July 22, 2013 – Republic of Mining

Minor miners face major headache from iron ore giants – by James Regan (Reuters U.S. – July 21, 2013)

July 23, 2013July 22, 2013

http://www.reuters.com/

SYDNEY, July 22 (Reuters) – From Africa to Australia, opportunities to develop small iron mines are fast disappearing, as cash dries up and miners are unable to compete with the crushingly low production costs of the sector’s heavyweights.

In Australia alone, a half a dozen or more projects pegged by prospectors in better times sit stranded in the outback with no timetable for development. Most are running short on money and have stripped payrolls and equipment spending to a bare minimum, awaiting a turnaround that forecasters predict is a long way off at best.

Companies such as Aquila Resources Ltd, Flinders Mines Ltd and Iron Road Ltd, which a year ago were leading a wave of new investment in iron ore, have had their stocks gutted as investors turned cold on their prospects.

“This is not the time to be developing a new iron ore mine, the big boys are making sure of that,” said Keith Goode, an analyst for Eagle Mining Research. Global miners Vale, BHP Billiton and Rio Tinto are increasing their supply dominance in the world’s second-biggest shipped commodity market after oil.

Australia’s Waning Boom Saps Mining Area Housing Demand – by Nichola Saminather (Bloomberg News – July 21, 2013)

July 22, 2013

http://www.bloomberg.com/

After slashing the price of three planned townhouses by a third in the coal-mining town of Moranbah in remote northeastern Australia, agent Ricardo Baggio still can’t find buyers.

“No one’s got confidence,” said Baggio from broker Ray White Group’s Townsville franchise, about 550 kilometers (341 miles) north of Moranbah in Queensland state. “There are a few mines around the town but they’re not hiring or they’re downsizing.”

Home prices in Australia’s isolated mining towns, which outpaced increases in the rest of the nation over the past decade, are falling as companies such as Glencore Xstrata PLC (GLEN) and Peabody Energy Corp. (BTU) delay projects and lay off workers amid a slowing resources boom. The percentage of homeowners more than 30 days behind on their mortgage payments in Gladstone, a Queensland coastal town near more than $60 billion of gas projects, was 0.94 percent in March, according to Fitch Ratings, a 71 percent increase in six months.

The Moranbah townhouses, which will be built on a flat, sparsely landscaped street about 1 kilometer from the center of town, are on the market for A$525,000 ($478,485) each, down from an initial price of A$750,000, said Baggio. The median price of a home in Brisbane, the state capital, is A$425,000.

Conflict mineral policy hurt miners – by Jonathan Cooper (Vancouver Sun – July 22, 2013)

July 22, 2013

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

‘Cure-all’ legislation that was meant to improve things, cost millions of jobs

Jonathan Cooper is vice-president of Macdonald Realty Group and has written this commentary as a concerned private citizen.

On July 1, 2010, the U.S. Congress passed the Dodd-Frank bill, a massive and complex piece of legislation which was designed to avoid a repeat of the 2008 housing bubble collapse and subsequent financial crisis. Buried in the bill’s 2,000-plus pages was Article 1502, the objective of which was considerably removed from the minutiae of credit-default swaps and mortgage finance.

Dodd-Frank Article 1502 (DF 1502) intended to prevent U.S. companies from being involved in the trade of “conflict minerals” in the Democratic Republic of Congo (DRC). As a result of strident lobbying by Hollywood celebrities and non-government agencies (NGO) like The Enough Project, Congress believed that eastern DRC’s immense mineral wealth was fuelling the civil war in that region, a war which has caused as many as five million deaths since its inception in 1998.

In the three years since its passage, DF 1502 has encouraged increased due diligence on the part of both multinationals and the DRC government. However, it has also become an object lesson in the unforeseen consequences of legislative intervention.

Aperam is only firm bidder for Outokumpu Italian plant-sources – by Silvia Antonioli (Reuters U.S. – July 22, 2013)

July 22, 2013

http://www.reuters.com/

LONDON, July 22 (Reuters) – A consortium led by steelmaker Aperam has made the only binding offer so far for Finnish group Outokumpu’s stainless steel plant in Terni, Italy, two sources familiar with the matter said.

This contradicts previous reports of at least two binding offers, and highlights the limited interest so far in one of Europe’s biggest and most modern steel plants in an industry currently dogged by poor demand and weak prices.

Outokumpu has agreed to sell the Acciai Speciali Terni steel mill as a condition for securing the approval of European competition authorities for its purchase of Inoxum, the stainless steel arm of rival ThyssenKrupp.

Outokumpu has twice requested a postponing of the deadline to sell the plant because it thought bids were “unsatisfactory”.

Four parties expressed interest in acquiring the plant in the spring: U.S. private equity funds Apollo and JP Morgan’s One Equity Partners, the consortium led by Luxembourg-based Aperam with Italian steel companies Arvedi and Marcegaglia, and Chinese stainless steelmaker Tsingshan.

Is the Gold Price Set for an Explosive Rebound? – by By Byron King (July 22, 2013 – The Daily Reckoning Australia)

July 22, 2013

http://www.dailyreckoning.com.au/

In recent months, the price of gold has tumbled. Along the way, lower gold prices have undermined the share price of many mining plays. The yellow metal is selling for its approximate cost of production at many of the world’s largest mines.

Yet for all the gloom and doom within the gold investment space, there are indications that physical gold is becoming scarce. In fact, gold may be setting up for an explosive rebound, both in its nominal price and in the value of companies that mine it…

Here’s the posted price of gold over the past year. We’ve endured a steady retreat from near $1,800 per ounce to the mid-$1,200s. Clearly, people are selling.

Gold had a decade or so in the doldrums in the 1990s. Then people started buying gold all through the first decade of the 2000s. Gold’s recent price decline comes after a solid decade of strong, steady gains. That’s what the chart indicates.

The back story to gold’s price rise is that in recent years, investors and some central banks accumulated large holdings of gold. This helped drive the gold price up.

Investors, Analysts See End of Commodity ‘Supercycle’ – by Christian Berthelsen (Wall Street Journal – July 22, 2013)

July 22, 2013

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

Popular Bet in Global Financial Markets—That Prices Would Keep Rising—Is Unraveling

Investors are suffering mounting losses as a decadelong rise in commodity prices unravels amid slowing emerging-markets economies, rising supplies of oil and metals and the eventual end of central-bank stimulus policies that propped up prices for raw materials.

The sharp reversal in the prices of commodities, ranging from gold to copper and aluminum, is undermining one of the most popular bets in global financial markets: that prices would keep rising, fueled by strong growth in China and other developing economies and the relative scarcity of many raw materials.

Institutions and individuals have poured more than $440 billion since 2004 into index funds and exchange-traded funds tracking broad commodity indexes, according to Barclays PLC. BARC.LN +1.22% That dwarfs the net flow of $25 billion into U.S. stock funds over the same period, according to Morningstar.

Commodity prices as a group nearly doubled between 1998 and 2008 as measured by the Dow Jones-UBS UBSN.VX +2.78% Commodity Index, with some index components such as oil and gold rising as much as sevenfold during that time and leading to talk of a commodities “supercycle” among analysts and strategists.

Canada needs to up conservation game, preserving half of boreal forests: paper – by Bob Weber (Canadian Press/Montreal Gazette – July 22, 2013)

July 22, 2013

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

A group of top international scientists says Canada needs to dramatically up its conservation game to ensure its vast northern forests remain healthy in the face of increasing industrial pressure.

In a paper to be presented today at the International Congress of Conservation Biology in Baltimore, Md., its authors argue that Canada needs to preserve about half of its boreal forest. That’s significantly more than the 10 per cent level researchers previously thought was necessary to conserve natural systems.

“Conservation science has caught up to an understanding of what is really needed,” said Jeffs Wells, a scientist with the Boreal Songbird Initiative and one of 23 researchers from Canada and around the world who contributed to the paper.

“We need to have much larger spaces than was ever realized.” Scientists used to set conservation goals by looking at single species or representative slices of landscape, Wells said.

“They didn’t really think about how interconnected places were and how animals moved across the landscape, how water flow is affected, all of those sorts of things.

The heavy price of Greek gold – by Jim Wickens (The Independent – July 21, 2013)

July 22, 2013

http://www.independent.co.uk/

The birthplace of Aristotle is being laid waste by a vast mining project, opening a rift in a cash-strapped society

This article was reported in partnership with the Investigative Fund at the Nation Institute. Shadowed by security guards who film his every move, Giannis Verginis gazes out over the slope of Mt Kakavos, listening to the whining of chainsaws in the valley below.

“We used to come to this area with my family and children,” says Mr Verginis. “Up until a few months ago it was a beautiful place and we used to have fun. Now the entire area is deforested and if my children were here they would cry seeing this.”

The large-scale clearance on this remote mountain-side in north-eastern Greece is only the preliminary part of a gold mining project green-lighted by the country’s cash-strapped government; a development that will see open-pit mines and several huge tailing dams built within a concession that spans over 31,700 hectares of ancient forest and farmland.

The peninsula of Halkidiki is the birthplace of Aristotle, a timeless landscape where bee hives stand amidst flowering gorse bushes, overlooking the glistening ripples of the Mediterranean sea.

Wynne’s green power blues – by Lorrie Goldstein (Toronto Sun – July 21, 2013)

July 22, 2013

http://www.torontosun.com/

Liberals have gone too far to admit the obvious — their renewable energy program is a disaster

Considering the albatross it has become around their necks, Premier Kathleen Wynne and the Liberals must be wondering exactly when their green energy program turned into a political disaster.

No doubt they long for the good old days — specifically, Nov. 24, 2009 — when global warming guru Al Gore, speaking in Toronto at a gala dinner, bestowed his blessing on their former leader, Dalton McGuinty.

With McGuinty and his Canadian cheerleader, David Suzuki, looking on, Gore declared the premier’s Green Energy Act (GEA) was “widely recognized now as the single best green energy program on the North American continent.” But that was then and this is now. Today, McGuinty is long gone and the GEA sits like a dead weight on the Liberals.

Last week angry demonstrators — furious the GEA took away their right to any say in the location of huge, industrial wind turbines in their communities — showed up to protest while Wynne was trying to jump-start the by-election campaign of London West Liberal candidate Ken Coran.

There’s gold in them thar mine tailings – by Tracie Cone (The Associated Press/Globe and Mail – July 22, 2013)

July 22, 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.

SACRAMENTO — Across the American West, early miners digging for gold, silver and copper had no idea that one day something else very valuable would be buried in the piles of dirt and rocks they tossed aside.

Now there’s a rush to find key components of cellphones, televisions, weapons systems, wind turbines, MRI machines and the regenerative brakes in hybrid cars – and old mine tailings piles just might be the answer. They could contain a group of versatile minerals the periodic table called rare-earth elements.

“Uncle Sam could be sitting on a gold mine,” said Larry Meinert, director of the mineral resource program for the U.S. Geological Survey in Reston, Va.

The USGS and Department of Energy are on a nationwide scramble for deposits of the elements that make magnets lighter, bring balanced hues to fluorescent lighting, and colour to the touch screens of smartphones to break the Chinese stranglehold on those supplies.

Canadian energy stocks buoyed by surge in prices for U.S. crude – by Jeffrey Jones (Globe and Mail – July 22, 2013)

July 22, 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.

CALGARY — Canadian energy stocks are finally playing catch-up with sizzling oil markets.

In the past four weeks, the S&P/TSX capped energy index, which includes big names such as Cenovus Energy Inc., Suncor Energy Inc. and Canadian Natural Resources Ltd., has climbed 9 per cent as U.S. crude prices approached, then rocketed above, $100 (U.S.) a barrel.

The gains come as companies prepare to deliver second-quarter financial results that in many cases will display rich rewards from a steady improvement in heavy crude prices that has accompanied the run-up in the West Texas Intermediate light oil benchmark.

There could even be potential acquirers running the numbers on deals after a long hiatus, to take advantage of still-discounted values.

“I think people with a longer-term view are eyeing this sector, and from a strategic standpoint or a market standpoint, it’s looking pretty attractive,” said John Stephenson, senior vice-president and portfolio manager at First Asset Capital Corp.

Gold price plunge saddles miners with billions worth of writedowns – by Garry White and Emma Rowley (The Telegraph – July 21, 2013)

July 22, 2013

http://www.telegraph.co.uk/

The fall in the gold price is now being recognised in gold mining companies’ balance sheets – and it is hurting.

AngloGold Ashanti, the world’s third biggest gold producer, last Monday revealed itself as the latest to take a hit, predicting a writedown in the range of $2.2bn (£1.5bn) to $2.6bn (£1.7bn) on its mining assets, including its stockpiles of ore. The figure will be revealed in its financial results for the second quarter.

The company also said it would produce 4m to 4.1m ounces of gold this year, rather than the 4.1m to 4.4m ounces previously planned, in response to the fall in its product’s price.

“In light of lower and more volatile gold prices, capital expenditure is being focused on the group’s highest quality assets, while curtailing spending or suspending operations at projects that may yield lower returns,” it said. “In addition, we may seek partners for certain of our projects.”

The update hinged on the more than 30pc drop in the gold price from its peak of $1,900 (£1,243) in 2011, as the global recovery gains traction and central banks appear to signal an end to their inflationary stimulus efforts. Gold ended last week trading around $1,295 (£847) an ounce.

There’s gold in them thar hills – by Larry Meyer (The [Oregon] Argus Observer – July 21, 2013)

July 22, 2013

http://www.argusobserver.com/

Company could pull nearly $1 billion of gold from ground in Malheur County

If approved, a proposed gold mine in the middle of the remote Malheur County desert could produce more than 700,000 ounces of gold, according to estimates from the company seeking to build the mine.

At today’s current price of $1,290 per ounce, that would equal nearly a billion dollars, or $903 million, worth of gold in them hills.

The so-called Grassy Mountain gold mine, being proposed by Calico Resources, is still at least a couple of years away from actual production, but if all goes as planned, it could have a major impact on the region.

The Grassy Mountain mine site lies about 25 miles southwest of Vale and northwest of Owyhee Reservoir. The site of Calico’s claims covers about 62 acres. The total permit area is 270 acres, including a mill site and access road area.

Once up and running, Calico officials expect the mine to be in operation for eight to 10 years, but that could be longer if additional ore is discovered, according to Andy Bentz, the former Malheur County Sheriff, who is now public and governmental affairs officer for the company.

Alabama Coal Billionaire Battles Murder Suits as Prices Ebb – by Anthony Effinger & Matthew Bristow (Bloomberg News – July 16, 2013)

July 22, 2013

http://www.bloomberg.com/

Gustavo Soler knew he was in trouble. It was 2001, and Soler was union president at a coal mine in Colombia owned by Drummond Co., which is controlled by the wealthiest family in Alabama.

Soler’s predecessor, Valmore Locarno, and Locarno’s deputy, Victor Orcasita, had been killed seven months earlier, and now Soler was getting threats, says his widow, Nubia, in an interview in Bogota. He told his family to pack up. They would leave the area as soon as he got home from the union office in Valledupar, a city in the country’s coal belt. He never made it.

Armed men stopped his bus, asked for him by name and abducted him. He was found under a pile of banana leaves with two bullet holes in his head, Bloomberg Markets magazine will report in its August issue.

After the killing, Nubia says, Garry Neil Drummond, chief executive officer of Drummond Co., sent a taxi to bring her to the Drummond offices near the coastal town of Santa Marta, where, in a meeting, he promised to put her children, Sergio and Karina, then 14 and 9, through school.

Inside Bingham Canyon– N. American mining’s largest, most successful landslide – by Dorothy Kosich (Mineweb.com – July 22, 2013)

July 22, 2013

http://www.mineweb.com/

Lost jobs, robotic mining, halved production, and lower tax revenues are some of the consequences of what experts say may be the most successful landslide event ever at Bingham Canyon.

RENO (MINEWEB) – On April 10th this year, one of the world’s largest landslides tumbled 150 million tons of rock and dirt down the northeastern pit wall of Kennecott Utah’s Bingham Canyon copper-gold-molybdenum mine, likely becoming one the more expensive landslides in modern history.

The U.S. Geological Survey estimated that the landslide unleashed 128 million cubic yards of rock and dirt into a pit nearly a mile deep, equal to about two-thirds of the material removed for the construction of the Panama Canal. Put another way, however, the largest landslide in modern history, the 1980 Mount St. Helens eruption, loosened 3.7 billion cubic yards.

Perhaps the biggest victory of this event was the ability to forecast and plan for it. Pit wall movement for the 24-hour/7-days-a-week operation was first detected in early February. A combination of radar, prisms and geotechnical sensors was employed to gather data used in mine planning. Mine employees were trained to observe and make slope stability determinations in areas that impacted their work.