June 21, 2013 – Republic of Mining

UPDATE 3-Mongolia tells Rio Tinto to delay Oyu Tolgoi copper exports (Reuters India – June 21, 2013)

June 21, 2013

http://in.reuters.com/

ULAN BATOR, June 21 (Reuters) – Rio Tinto said its plan to start exporting copper from the $6.2 billion Oyu Tolgoi mine on Friday has been delayed at the request of the Mongolian government, heightening investor concerns about the risks of mining in the country.

Uncertainty over what was behind the delay sparked an exodus out of shares in other Mongolian miners on Friday, with Canadian and Australian listed miners exposed to the country sliding between 10 and 20 percent.

Journalists had been invited last week to attend a ceremony at the copper and gold mine on June 14 to mark the first exports. That was postponed to June 21, but the event was again cancelled at the last minute. Mongolia is due to hold a presidential election on June 26.

“Oyu Tolgoi is ready to start its first shipments of copper concentrate from its Mongolian mine and all necessary permits to do so have been received from relevant authorities,” Rio Tinto spokesman Bruce Tobin said on Friday.

“However, plans to start shipping on Friday 21 June have been postponed at the request of the government of Mongolia.” The company declined to comment on what was behind the latest delay.

CORRECTED-UPDATE 2-Two dead in suspected Renamo attacks in Mozambique – by Marina Lopes (Reuters India – June 21, 2013)

June 21, 2013

http://in.reuters.com/

MAPUTO, June 21 (Reuters) – Gunmen killed two people in ambushes on vehicles in Mozambique on Friday, two days after the opposition Renamo party threatened to sabotage transport routes in the mineral-rich southern African country.

Just before the attacks, police arrested Renamo information chief Jeronimo Malagueta, who on Wednesday had announced that the ex-guerrilla group would halt traffic on main roads and the Sena railway linking the northwest coal-fields to the sea.

Persistent tension between Renamo and the ruling Frelimo party, who fought each other in a 1975-92 civil war, has alarmed citizens and investors just as the former Portuguese colony enjoys a boom driven by bumper coal and gas discoveries.

“We urge all Mozambicans to stay vigilant to premeditated and spontaneous attacks and threats to public safety,” Interior ministry spokesman Pedro Cossa told a news conference in Maputo.

Cossa said a truck driver and his passenger were killed and five others wounded in Friday’s attacks. He denied reports that a bridge was damaged in the central province of Sofala, a Renamo stronghold.

Caisse de dépôt provides shot in the arm for mining – by Peter Hadeke (Montreal Gazette – June 20, 2013)

June 21, 2013

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

MONTREAL — The mining industry in Quebec has been reeling since the Parti Québécois government made the provincial royalty regime more onerous.

The government’s decision to impose royalties on both production and profits was seen by industry players as the wrong move at the wrong time, given the volatility in metal prices and the scarcity of investment capital these days.

Now, an arm of the provincial government is stepping in with more positive news. The Caisse de dépôt et placement, Quebec’s giant pension fund manager, announced Thursday that it’s injecting $250 million to invest in Quebec mining companies through a fund known as Sodémex Développement. Its mandate will include investing in all stages of mining activity.

It will purchase stakes of between $5 million and $20 million, primarily through debentures or equity. The announcement comes at a time when many voices in the industry are complaining about a brutally tough investment climate that has made it extremely difficult to raise financing. The appetite for risk has diminished sharply.

“It might be the global economy, it might be the situation in China, it might be the decline in gold prices,” said Dany Pelletier, a senior Caisse executive who will be involved in the new fund.

CBC Thunder Bay’s Lisa Laco interviews Republic Of Mining’s Stan Sudol about Ring of Fire (CBC News – June 17, 2013)

June 21, 2013

Is it the boom-bust cycle of mining, or is Cliffs Natural Resources playing political poker? Up next, a mining analyst Stan Sudol makes sense of the latest Ring of Fire developments. Click here: http://www.cbc.ca/superiormorning/episodes/2013/06/17/republic-of-mining/

Mining in Minnesota — regulation needed – by Rolf Westgard (Minneapolis Star Tribune – June 21, 2013)

June 21, 2013

http://www.startribune.com/

Rolf Westgard is a professional member of the Geological Society of America and is adjunct faculty on energy subjects for the University of Minnesota’s Lifelong Learning program.

This is a potentially significant industry for the northeastern part of the state. Regulation is needed, and can succeed.

Josephine Marcotty’s June 16 article “Minnesota’s next mining boom” focused on the environment-vs.-economics dispute that hangs over Minnesota’s world-class deposits of copper, nickel, cobalt, gold and platinum group elements.

They lie in a band, meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range. They arrived more than a billion years ago in the magma that featured northern Minnesota’s active volcanic history. They are concentrated out of the magma by liquid sulfur, which acts as a “collector,” because these elements prefer the sulphide liquid to the magma by a factor of 1,000 times more. This process is responsible for forming the world’s economically mineable magmatic nickel-copper sulphide deposits, like those found in Canada, Russia and the United States.

Demand for these elements is soaring. One reason is their use in renewable energy systems that provide transmission, rechargeable batteries and wind turbine technology.

Plunging prices put squeeze on gold miners – by Peter Koven (National Post – June 21, 2013)

June 21, 2013

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

Another steep drop in gold and silver prices is forcing mining companies to look at severe cost-saving measures that would have been unthinkable at the start of the year.

When bullion plunged 13% in two days back in April, miners evaluated contingency plans they would adapt if prices continued to weaken. Those included major production cuts, dividend cuts, layoffs and mine closures.

With gold sinking another 6.4% on Thursday to below US$1,300 an ounce (along with an 8% drop for silver), those contingency plans no longer feel like such a longshot. Numerous analysts have warned that if prices fall much below US$1,200 for a prolonged period, even the large companies would consider large restructuring initiatives.

Many gold miners have curtailed capital spending, delayed projects or both. However, some development companies are already starting to overhaul their business in more dramatic ways. It is a potential sign of things to come if the bear market gets worse.

One example came this week, when Ottawa-based Orezone Gold Corp. tossed out its entire development plan for a project in West Africa and replaced it with a cheaper option that has a better shot at being financed.

Higher expectations [for Ring of Fire] – by Jeff Labine (tbnewswatch.com – June 21, 2013)

June 21, 2013

http://www.tbnewswatch.com/

Ontario has hired a secretariat for the lead negotiator of the Ring of Fire, even though the province still doesn’t actually have a lead negotiator.

Christine Kaszycki took on the job of being province’s Ring of Fire secretariat back in 2010. Since then, Matawa First Nation engaged former MP Bob Rae to act as a mediator with the province during the negotiations.

Rae announced that he would be retiring from politics in order to focus on his responsibilities as Matawa’s Ring of Fire negotiator.

MPP Bill Mauro (Lib. Thunder Bay – Atikokan) said Rae stepping down has put more pressure on the province to find its lead negotiator. “It certainly heightened expectations,” he said. “There’s a commitment from the province that we appoint someone as well who can have a similar role.”

Mauro said the negotiator wouldn’t just work with Matawa, but with all areas impacted by the Ring of Fire development. That includes the private interests. While the secretariat does negotiate, Mauro said there are high expectations for the province to do more and to have more focused approached.

Challenges ahead [Thunder Bay mining forum] – by Jeff Labine (tbnewswatch.com – June 20, 2013)

June 21, 2013

http://www.tbnewswatch.com/

Mike Metatawabin says he’s disappointed that there wasn’t more First Nation representation at this year’s provincial mining conference.

Metatawabin, the president of Five Nations Energy Inc., joined about 50 other participants at the third annual Ontario Mining Forum at the Valhalla Inn. The two-day mining forum, which started Thursday, promised keynote speakers such as Ontario’s Ring of Fire Secretariat Christine Kaszycki but did not deliver.

Instead, the forum heard from various speakers including politicians and the city’s Community Economic Development Commission on the mining industry in the region.

The cost to attend the event averaged out to be about $2,000 per person. Some participants speculated that that price kept more people, including First Nation officials, from attending. With major projects like the Ring of Fire being discussed, Metatawabin believes it’s crucial First Nation organizations and chiefs attend these conferences.

“During the course of these conferences that I’ve attended, these presentations bring a lot of hope and a lot of inspiration to what we need in the North,” he said. “I think our leadership needs to hear this and be a part of these conferences. We need to sit down, set aside the politics and maybe engage our business people. There’s so much potential here.”

Mining’s relationship with First Nations has matured – by Zoe Younger (Vancoucer Sun – June 20, 2013)

June 21, 2013

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

Opinion: We see aboriginal people choosing the mining industry and building careers with us

Zoe Younger is vice-president, corporate affairs at the Mining Association of B.C.

As we celebrate National Aboriginal Day across Canada, it is timely to reflect on the evolving relationships between the mining industry and First Nations, in particular with respect to employment in the industry.

With a long history of working together, it is interesting to note how the partnerships between our industry and First Nations have matured, and the mutual respect for each other has deepened. Parallel to the evolving case law that has dictated changes in the regulatory process, and has better defined the relationships between the Crown and First Nations, the mining industry and aboriginal leaders across Canada have been reshaping their own relationships not based on what they have to do, but based on common interests, shared goals and values, and most importantly, communication grounded in mutual recognition and respect.

Aboriginal communities across B.C. have high levels of unemployment, and many of these communities are located in parts of the province that are economically depressed. In particular, rural and remote communities that were once dependent on a thriving forestry sector faced hardships as that industry waned.

DERIVATIVES: Commodity super-cycle loses power – by Helen Bartholomew (International Financing Review – June 20, 2013)

June 21, 2013

http://www.ifre.com/

As concerns surrounding the inflationary impact of central bank intervention recede, investors have begun to unwind commodity-based inflation hedges, resulting in a flood of outflows from commodity funds.

It is a trend that could accelerate, with some analysts warning that the commodities super-cycle may finally have ground to a halt. And that could leave prices subdued for the next decade.

“Futures markets suggest no respite to commodities correction for the time being. The evidence seems to be clear – the commodity super-cycle is over,” noted Taimur Baig and Jun Ma, DB’s chief economists in a recent report.

In addition to a cyclical shift, with demand from emerging market proving to be less vigorous than first thought, Baig and Ma cite a range of structural factors, including muted demand projections, substantial oil supply shocks and adoption of alternative energy sources in China.

However, they view developments in shale oil and gas extraction as the big game-changer in keeping natural gas prices dampened. Shale extraction is expected to represent more than 50% of US production by 2040, up from just 10% in 2007, according to projections from the US Department of Energy.

Exxon joins West Coast LNG race, seeks 25-year export permit – by Jeff Lewis (National Post – June 21, 2013)

June 21, 2013

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

CALGARY – ExxonMobil Corp. has joined the race to export liquefied natural gas from British Columbia with a monster proposal that would process the equivalent of nearly one-third of Canada’s current daily production.

The world’s largest energy company is seeking approval from Canada’s National Energy Board to export up to 30 million tonnes annually of liquefied natural gas, or four billion cubic feet a day, over 25 years from a prospective terminal in the vicinity of Kitimat and Prince Rupert, B.C., it said in an export application filed with the regulator Wednesday.

Exxon, which has optioned land from the B.C. government at Grassy Point, north of Prince Rupert, said the project would initially produce 10 million to 15 million tonnes of chilled fuel per year, beginning in the 2021-to-2023 time frame. At full capacity, the facility would include six processing units. It would draw gas from fields owned by Exxon and Imperial Oil Ltd., its Canadian subsidiary, the company said.

No capital cost for the project was given, but the application is the biggest export scheme proposed for Canada’s West Coast yet. It comes in the same week as the U.K.’s BG Group Plc asked Canadian regulators for permission to export up to 21.6 million tonnes of LNG per year, or roughly 2.9 billion cubic feet of a day. Canada’s natural gas production, by comparison, stood at 14.1 billion cubic feet per day in 2012.

Oil a constant in a changing energy world – by Yadullah Hussain (National Post – June 21, 2013)

June 21, 2013

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

We are not in 1974 anymore, says Maria van der Hoeven, as she scans the complex and multi-layered energy world.

That year OECD countries had hastily launched the International Energy Agency as a direct response to the Arab oil embargo that was hurting Western economies and had quadrupled crude prices. The Americans were concerned about their dwindling oil production and the Western world tasked the IEA to keep an eye on their fragile crude inventories.

But the world has moved on since then. “It has changed dramatically in more than one aspect,” Ms. van der Hoeven, who heads the agency, told a conference in Montreal last week. “The IEA has also been changing dramatically and has to change, because energy policy in 1974 was quite simple, although — how should I put it — not easy.”

The Paris-based autonomous IEA and its 28-member countries now have to balance climate change issues with economic development and the importance of non-OECD countries in the global economy — a far cry from just releasing crude stocks to counter OPEC’s machinations.

But one thing that is not going to change: the demand for oil. In 2010, fossil fuels made up more than 80% of the world’s energy, and despite the rapid deployment of renewable energy technologies, they will still command three-fourths of the market by 2035, according to the IEA’s estimates.

Is It Sustainable To Mine Gold In This Current Price Environment? – by Alex Létourneau (Kitco News – June 14, 2013)

June 21, 2013

http://www.kitco.com/

(Kitco News) – After seeing gold prices plummet in 2013 and with gold miners battling high operating costs, gold companies find themselves with razor thin profit margins with the ounces they’re pulling out of the ground.

The cost to mine and produce an ounce of gold, on average, ranges from $1,100 to $1,250.. Some mines produce gold at a very affordable cost while others are now producing gold at costs that are higher than the metal is valued.

As gold rose to over $1,900 an ounce in the fall of 2011, the general thought process that accompanied the rise was that gold miners were reaping enormous profit margins.

Not so, said Peter Gray, managing director of Headwaters MB, a US-based investment bank. “Everyone thought at $1,600, $1,800 and $1,900 gold (that) all the mining companies were making profit hand over fist, but, the reality is that the capital costs of construction had escalated so significantly that the margins of production and the margin of operation were still tight,” Gray said.

“$1,300 is not a sustainable gold price. In the long term, I think it’s good that this correction happened, but for the immediate future of gold there’s going to be some systemic changes that will result as a consequence of this price environment, no question.”

As Glencore grows, investors ask about life after Ivan – by By Clara Ferreira-Marques and Sinead Cruise (Reuters U.S. – June 20, 2013)

June 21, 2013

http://www.reuters.com/

LONDON – (Reuters) – Glencore Xstrata (GLEN.L) boss Ivan Glasenberg, a former coal trader who has been at the helm for over a decade, is known for his pre-dawn runs, cut-throat competitiveness and a grueling travel schedule that shows no signs of slowing.

Yet while no one expects the imminent departure of Glencore’s top shareholder – at 56, not far above the average CEO age – the takeover of $46 billion miner Xstrata has prompted investor questions over how a company so closely identified with a boss will manage his succession.

This includes not just the process of earmarking future leaders, but that of rebuilding the board and bringing in a new chairman willing to act as a counterweight to both Glasenberg and a culture born of almost four decades as a private company.

“On the one hand you don’t want to stifle the entrepreneurialism, aggression, dynamism that people associate with Glencore versus the style of the other mining companies,” said analyst Paul Gait at Sanford Bernstein.

“But on the other hand, you do want to put into place the processes and protocols that you associate with a bluechip company,” he added.

Sudbury mourns fallen workers – by Carol Mulligan (Sudbury Star -June 21, 2013)

June 21, 2013

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

There is only one correct answer to the question of whether workers should fight for improved workplace safety or “just remember” those who were killed, injured or got sick on the job, says the president of Mine Mill Local 598/CAW.

As long as one worker in the world is killed every 15 seconds, the union representing four men who died in a rockburst at Falconbridge Mine in 1984 will do more than just honour those miners’ memories.

It will continue to call for workplace improvements in health and safety, Richard Paquin told about 150 people at the 29th annual Workers’ Memorial Day at the Caruso Club.

Paquin repeated what he has said at previous services, a fact that every year drives home how many people are hurt on the job. “More people have died at work than in war,” said Paquin.

That includes more than 1,125 people who died in a fire at a Bangladesh garment factory in April and the 12 construction workers killed on the job every year in New York City.