May 22, 2013 – Republic of Mining

Barrick Weighs Shrinking to Add Profits: Corporate Canada – by Liezel Hill (Bloomberg News – May 22, 2013)

May 22, 2013

http://www.bloomberg.com/

May 22 (Bloomberg News) — Barrick Gold Corp. (ABX), the biggest miner of the metal by sales, is considering shrinking in size as the company focuses on returns over production volumes, Chief Executive Officer Jamie Sokalsky said.

“Being more profitable is better than being bigger,” Sokalsky said yesterday at the Bloomberg Canada Economic Summit in Toronto. “If we divested of some of those smaller, higher-cost assets and came down to a suite of assets that are long-lived and lower-cost and more valuable, I think that ultimately that can be a better investment proposition.”

Gold producers are trading at their cheapest in more than a decade relative to the broader market, according to data compiled by Bloomberg, as investors flee the industry amid rising mining costs, project delays and asset writedowns.

Sokalsky, who took over as CEO of the Toronto-based company 11 months ago, is reviewing growth plans and pursuing asset sales as gold trades at a two-year low and is poised to end a rally that has extended for 12 straight years.

Barrick, the owner or part owner of 27 mines, rose 2.1 percent to C$20.29 at 9:43 a.m. in Toronto. The company closed at a two-decade low on April 17, losing its position as the top gold miner by market value to Vancouver-based Goldcorp Inc. (G) last month.

Swedish City Is Displaced by Race for Arctic Iron – by Niklas Magnusson and Johan Carlstrom (Bloomberg Business Week – May 21, 2013)

May 22, 2013

http://www.businessweek.com/

Swedes living in the Arctic town of Kiruna are packing up their belongings before their homes are bulldozed to make way for iron ore mining driven by Chinese demand.

LKAB (LKAB), Sweden’s state-owned mining company, opened a new level yesterday, more than 1 kilometer (3,281 feet) below the town, to be able to continue tapping the world’s largest contiguous body of iron ore. Many of the 18,000 who live above the deposit in the Scandinavian nation’s fourth-richest county will move a few kilometers east to accommodate the mine.

The extreme measure underscores the lengths to which governments and companies are willing to go to gain access to commodities prized by importers like China, the world’s fastest-growing major economy. And with LKAB producing 90 percent of all iron in the European Union, the willingness of Swedes to move is proving key to the whole region’s access to the metal.

“The move is of course crucial for the continuation of mining in Kiruna,” LKAB Chief Executive Officer Lars-Eric Aaro said in a May 20 phone interview. “Being Sweden’s seventh-largest exporter and third-biggest taxpayer, in addition to the dividend we pay the state each year, this is a national matter.”

Business in the Democratic Republic of Congo: Murky minerals (The Economist – May 18, 2013)

May 22, 2013

http://www.economist.com/

How bad is it?

CAPE TOWN AND KINSHASA – THE business climate in Congo “is disgusting”, says an adviser to the government in Kinshasa. Any casual visitor has probably noticed. Traffic police stop cars for no reason, force their way in and refuse to leave until paid off. Tax agents arrive at company offices with seven- and eight-figure demands that—of course—can be negotiated down.

Small wonder this central African nation’s biggest business—digging in the dirt to extract precious minerals—is so dirty. An expert panel led by Kofi Annan, a former UN secretary-general, looked at five deals struck between 2010 and 2012, and compared the sums for which government-owned mines were sold with independent assessments of their value.

It found a gap of $1.36 billion, double the state’s annual budget for health and education. And these deals are just a small subset of all the bargains struck, says the report, which Mr Annan presented in Cape Town, South Africa, on May 10th.

The report highlights some puzzling details. For instance ENRC, a London-listed Kazakh mining firm, waived its rights to buy out a stake in a mining enterprise owned by Gécamines, Congo’s state miner, only to acquire it for $75m from a company owned by Dan Gertler, an Israeli businessman, which had paid $15m for it just months earlier.

Nevada’s economy: Silver dollars (The Economist – May 18, 2013)

May 22, 2013

http://www.economist.com/

A fast-changing state leaves its mining roots behind

LAS VEGAS AND YERINGTON, NEVADA – TIM DYHR scrambles atop a mound of land in the lonely Nevada desert. “That’s where the pit mine will be,” he says, pointing towards a bland expanse of scrub. Turning his gaze to an area of desert indistinguishable from the first, he identifies the site for waste storage.

A processing facility will occupy a third plot. It is an impressive feat of visualisation. “Of course,” he chuckles, “Las Vegas used to be like this before they screwed it up.”

Mr Dyhr’s firm, Nevada Copper, hopes to build an open-pit mine near Yerington, a depressed town in the north-west of the state, though Congress must first approve the transfer of 10,000 acres of federal land. He bears no animus towards Las Vegas, a six-hour drive away. But the transformation of Nevada, and the dizzying growth of its largest city, helps explain why mining companies are feeling the political heat.

Nevada’s north, where mining is concentrated, was eclipsed by Las Vegas and the south 50 years ago. Today mining is Nevada’s ninth-biggest industry, but it remains at the core of the silver state’s identity and has been singled out for special treatment since its 1864 founding.

Canada Works – by Mark Carney: Governor of the Bank of Canada (May 21, 2013)

May 22, 2013May 22, 2013

Presented to: Chambre de commerce du Montréal métropolitain (CCMM)/Board of Trade of Metropolitan Montreal, Montréal, Quebec on May 21, 2013

Introduction

It is almost six years since the start of the global financial crisis, and its dynamics still dominate the economic outlook.

In the United States, households are emerging from a painful period of deleveraging. Their economic expansion continues at a modest pace, with gradually strengthening private demand partly offset by accelerated fiscal consolidation. Despite recent progress, the U.S. economy has not yet achieved escape velocity.

Europe remains in recession, with economic activity constrained by fiscal austerity, low confidence and tight credit conditions. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens.

Europe can draw lessons from Japan on the dangers of half measures. It is now more than two decades since the Japanese financial crisis erupted. To end its debilitating legacy, Japan has just embarked on a bold policy experiment. Its success or failure will have a major impact on the outlook over the coming years.

Amongst the G-7, Canada is unique. For us, the global financial crisis was an external rather than internal shock. When Canadian policy-makers responded quickly and forcefully, our financial system channelled credit to where it was needed and our economy adjusted smartly.

Mining Future is Bright for First Nations – by Stan Sudol (Onotassiniik – Summer 2013)

May 22, 2013

A version of this column was recently published in the premier issue of Onotassiniik, Wawatay’s Mining Quarterly http://onotassiniik.com/

Stan Sudol is a Toronto-based mining analyst, communications consultant and owner/editor of the RepublicOfMining.com website. www.republicofmining.com stan.sudol@republicofmining.com

While this year’s PDAC mining convention was filled with gloom and doom for both junior explorers and large miners, let’s remember that we are still in the middle of one of the largest expansions of mining activity in the history of mankind. Even in past commodity super cycles – the most recent occurred from the mid 1940s to the late 1970s – there were significant “corrections” but the overall trend was always upwards.

Well-respected Scotia Commodity expert Patricia Mohr recently stated that she feels that there will be a slowdown in exploration and mining activity in the next few years but the “bull run” will return in the second half of the decade.

As hundreds of millions of people in China, India and other developing nations urbanize and industrialize they will need the minerals that we dig out of the ground in northern Ontario and Canada. Mining has always been a boom and bust business and it is no different this time.

However, this slowdown will also give the First Nations surrounding the Ring of Fire a chance to access their training and infrastructure needs, allow ample time to complete and resolve environmental studies – hopefully Cliffs and the federal government will come to their senses and switch to the broader Joint Review Panel Environmental Assessment that most First Nations in the Ring of Fire prefer – as well as resolve outstanding resource revenue sharing issues with governments.

Sudbury: Ontario’s mining superstore – by Dick DeStefano (Sudbury Mining Solutions Journal – May 2013)

September 7, 2018May 22, 2013

Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA).destefan@isys.ca This column was originally published in the May 2013 issue of Sudbury Mining Solutions Journal.

SAMSSA is having a banner year on its tenth anniversary with multiple accolades recognition and events. One of the most important acknowledgements came from The Canadian Chamber of Commerce.

A study entitled, Chamber of Commerce Mining Report Mining Capital-How Canada Transformed its Resources Endowment into a Global Competitive Advantage, announced the importance of years of effort by SAMSSA to identify the “Sudbury Mining Cluster” as the leader in underground intelligence in Canada.

The report demonstrates how Canada is home to a number of competitive clusters that deserve greater recognition not only for Canadians but from the Canadian Government as well. After multiple interviews with the Canadian Chamber researchers the following important statements were included in the Study:

Toronto is the small to medium capitalization finance capital of the world, boasting a unique collection of experts and institutions that draw exploration and mining companies seeking capital from around the world.
Vancouver has established itself as a global hub of the exploration sector, running projects in Africa, Asia, South America and Europe well as Canada and the United States.
Sudbury’s emerging mining supply and technology cluster is the “superstore” of Ontario for underground mining with the potential to become a global leader.
Read more

B.C. mining company justified in bringing in Chinese workers, Federal Court rules – by Tobi Cohen (Vancouver Sun – May 22, 2013)

May 22, 2013

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

OTTAWA — The government was justified in issuing a positive labour market opinion that allowed a British Columbia mining company to hire 201 temporary foreign workers from China, the Federal Court ruled Tuesday.

The decision comes after two unions challenged the government and the companies involved, arguing Canadians are available to do the jobs required and that it was not necessary to look outside the country for foreign labour.

The incident touched off a massive debate over Canada’s Temporary Foreign Worker Program, with the government promising, and eventually delivering on, a number of changes to protect Canadian jobs.

While the Construction and Specialized Workers’ Union and the International Union of Operating Engineers ultimately lost their court case, their lawyer, Lorne Waldman, said it’s far from a total defeat.

“I’m disappointed that the courts opted to uphold the decision, but having said that, I think the importance of the case goes far beyond this decision,” he said. “I think this case was an extremely important one and was successful because it ultimately exposed some of major shortcomings in the labour market opinion process and forced the government to make changes.”

In Peru, PM’s officials say Harper will answer questions on Senate controversy – by Heather Scoffield (Canadian Press/CTV News – May 22, 2013)

May 22, 2013

http://www.ctvnews.ca/

LIMA, Peru — The Senate expenses scandal is turning Prime Minister Stephen Harper’s visit to South America into an awkward communications exercise.

Harper’s officials have indicated that the prime minister will finally take questions early this afternoon on the Prime Minister’s Office involvement in reimbursing Senator Mike Duffy $90,000 for improper housing expense claims.

But Harper will be next to Peruvian President Ollanta Humala Tasso in a joint presentation that was supposed to be about boosting the mining sector to aid development in Peru.

So Harper took the rare step of announcing a $53-million aid package and the text of the joint statement well before holding any meetings with Peruvians in the hopes of garnering some attention for his policy plan.

The $53 million will be spread over six years and go towards mining-related initiatives and education — a new and controversial approach for Canada’s aid and foreign policy that places natural resource extraction and promotion of Canadian business at the centre.

“Canada is committed to working with countries in the Americas to support development through sustainable economic growth and improved education,” Harper said in a news release.

Gold space now a ‘buyer’s market’, Barrick chief says – by Peter Koven (National Post – May 22, 2013)

May 22, 2013

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

TORONTO – Gold mining stocks have been decimated in recent months, but Jamie Sokalsky does not think investors should expect any corresponding uptick in M&A activity.

Speaking at the Bloomberg Canada Economic Summit, the chief executive of Barrick Gold Corp. said there is a general “anti-M&A” mood in the gold space right now, and that investors don’t even ask him about it much anymore.

“It’s a lot harder to sell assets now than it would have been a year or two ago,” he said, adding that it is a “buyer’s market.”

Until recently, Barrick would have been taking advantage of a buyer’s market to snap up almost anything that caught its eye. But as the company shifts its focus from growing production to growing profitability, it is trying to dump its smaller and higher-cost mines rather than purchase anything new.

The Toronto-based miner has stated that its oil, nickel and Tanzanian gold assets are on the block, and sources confirmed to the Financial Post that its Australian gold mines are being shopped as well. Other seniors are also keen to shed non-core assets to upgrade their portfolios.

NEWS RELEASE: Chile ranked third as most attractive country for copper mining investments (Merco Press – May 21, 2013)

May 22, 2013

Chile is the third most attractive country for copper mining investments behind Canada and Australia according to a report from the Chilean Copper Committee, Cochilco that includes fifteen leading countries in the industry and was released this week by Mining minister Hernan de Solminihac in Santiago.

“After analyzing all variables, Chile is placed in third place among the most attractive countries for investments behind developed mining powerhouses such as Canada and Australia”, said Solminihac.

The ranking was based taking into account structural aspects of the different economies from the World Economic Forum and the Heritage Foundation records, as well as information on investing conditions in the mining sector in countries provided by the Fraser Institute.
According to the Chilean minister Cochilco took into account six variables: macroeconomics, political stability, labour specialization, business infrastructure, licences and geological potential.

“The work included the fifteen countries with the largest copper mining developments in the next decade with a total of 120 projects which imply investments in the range of 240 billion dollars”, said Solminihac. Of that number of projects, 32% are in Chile.

Chile is also the world’s leading producer and exporter of copper and is enjoying the benefits of world demand bonanza led by China.

LNG: The race for the next ‘Fort McMurray’ – by Drew Hasselback (National Post – May 22, 2013)

May 22, 2013

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

You’ve been hearing about the many liquefied natural gas projects that are planned for British Columbia’s west coast over the next few years. What you might not know is the degree to which LNG is already dominating the work done by energy lawyers in Calgary.

The oil sands are still chugging along, and the battle to build oil pipelines won’t end soon — especially with the surprise re-election of the pipeline friendly BC Liberals in British Columbia. The oil files alone can fill the desks of a great many energy lawyers. Yet the chase for LNG projects is well underway. There’s a bit of a gold rush mentality in the air.

“LNG feels like the next Fort McMurray,” says Chad Schneider, a partner with Blake, Cassels & Graydon LLP in Calgary. Adds Brock Gibson, chairman of Blakes: “People are already working around-the-clock on those deals.”

“Each of the larger projects would be amongst the largest things ever constructed in B.C.,” says Paul Wilson, a partner in the Vancouver office of Fasken Martineau DuMoulin LLP. “It’s probably more than half of what we’re doing day to day.”

Proponents are backing the development of at least 10 multi-billion dollar LNG plants for B.C.’s west coast. Many are early stage proposals, and not all will be built. Mountains of paperwork and millions of dollars in fees are needed to transform such complicated projects from dream to reality. Yet the projects are backed by some well-financed and technically able players — BG Group PLC, Imperial Oil Ltd., Nexen Inc., Royal Dutch Shell PLC, just to name a few.