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Day: June 11, 2013

Russia Stocks Sink 2nd Day on Bets Commodity Supercycle Fading – by Ksenia Galouchko (Bloomberg News – June 11, 2013)

http://www.businessweek.com/

Russian shares dropped for a second day on concern commodities may extend their decline, curbing growth in the world’s biggest energy exporter.

The Micex Index (INDEXCF) fell 1.4 percent to 1,317.20 by 11:31 a.m. in Moscow, the sharpest slide in almost a week. Basic materials companies led the retreat, losing 1.5 percent on average. The volume of shares traded on the gauge was 50 percent below the 30-day average, while 10-day price swings subsided to 16.497.

The Standard & Poor’s GSCI (SPGSCI) gauge of 24 raw materials retreated 0.5 percent as the Bank of Japan disappointed investors by failing to expand monetary stimulus and concern grew that the U.S. Federal Reserve will scale back debt purchases. Russian central bank Chairman Sergey Ignatiev, who presided yesterday over his last policy meeting after leading the regulator for more than a decade, kept key rates on hold for a ninth month.

“The market is falling on fears that we’re entering the end of the commodity cycle, that the rise of commodities is over,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone. “Russia is very closely correlated to oil.” The dollar-denominated RTS Index (RTSI$), which last week entered a bear market, declined 1.4 percent to 1,282.53. On the Micex, 3 stocks increased while 44 dropped, three were little changed.

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Canada’s mining industry steps towards publishing what it pays – by Stella Dawson (Thomson Reuters Foundation – June 11, 2013)

http://www.trust.org/

WASHINGTON (Thomson Reuters Foundation) – Canadian mining companies have reached a draft agreement to disclose what they pay to governments for the right to extract gold, coal and other minerals, anti-poverty activists and an industry group said.

The agreement, due for release later this week once final details have been ironed out, would be a major expansion of transparency in the extractive industries and would start to bring Canada into line with standards now taking shape in the United States and the European Union.

“Three-quarters of all transactions in the mining sector have occurred in Canada. If you want to capture transactions, the Canadian market is essential,” said Andrew Bauer, economic analyst at Revenue Watch Institute, one of the parties in the talks.

Campaigners say requiring companies to reveal what they pay governments in the oil, gas and mining sectors will increase accountability for how natural resource wealth is used by countries and will help combat corruption. About 3.5 billion people live in resource-rich countries worldwide, yet many are desperately poor, too often because government officials siphon off resource money into personal accounts.

Financial transparency is high on the agenda for G8 leaders from major industrial countries meeting next week in Northern Ireland as a way to tackle poverty in times of constrained development aid budgets.

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[Saskatchewan potash] Bethune Mine: Promises Lasting Legacy – by Ella McIntyre (Saskatoon StarPhoenix – June 11, 2013)

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

A promise of economic growth and employment, with an eye to ensuring long-lasting environmental and community well-being, is behind K + S Potash Canada’s $3.25 billion dollar solution mining Legacy Project planned for the Rural Municipality (RM) of Dufferin, near the village of Bethune. Bethune is approximately 50 kilometres from Regina.

“Not only is the Legacy Project Saskatchewan’s first potash mine in nearly 40 years, it is one of the world’s most economically attractive greenfield projects,” said Christine Stass, spokesperson for K+S Potash Canada and its parent K+S Group, a leading supplier of fertilizers and the world’s leading salt producer.

As Stass explains, with a potash price of between USD 400 and 450/tonne, the project achieves a Return on Capital Employed of 12 per cent and an attractive premium on K+S Group’s costs of capital. It also promotes important jobs and economic opportunities for Saskatchewan. By spring 2013, 200 to 300 people will be working on site which, at its peak, will provide over 1,100 jobs and roughly 6 million employment hours. The following two years will see rail construction, structures built and equipment installed and, by late 2015, plant commissioning and the site near completion. Once in full production, the mine will employ 320 permanent workers, with more jobs created through ongoing contract employment.

Potash production for the mine is anticipated for 2015. The operation will ramp up to full capacity of 2.86 million tonnes by 2023. With further expansion, production could increase up to 4 million tonnes per year.

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Arctic governments stand by as deadly pollution spews from Russia’s Nikel mine – by Alex Boyd (Nunatsiaq on line.ca -June 11, 2013)

http://www.nunatsiaqonline.ca/

“More profitable to keep polluting the region than modernize the production”

The nickel mine in the aptly named town of Nikel in northwestern Russia is usually notable for three things: it’s big, it’s a massive source of pollution, and, for more than 20 years, it’s defied all attempts to change.

Controversy is as constant in Nikel as the clouds of sulphur dioxide; the mine here is equal parts economic powerhouse and environmental scourge. Yet, criticism has kicked up a notch in recent weeks after European leaders met to discuss issues in the region — and failed to mention Nikel.

Last week’s Barents Summit in Kirkenes, Norway brought together leaders from all over northern Europe, but despite old promises to deal with the mine’s pollution and new commitments to environmental sustainability, the mine located just 50 kilometres away went unmentioned.

Amid the international hoopla over the Arctic, it’s easy to forget that the region is a relatively small place, with a small population. The presence of organizations such as the Arctic Council and the Barents Council means countries are increasingly trying to tackle Arctic issues as a group, but disagreements still arise.

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How Canada’s big oil firms are trying to sway public opinion – by Kelly Cryderman (Globe and Mail – June 11, 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.

CALGARY — The images have become ubiquitous in the Canadian TV advertising landscape – earnest engineers working to unlock oil sands bitumen from Northern Alberta’s boreal forest, and manufacturers parlaying the Fort McMurray boom into jobs in Ontario and Quebec.

The oil industry has developed TV, print and online ads to extol the national economic and social benefits of the oil sands, and to battle critics who have emphasized the risk of spills, and say an overreliance on the energy industry as an economic driver means outsized greenhouse gas emissions and environmental degradation.

The question is, are Canadians moved by the pictures and words paid for by big Canadian oil? Greg Lyle, managing director of Innovative Research Group Inc. – a Toronto-based public affairs and corporate communications firm that counts a number of energy companies among its clients – believes there’s some potential to move “the mushy middle” of Canadian public opinion.

“When they’re given new information – which are the arguments the industry puts forward – they’re prepared to be swayed. That doesn’t mean they will be.”

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Miner [Anglo-American], Billions Over Budget, Slogs Ahead in Rural Brazil – by John W. Miller and Paul Kiernan (Wall Street Journal – June 9, 2013)

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

CONCEIÇÃO do MATO DENTRO, Brazil—The hills surrounding this isolated rural town contain a rich lode of iron ore and the seeds of one of the biggest cost overruns in mining history.

Anglo American AAL.LN -3.52% PLC is spending $8.8 billion on a massive mine project here—more than three times what it initially projected, and not a single ton of iron ore has been mined. The project, conceived by some of the best geologists and engineers in the world and currently employing 12,000, is three years behind schedule.

“I think all the time about what we could have done differently,” Cynthia Carroll said in an interview. Mrs. Carroll, who still believes the mine will be profitable, stepped down as CEO in April after shareholders complained about cost overruns, especially at this mine, baptized Minas Rio.

Anglo American knew mining iron ore under cattle farms crisscrossed by strips of red dirt roads—then processing and shipping it—would be a logistical challenge. And it isn’t the only one under pressure. With coastal areas tapped out, global mining companies are having to dig in increasingly remote areas, often in countries with unstable currencies, volatile economies, and uncertain legal systems.

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RPT-BHP entry threatens creaking global potash duopoly – by Ron Bousso and Polina Devitt (Reuters U.K. – June 10, 2013)

http://uk.reuters.com/

(Reuters) – The prospect of new competition from miner BHP Billiton could dynamite the cracks appearing in a potash duopoly that accounts for 70 percent of global trade in the fertiliser.

For decades two export groups, Belarus Potash Company (BPC), which represents producers in Russia and Belarus, and Canpotex, its North American equivalent, have set identical prices in key markets such as China and India and have often curbed output simultaneously.

That choreography, which smaller players also dance in step with, is already under fire; four producers in the groups – BPC’s Uralkali, and Canpotex’s three members Potash Corp of Saskatchewan, Agrium and Mosaic – recently agreed to pay over $100 million to settle a U.S. antitrust lawsuit accusing them of concerted action to raise prices.

Canpotex and BPC did not respond to a request for comment for this story, but the producers have denied the accusations, and Uralkali said “potash producers and traders do not agree with each other on prices and pursue their own pricing policies”. Their footwork has also faltered under the strain of falling prices in recent months, and the music could stop altogether if BHP goes ahead with the 8 million tonne per year Jansen mine in western Canada, which would be the world’s largest potash mine if it opens as scheduled in 2017.

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Allana Says Concerns for Potash Supply Glut Overblown – by Christopher Donville (Bloomberg News – June 10, 2013)

http://www.bloomberg.com/news/

Allana Potash Corp. (AAA), the Canadian developer of a $642 million potash mine in Ethiopia, says predictions of a global oversupply of the crop nutrient are overblown because competing projects are being put on hold.

World potash production capacity will rise 38 percent to 96.5 million metric tons by 2017, while demand will increase 26 percent to 66 million tons, according to Green Markets, a fertilizer industry information provider.

Supply forecasts include mines that aren’t yet in production and may be shelved or canceled because of rising construction costs, said Farhad Abasov, Toronto-based Allana’s chief executive officer.

“On paper it seems like there is quite a bit of supply coming on line,” Abasov said in a May 28 telephone interview from London. “In reality only a handful of them will hit production.”

Soaring expenses are beginning to exact a toll on proposed potash mines around the world. Vale SA, the third-largest mining company, in March suspended its Rio Colorado project in Argentina after the estimated cost almost doubled to about $11 billion.

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Horizonte raises $4.7 million for Brazilian nickel project – by Lawrence Williams (Mineweb.com – June 11, 2013)

http://www.mineweb.com/

AIM and TSX junior nickel developer Horizonte Minerals has done well to raise $4.7m in the current climate and has organised an optional facility for a further $12.5m.

LONDON (MINEWEB) – AIM and TSX main board quoted Horizonte Minerals, which is concentrating its efforts on its Araguaia nickel project in Brazil’s Carajás region in Pará state – a deposit which it describes as a world leading asset in terms of size and grade – has just announced it has raised some £3 million ( around US$4.7 million) in an equity issue at 7.5 p/share, fully supported by its two major shareholders, Teck and Henderson Global Investors (HGI).

In addition it has also entered into a term sheet for an equity financing facility (EFF) for up to £8m ($12.5 million) over three years with Darwin Strategic Limited, a subsidiary of HGI. This can be drawn down at Horizonte’s option.

The Araguaia nickel deposit is a saprolitic nickel laterite located in the same area as Vale’s Onça Puma nickel mine as well as some other significant nickel projects including Glencore Xstrata’s Serra do Tapa only 60 km away.

Grades are reckoned as good for a deposit of this type and the resource is big – with considerable scope for expansion. The current NI 43-101 resource is estimated at 39.3 million tonnes grading 1.39% Ni (Indicated) and 60.9 million tonnes at 1.22% Ni (Inferred) at a 0.95% nickel cut-off. At lower cutoff grades the tonnages are far higher.

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Exiting Ecuador the right move for Kinross – by Peter Koven (National Post – June 11, 2013)

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

Kinross Gold Corp. has abandoned plans to develop the massive Fruta del Norte project in Ecuador after refusing to pay a 70% windfall profits tax demanded by the government.

It is a major disappointment for the company. Fruta del Norte was acquired for more than US$1-billion in 2008, and was expected to become one of the Toronto-based miner’s cornerstone operations. But more than two years of fruitless negotiations convinced Kinross that it was not going to get a deal that would generate good investor returns.

The Ecuadorian government played hardball with Kinross from the beginning, insisting on the monstrous windfall profits tax and never backing down. That was by far the biggest sticking point in the negotiations, chief executive Paul Rollinson said in an interview Monday. He is certain that walking away is the best move for shareholders.

“It really was a tough decision, but I do think it was the right decision,” he said. “I’m not prepared to sign anything with a 70% windfall profits tax.” Since taking over as CEO last year, Mr. Rollinson has put an emphasis on boosting profitability rather than building new mines for the sake of growth. This was clearly a project that could not generate a strong return because of the punitive tax regime.

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NEWS RELEASE: Commodity expert provides outlook for OMA members’ products

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.

Commodity expert Patricia Mohr delivered two primary messages to Ontario Mining Association directors recently – China continues to supplant the United States as the main driver of the global economy and the Canadian economy would benefit from new pipelines for oil and gas. Ms Mohr, Scotiabank Vice President of Economics and Commodity Market Specialist, was the featured speaker at a recent OMA board of directors meeting. Her address was titled “Metal Prices, Currencies and Global Growth.”

“China is all dominant in the commodity markets. It would get the gold medal for economic growth around the world,” said Ms Mohr. “China is buying base metals at four times the rate of the United States and China is buying 45% to 50% of the world’s steel.”

These statistics are based on a blended index for nickel, copper, zinc and aluminum, which indicates China consumes 44% of the global supply of these metals and the U.S. consumes 10%. She sees China’s economic growth at 7.9% in 2013 and 8% in 2014.

“The once a decade change in leadership in China is now as important to global economic growth as the U.S. presidential election,” she said. “There have only been five leadership changes in China since Mao.” She sees this new leadership moving in a direction, which will continue development in China but in a more environmentally friendly fashion while raising living standards.

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Vale VP [Kelly Strong] takes on role as OMA director – by Star Staff (Sudbury Star – June 11, 2013)

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

A Sudbury mining executive has been appointed the new chair of the board of directors of the Ontario Mining Association.

Kelly Strong, vice-president of Vale’s Ontario and U. K . operations, is the 78th chair of the association, taking over the role from another Sudburian, Marc Boissoneault, vice-president of Xstrata Nickel’s Sudbury operations.

OMA members are involved in exploration, production and processing mining resources. The OMA is one of the province’s oldest trade associations and is celebrating its 93rd anniversary this year. OMA president Chris Hodgson said Strong will add his own ideas, viewpoints and interests during his two-year term.

“The OMA and the Ontario mineral industry will benefit from the varied experience, enthusiasm and wise counsel of Kelly in his new volunteer position,” said Hodgson, a former minister of Northern Development and Mines in the Progressive Conservative government of Mike Harris.

Strong said he was “excited and humbled” to chair the association. “Ontario’s mining industry has so much to offer, and I look forward to working together with our industry partners to maximize the potential of our industry now and in the future,” he said.

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Germany seeks to develop relationships in mining – by Lindsay Kelly (Northern Ontario Business – June 10, 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

There’s such little awareness amongst German companies of the underground mining capabilities in Canada that one German company recently declared, “There’s no underground mining in Canada.”

It’s a misperception that needs to change in order for relationships to develop between Canadian and German companies in the mining supply and services sector, said Aarti Mona Soerensen, manager of the mining and mineral resources department at the Canadian German Chamber of Industry and Commerce.

Based in Toronto, the chamber is an official representative of German trade with more than 500 members. It focuses on establishing partnerships in the construction, food, medical technology and mining sectors. During a recent exploratory discussion with industry representatives in Sudbury, Soerensen said Canada has been underestimated as a partner for German companies, and she’s hoping to change that.

“The intent is to get into a discussion and hopefully, then, over the longer term, co-operation to work out partnership opportunities,” Soerensen said. “My idea is not to flood Sudbury with new companies and take over the market, because that’s not really what German companies do. We very much rely on collaboration with local companies.”

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Canadian Company: EPA is Evil, Let Us Create Giant Alaska Mine – by Hal Herring (Field and Stream – June 10, 2013)

http://www.fieldandstream.com/

There is nothing like a good anti-federal-government advertising campaign to rally support for, well, almost anything. In this time of Internal Revenue Service scandals and accusations that the Environmental Protection Agency has charged so-called “conservative” groups for Freedom of Information Act requests that they handed over to environmental groups for free, the time was ripe for a smart advertising professional to tap in to the zeitgeist and try, yet again, to sell a highly skeptical American public on the Pebble Project—a huge proposed gold and copper mine proposed by two foreign mining corporations to be built on public lands in the headwaters of Bristol Bay, Alaska.

On June 4, Northern Dynasty Minerals, Limited, a Vancouver, Canada-based corporation that owns 50 percent of the Pebble Project, ran an ad in the Washington Post and on various political websites that demands an end to what it calls EPA’s “black box bias” against the mine. The ad also claims that the EPA is manipulating public opinion and denying science in response the results of the EPA’s 14 month-long comprehensive Bristol Bay Watershed Assessment (BBWA) show that the Pebble Project does indeed threaten the greatest salmon fishery on earth (a $500 million industry annually) and the estimated 14,000 jobs that depend upon it, thus industrializing one of America’s wildest and most pristine expanses of public land, which would forever change the culture and economy of the 7,500 people, mostly Native Americans, who now call it home.

I’m not sure what the Canadian mining executives thought the report should have said. Perhaps that Pebble Project would build the first road, first power-generating facility, and first deep-water port in the region to open up mining on tens of thousands of acres of public land in the trackless headwaters of the Nushagak and Kvichak Rivers.

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Sudbury mining workshop draws students from across Canada – by Lindsay Kelly (Northern Ontario Business – June 10, 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Before Nick Joyce arrived in Sudbury last month, the city’s famed mineral exploration history was just something he had learned about in the classroom. But a visit to the city brought the story to life.

“It is one of those classic case studies we do go over in our mineral exploration classes, but to actually come here and see the rocks and go to a discovery outcrop and then go to one of the mines, it’s something different,” said Joyce, who recently graduated from the geology program at the University of British Columbia and will be working towards his Master’s degree in mineral exploration at Queen’s University starting this fall.

“It brings it to a whole new level of understanding.”

Joyce is one of 26 students who participated in the 2013 Student-Industry Mineral Exploration Workshop (S-IMEW) hosted by the Prospectors and Developers Association of Canada (PDAC). Using Sudbury as a base of operations, this year’s workshop, held from May 4 to 17, guided students through tours of Sudbury, Timmins and Rouyn-Noranda, which were complemented by lectures given by industry representatives.

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