Twitter

Day: July 2, 2013

JPMorgan Turns Bullish On Commodities, Lukewarm On Gold – by Neils Christensen (Kitco News – July 2, 2013)

http://www.kitco.com/

(Kitco News) – For the first time in almost two years commodity analysts at JPMorgan have turned bullish on commodities and are now overweight the entire complex.

“In a number of commodities, prices have fallen far enough for long enough to force involuntary cuts in production and to spur fresh demand,” the bank said in the report released Sunday. “Risk is now skewed toward demand growth surprise and production disappointment.”

Although the firm’s analysts do admit that downside risks remain high, their recommendation in the report has been very clear.

“Our analysis concludes that it is in the best interests of most commodity index investors to buy immediately,” they said. “We would rather be premature in our pretend portfolio than you be late in your real portfolio.”

The firm is slightly more bullish on energy commodities particularly oil than it is in precious and base metals – the analysts said in the report that their “overweight” view is based on the energy sector, “that dominates most indices.”

Read more

New South Wales Mineral Council News Release: MASSIVE COST OF PLANNING DELAYS REVEALED:

Jobs and billions of investment gone

Monday 1 July 2013
Ref: 56-13

Click here for full report: http://www.nswmin.com.au/default.aspx?ArticleID=555

NSW will pay a high economic price including the loss of billions of dollars in mining revenue and thousands of jobs if mining projects continue to be subjected to approval delays of 12 months or more, according to new research undertaken by PricewaterhouseCoopers (PWC). The detailed economic study found that inefficiencies in the NSW Planning System resulting in mining project delays of 12 months or more impose a massive cost to NSW.

“The PWC research shows that project delays of 12 months or more would cost NSW, over the next 20 years, 29,000 jobs across the state, $10.3 billion in lost investment and $600 million a year in lost mining royalties,” NSW Minerals Council CEO Stephen Galilee said today.

“These results confirm that slowing the State’s biggest export industry in NSW has an impact felt right across the state economy. It means lost jobs, lost investment and a loss of crucial mining revenue that helps fund infrastructure and services including hospitals, police, public transport and schools,” he said.

Read more

Judge questions court’s role in SEC’s ‘conflict minerals’ rule – by Sarah N. Lynch (Reuters U.S. – July 1, 2013)

http://www.reuters.com/

WASHINGTON – (Reuters) – A federal judge on Monday questioned whether U.S. courts should intervene regarding a rule that forces public companies to disclose if their products contain minerals extracted in the Democratic Republic of Congo, which has been castigated for committing human rights abuses.

Three business trade groups are challenging the “conflict minerals” rule from the U.S. Securities and Exchange Commission, saying it is nearly impossible to track minuscule amounts of such minerals in their supply chains. They also say the rule violates companies’ free speech rights because it makes them engage in “politically charged” speech.

The rule is championed by human rights groups, which say disclosing this kind of information will help socially conscious investors. Opponents say the rule is a compliance nightmare that will cost billions and unfairly tarnish companies’ reputations by forcing them to make political statements about their products.

During roughly three hours of oral arguments, Judge Robert Wilkins of the U.S. District Court for the District of Columbia suggested to an attorney for the trade groups that federal courts should consider deferring to Congress on the matter. “This is a circumstance where a court should really defer to Congress and the executive in an area of foreign policy where the court has no expertise,” he said.

Read more

INTERVIEW-Indonesia trade minister eyes speedy end to Freeport contract talks – by Michael Taylor (Reuters India – July 2, 2013)

http://in.reuters.com/

JAKARTA, July 2 (Reuters) – A deadly tunnel collapse at Freeport McMoRan Copper and Gold’s Indonesian mine seven weeks ago should not delay contract talks with the U.S.-based firm, a member of the government negotiating team said, adding that he hoped to strike a deal as soon as possible.

Contract talks between Freeport Indonesia and the government were put on hold after a training area in a tunnel caved in on May 14, killing 28 people at the world’s No.2 copper mine in remote West Papua.

“It is tragic what happened, but Indonesia needs to be cognizant of where it needs to be going forward as an economic relevance to the world,” Trade Minister Gita Wirjawan told Reuters. “It is important for a conclusion to be reached sooner rather than later because it will reflect upon the desires of both Freeport and the Indonesian government.”

“ASAP,” said Wirjawan, when asked about the ideal time for the talks to be concluded. “I’m hopeful that there will be a meeting of minds between both sides.”

Open-pit mining at Freeport’s Grasberg mine is due to end after 2016, just five years before its current mining contract expires. Freeport estimates it will cost about $15 billion to turn the complex into a vast underground mine, an investment that only makes sense if it has a new contract with the Indonesian government beyond 2021.

Read more

Mongolia neo-Nazis announce a change of tack – pollution control – by Carlos Barria (Reuters U.S. – July 2, 2013)

http://www.reuters.com/

ULAN BATOR – (Reuters) – A Mongolian neo-Nazi group has rebranded itself as an environmentalist organization fighting pollution by foreign-owned mines, seeking legitimacy as it sends Swastika-wearing members to check mining permits.

Tsagaan Khass, or White Swastika, has only 100-plus members but it is one of several groups with names like Dayar Mongol (Whole Mongolia), Gal Undesten (Fire Nation) and Khukh Mongol (Blue Mongolia), expanding a wave of resource nationalism as foreign firms seek to exploit the mineral wealth of the vast country, landlocked between Russia and China.

From an office behind a lingerie store in the Mongolian capital, the shaven-headed, jackbooted Tsagaan Khass storm-troopers launch bizarre raids on mining projects, demanding paperwork or soil samples to be studied for contaminants.

“Before we used to work in a harsh way, like breaking down doors, but now we have changed and we use other approaches, like demonstrations,” the group’s leader, Ariunbold Altankhuum, 40, told Reuters, speaking through a translator.

On a patrol to a quarry in grasslands a dusty two-hour ride from the capital, members wore black SS-style Nazi uniforms complete with lightning flashes and replica Iron Crosses. They questioned a mine worker against the sound of machinery grinding stones about paper work, opting to return in a week when the owner had returned.

Read more

Brazil’s Vale: Outlook for Iron Ore Hasn’t Changed – by Paul Kiernan (Wall Street Journal – July 1, 2013)

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

RIO DE JANEIRO–Brazilian mining giant Vale SA VALE -1.36% hasn’t seen China’s appetite for iron ore weaken despite the recent tumult in global markets and hopes to follow through with costly expansion plans despite skepticism from some quarters.

Slowing Chinese growth and the possible withdrawal of easy-money policies in the U.S. have sent the dollar higher against other currencies such as the Brazilian real and raised concerns about demand for commodities. Worries about the world’s second-largest economy have weighed particularly heavily on Vale’s shares, which are trading near four-year lows.

But Jose Carlos Martins, Vale’s executive director of ferrous minerals and strategy, said the company has felt “no negative impact in terms of demand” and sees a silver lining in the recent depreciation of the Brazilian real. Vale, the world’s number three mining company and top producer of iron ore, mines the key steel ingredient in Brazil and sells most of it abroad, at dollar-denominated prices.

“Putting everything together–the positive and negative effects of all this confusion–the truth for us is that we haven’t had big changes in the scenario for iron ore,” Martins said in an interview. He noted China’s renminbi is “one of the only currencies in emerging countries that hasn’t suffered,” meaning Vale’s costs relative to Chinese iron-ore producers have declined.

Still, Vale’s preferred shares are down 34% this year, having underperformed Brazil’s Ibovespa stock index as well as rival mining majors BHP Billiton BLT.LN -0.12% and Rio Tinto RIO -1.42%.

Read more

China, Base Metal Tiger, Sets the Trend for Metals: Stefan Ioannou – Interview by Brian Sylvester (The Gold Report – July 1, 13)

http://www.streetwisereports.com/

Industrial metal prices have struggled to find firm footing. Stefan Ioannou of Haywood Securities tees up near-, medium- and long-term scenarios for three industrial metals—copper, zinc and nickel—and explains why he is most enthusiastic about zinc. In this interview with The Gold Report, Ioannou discusses companies that stand to benefit from the coming supply squeezes and China’s role as both supplier and consumer of all three metals.

The Gold Report: In January, Haywood Securities forecast a copper price above $3.60/pound ($3.60/lb) for the remainder of 2013. Six months later, copper is struggling to remain above $3/lb. What is causing the weakness?

Stefan Ioannou: A lot of it relates to uncertainty regarding the global economic situation. Early in the year, the price hovered around $3.25–3.50/lb and recently nosedived to $3/lb. That happened on the back of Federal Reserve Chairman Ben Bernanke’s hints that quantitative easing in the United States may end in mid-2014, raising concerns that U.S. demand for raw goods will decline. Because copper goes into a lot of raw goods, that supposes less demand. In addition, copper inventories are well over 600,000 tons (600 Kt), which is high on a historic basis.

China is the other big concern. Its manufacturing numbers are weakening. People are worried that China, which really drives a lot of the metal stories, is not growing as fast as expected.

Read more

Analysis: Latest Barrick mine delay fans price tag fears – by Julie Gordon (Reuters U.S. – June 30, 2013)

http://www.reuters.com/

TORONTO – (Reuters) – Barrick Gold Corp (ABX.TO) has slowed spending at its Pascua-Lama project in South America, delaying first output to 2016, but that may not be enough for the its shareholders, who worry that the final price tag may creep beyond what the mine is worth.

While the flagship development, which straddles the border of Chile and Argentina, is one of the richest untapped gold deposits in the world, the string of delays and budget overruns have been a nightmare for world’s top producer and its investors.

“They should walk from Pascua-Lama,” said John Ing, president of boutique investment and research firm Maison Placements, adding that the embattled miner also needs to divest non-core assets, cut exploration spending and slash hefty board salaries if it wants to turn its fortunes around.

Barrick said late on Friday that it would re-sequence construction of the controversial project to target first production by mid-2016, deferring some $1.5 billion to $1.8 billion of planned capital spending in 2013 and 2014. The company has not updated the market on capital costs, last projected to be up to $8.5 billion.

The delay was in-line with a scenario that Credit Suisse analyst Anita Soni outlined earlier this week, as the bank downgraded Barrick to ‘Neutral’ from ‘Outperform’.

Read more

Mining group head sees tough times now, but better prospects ahead – by Josh Kerr (Globe and Mail – July 2, 2013)

The 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.

TORONTO — Trying to get a read on the mining industry may be like peeking in a crystal ball at this point, but Zoë Yujnovich believes the long-term outlook is still a good one. “Right now it’s a little bit like reading tea leaves to try to figure out exactly what’s happening,” says the new chair of the Mining Association of Canada.

“Certainly in the longer term the industry is still poised to be very successful, and when we look at it in a Canadian context I think we’re going to continue to see the extractive industry being a major contributor to Canadian GDP,” she said.

Ms. Yujnovich’s comments come as she takes the helm of the 78-year-old association, building on an impressive résumé. The first woman to hold the post, she first made waves when put in charge of the Brazilian operations for British-Australian mining giant Rio Tinto Inc. at the age of 34.

Ms. Yujnovich, the chief executive officer of Iron Ore Co. of Canada, which is majority owned by Rio Tinto, will chair the association for two years. Pierre Gratton the current president and CEO of the mining association said he is excited to have her heading up the board and isn’t surprised that Ms. Yujnovich, who he describes as a natural leader, has risen so far so fast in an industry long dominated by men.

Read more

When the U.S. doesn’t need Canadian oil – by Jeffrey Simpson (Globe and Mail – June 29, 2013)

The 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.

Could it be that a keystone belief and a bedrock of prosperity in Canada might disappear over the next two decades? For a long time, it has been assumed that whatever surplus oil (and natural gas) Canadians could produce would be gladly purchased by the United States. “Pump it and they will come” has been an underpinning reality for Canada’s economy.

Recently, the U.S. Energy Information Agency produced an estimate that the U.S. has almost 60 billion barrels of “technically recoverable” shale oil. Now, “technically recoverable” does not mean that all this supply will be used. Nor does it mean, however, that supplies the agency knows about today will not increase, perhaps substantially, as new deposits are discovered or innovative technologies for discovery and extraction are found. All that can be said is that 60 billion barrels of “technically recoverable” oil is a godsend for the United States.

These barrels, or a portion thereof, could be a game-changer in a country with 7.4 million barrels of daily net imports of oil. U.S. dependence on imported oil has declined since peaking in 2005. The recession of 2008 and its aftermath knocked down consumption. So did improved energy efficiency measures, switching to natural gas, more renewable energy and consumers watching their pennies.

Forthcoming tighter mileage requirements for cars will drive down demand for oil, as will requirements for heavy-duty vehicles that President Barack Obama promised in his recent climate change speech.

Read more

Kitimat vision of LNG boom clouded with uncertainty – by Claudia Cattaneo (National Post – June 29, 2013)

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

Kitamaat Village, B.C. – On the north side of Douglas Channel, a quick boat ride from the Haisla Nation’s town site, an old log dumpsite covered by forest is awaiting transformation as the first liquefied natural gas (LNG) export site on Canada’s West Coast.

While surveying the band-owned oceanfront location from a fishing boat, chief counselor Ellis Ross pondered the massive work ahead.

“We are not prepared for all the tanker traffic,” said the 48-year-old Aboriginal leader, donning a dark business suit and wingtip dress shoes, markers of his new role in the energy world, while checking a fishing net for crabs.

“We don’t even have docks for tugs and barges. We’ll need to sit down with governments and proponents, look at the impacts and come up with a framework.” Two years from now, as long as market conditions and financing terms remain supportive, the Haisla’s partly owned BCLNG project will be loading for the first time British Columbia natural gas into tankers headed for Asia from a floating platform moored next to land-based facilities.

The project is one of three planned for the coast near Kitimat, and one of nine announced for Northern British Columbia so far. The LNG opportunity emerged out of the blue three years ago after the tsunami and nuclear disaster in Japan triggered a rush by Asian countries to secure natural gas from Western Canada as a backup fuel.

Read more

NEWS RELEASE: Ontario Appoints Lead Negotiator for Ring of Fire

Ontario and Chiefs of the Matawa Tribal Council Negotiators to Develop a Negotiation Framework

NEWS – July 2, 2013

Ontario has appointed former Supreme Court of Canada Justice Frank Iacobucci as lead negotiator on behalf of Ontario in discussions with Chiefs of the Matawa Tribal Council on resource developments in the Ring of Fire, a project that will create jobs and grow Ontario’s regional economies.

Former Justice Iacobucci looks forward to community-based discussions on regional considerations with the Chiefs of the Matawa Tribal Council and their lead negotiator, Bob Rae. Mr. Iacobucci hopes to be invited to visit the Matawa First Nations communities closest to the proposed resource developments in the Ring of Fire prior to engaging in more formal negotiations. He hopes to address the following priorities:

• Environmental protection and monitoring
• Regional infrastructure planning and development
• Resource revenue sharing
• Social and economic supports

Read more

Is the global boom in commodity prices finally over? – by Linda Yueh (BBC News – July 2, 2013)

http://www.bbc.co.uk/

Like Graham Greene’s The End of the Affair, it is hard to believe it is over and let go. But, it has been an extraordinary run, a decade of what has been called the commodity super-cycle.

It started, and perhaps will end, with China. The global integration of an economy that has grown at double digits since China joined the World Trade Organization (WTO) in December 2001 perhaps marked the start. Will China also now mark the end?

Until the last decade, the real price – so, taking off inflation – of commodities had fallen for 150 years. It was the reason why developing countries wished to diversify out of natural resources and into manufacturing.

Because agriculture prices fall over time, countries like Brazil, where more than 90% of exports were coffee during the immediate post-war period, would experience worsening incomes. This is why.

Read more

Commodity investors race to adapt on fear of supercycle end – by Barani Krishnan (Reuters U.S. – July 1, 2013)

http://www.reuters.com/

NEW YORK – (Reuters) – Investors who have plowed some $400 billion into raw materials markets over the past 10 years are accelerating efforts to change their strategies, if not their allocations, on the growing belief the commodities “supercycle” has come to an end.

While pension funds and other institutional investors have been quick to bail on gold as bullion fell deeper into bear market territory in the second quarter, they have yet to abandon other markets like oil and metals en masse, asset allocation experts and analysts say.

Instead, more and more funds are changing tack, abandoning the passive, buy-and-hold strategies that held sway in the previous decade to embrace a more active approach to picking winners and losers within the commodities sphere.

While the shift toward ‘active’ investing has been growing for several years, the pressure to adapt is mounting. The 19-commodity Thomson Reuters-Jefferies CRB index .TRJCRB fell 7 percent in the second quarter and 25 percent from a second-quarter 2011 peak, entering bear market territory.

Among individual commodities, the second quarter was gold’s worst on record due to fear the U.S. Federal Reserve will curb stimulus money crucial to bullion prices.

Read more