resource wealth may be used to reset the relationship between Aboriginal and non-Aboriginal Canadians.

Canada finds itself today in the midst of one of the most important resource development booms in national history. The scale and intensity of resource development in Canada has buoyed the national economy in the midst of global difficulties; equally important, the vast treasure trove of Canadian resources provides solid assurance that the Canadian economy will remain robust well into the future.

Read more

Grim report warns Canada vulnerable to an aboriginal insurrection – by John Ivison (National Post – May 2, 2013)

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

Mankind is at a crossroads, Woody Allen once quipped: “One path leads to despair and utter hopelessness. The other to total extinction. Let us pray we have the wisdom to choose correctly.”

Canada’s relations with its aboriginal people are also at a crossroads but, fortunately, one of the potential paths forward promises a more auspicious outcome than Mr. Allen’s doomsday scenario.

The Macdonald-Laurier Institute think-tank laid out the options in two important essays released Wednesday. One paper, by Ken Coates and Brian Lee Crowley, outlines an optimistic vision where aboriginal and non-aboriginal Canadians find ways to collaborate on natural resource development, to the benefit of all.

A more pessimistic report, by Douglas Bland, suggests that Canada has all the necessary “feasibility” conditions for a violent native uprising — social fault lines; a large “warrior cohort”; an economy vulnerable to sabotage; a reluctance on the part of governments and security forces to confront aboriginal protests; and a sparsely populated country reliant on poorly defended key infrastructure like rail and electricity lines.

Mr. Coates and Mr. Lee Crowley suggested that aboriginal people are in a “sweet spot” when it comes to natural resource development — the result of treaty agreements, court settlements and Supreme Court decisions.

Read more

First Nation threatens to shut down B.C. copper mine – by Peter O’Neil (Vancouver Sun – May 1, 2013)

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

Possible blockade of mine road across reserve could be start of ‘catastrophic’ uprising across Canada, think-tank warns

OTTAWA — A threat by a B.C. First Nation to shut down a B.C. mine is a small sign of a potentially “catastrophic” uprising in Canada if Aboriginal Peoples don’t become full participants in natural resource extraction, a prominent think-tank warned Wednesday.

On Tuesday, the Wet’suwe’ten First Nation threatened to shut down the $455-million expansion of the Huckleberry Mines Ltd. copper/molybdenum operation, 123 kilometres southwest of Houston, in northern B.C.

Wet’suwet’en Chief Karen Ogen said Wednesday the mine’s access road and power transmission line crosses her band’s reserve near Owen Lake. She said the Wet’suwet’en would likely start by charging a toll on mine workers and contractors using the road. But if the band’s demand for jobs for its members are not met, she threatened more drastic action.

“If we have to the hydro lines will come down,” she vowed. The warning of possible violence across Canada comes from Douglas Bland, a professor emeritus at Queen’s University in Kingston. Bland, in one of two reports on resource development and First Nations published by the Macdonald-Laurier Institute, argued Canadians should take heed of the Idle No More movement that held protests across Canada against federal inaction on key issues.

Read more

Ontario’s green [energy] disaster – by Ross R. McKitrick and Kenneth P. Green (National Post – May 2, 2013)

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

Ross R. McKitrick is a Professor of Economics at the University of Guelph, a Senior Fellow at the Fraser Institute and author of Environmental and Economic Consequences of Ontario’s Green Energy Act. Kenneth P. Green is Senior Director, Energy and Natural Resources at the Fraser Institute.

The province could soon top North America in electricity costs

In 2009 the Ontario government passed the Green Energy Act (GEA), with the aim of increasing the province’s use of renewable energy such as wind and solar power, biofuels, and small-scale hydro. The centerpiece of the Act is a schedule of subsidized electricity purchase contracts – called Feed-in-Tariffs – that provide long-term guarantees of above-market rates for power generated by those renewables.

The GEA may have been well-intended but a recent Fraser Institute analysis, called The Environmental and Economic Consequences of Ontario’s Green Energy Act, demonstrates that it is driving up Ontario’s energy costs and poses a threat to economic competitiveness for the manufacturing and mining sectors. What little environmental benefit it is expected to generate could have been achieved at a fraction of the cost. Unless the province changes course, the GEA will saddle Ontarians with needlessly high energy costs for decades to come.

As our study demonstrates, the GEA will soon put the province at or near the top of North American electricity costs.

Read more

Glencore seen still hungry after swallowing Xstrata – by Clara Ferreira-Marques (Reuters U.K. – May 2, 2013)

http://uk.reuters.com/

LONDON, May 2 (Reuters) – After years of on-off talks, months of brinksmanship and often bitter negotiations, Glencore’s head Ivan Glasenberg gets to complete the $30 billion acquisition of Xstrata on Thursday, the mining industry’s biggest takeover yet.

But even as the champagne pops, investors and rivals are asking where the highly ambitious South African will look for his next deal. Many are already pointing to vulnerable or undervalued rivals, including Anglo American.

“This is not the endgame, this is the beginning,” analyst Chris LaFemina at Jefferies said. “Glencore wants to buy when no one else wants to buy, and what no one else wants to buy – that is when no one else is bidding and you can buy things cheap. That time is clearly now.”

Xstrata began just over a decade ago with a collection of zinc and ferroalloy assets and coal mines bought from Glencore, building itself up under now departing chief executive Mick Davis into one of the world’s largest diversified miners.

The combination of commodities trader Glencore and producer Xstrata, long Glasenberg’s ambition, creates a mining and trading powerhouse with over 100 mines around the world, some 130,000 employees, and an oil division with more ships than Britain’s Royal Navy.

Read more

[Mining] Inquiry ‘the right thing’ – by Star Staff (Sudbury Star – May 2, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Ontario’s NDP leader repeated her call for a public inquiry into mine safety during Question Period on Wednesday.

“Nearly two years ago, Jordan Fram and Jason Chenier were buried in a run-of-muck accident at the Sudbury Stobie mine,” Andrea Horwath told the provincial legislature. “Their families are still waiting for answers about why they died in a preventable accident.

“When will the premier do the right thing and call a public inquiry into this tragedy so that no more lives are lost on the job?”

In response, Labour Minister Yasir Naqvi stopped short of calling an inquiry. He told the legislature that he and Northern Development and Mines Minister Michael Gravelle met last week with Fram’s mother, Wendy.

He said he and Gravelle committed to working with Wendy Fram “to ensure that we are taking steps that no other sons or daughter are lost in a mining accident in our province.” Chenier, 35, and Fram, 26, died June 8, 2011, when they were struck by tons of rock and water. Vale and a super visor have been charged in connection with their deaths.

Since the deaths, the union representing Vale miners in Sudbury, the Steelworkers, and family members have pushed for a public inquiry into mine safety in the province.

Read more

[Ontario] PCs plan to open 10 mines – by Jonathan Migneault (Sudbury Star – May 2, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The Progressive Conservative Party will push to open 10 new mines in five years if it wins the next election, Paula Peroni, the party’s Sudbury candidate, said during a campaign platform announcement Wednesday.

Peroni said Ontario had the world’s top mining sector when Mike Harris was premier, but now sits in the 13th position worldwide.

“Northerners must govern the north, not the special inter-e sts in southern Ontario,” Peroni said. “We will determine our own path and Northern Ontario will once again be the fuel that drives the economic engine of this province.”

Peroni made the announcement at Henninger’s Diesel Ltd., a local mining supply company that refurbishes used diesel engines for heavy equipment. Diana Henninger, the company’s president and owner, said she was proud to host a female candidate who would support the mining sector.

“Hearing that the north will be a priority, and the enormous resources we have will be a priority for a Conservative government, is hugely important to everybody in the mining supply and service sector,” Henninger said. “I’ve always felt Northern Ontario has been forgotten and certainly under-appreciated.”

Read more